Business Structures for Serial Entrepreneurs: Setting up Multiple Businesses
Most entrepreneurs start and end their careers as a sole proprietor. However, the more successful ones eventually incorporate, and the most successful ones start, run, and sell, multiple businesses at the same time. For the serial entrepreneur, there is no one right way to go about structuring multiple businesses.
Sometimes a serial entrepreneur will have multiple businesses all focused in one industry. For instance, a surf shop owner may own the surf store, as well as make surf boards, bikinis, offer surf lessons, sponsor a professional surf team, and make surfing videos. Apart from being one of the most motivated surfers to ever ride a wave, this serial entrepreneur would really benefit knowing the different kinds of corporate structures and how to structure multiple businesses.
One Big Business, or Lots of Independent Businesses?
Initially, using the same corporate hub to do everything from seems enticing due to the simplicity. However, this requires maintaining a steady brand across all the businesses, and it becomes even more complicated if separate businesses are sharing finances. An alternative is for each business to use a dba name (doing business as), and stay under the main, principal business, using separate accounts under the dba name. Sometimes, setting up each business as an independent corporation may serve your interests or goals best, especially if there are outside investors or partners who are not part of the old business.
In the surf shop example, it would make sense for everything to stay under the same business as it is all very related, and promoting one would promote each of the others. However, if there are aspirations of selling one of the business lines, having the business set up as its own independent business may make division and sale easier.
To Form an LLC? That's a Question for Your Lawyer
While there are different methods of setting up your companies, consulting your lawyer is always advisable on these matters. Understanding if there are specific reasons why you'd want to have a new business be formed in a particular manner, and whether you want to form it under an existing business or as a new business, are questions best left for the attorney who understands both your new and old businesses.
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