As your business grows and begins to make a name for itself within your industry, you might need to start making decisions about which path toward further growth to follow: Is it better to continue to concentrate on your main business, or should you focus on certain aspects of your company and grow those as their own ventures? Going with the latter option can be a risky decision, as you are essentially creating a sub-company underneath your main business, but it could also make it easier to find specialized customers and lead them to your main company, allowing you to play a more active role in customer acquisition. If you decide to start founding project companies under your main business, there are a few steps you will need to take into consideration before you begin advertising.
Register for any DBA and domain names you may need.
At this stage in the game you probably already know what a ‘Doing Business As’ name is but, as a quick refresher, a DBA name is the name under which you sell—and are paid for—goods and services. Jon Smith’s Flower Shop, for example, would be a DBA name. However, if Jon Smith decides that his business has done fairly well and he wants to start landscaping using the flowers in his flower shop, he should register for a new name, like Jon Smith Landscaping, unless he wants to advertise his services as and receive checks made out to Jon Smith’s Flower Shop. The main reason you are creating this separate company is to focus your services towards a particular market, so you don’t really want to be stuck advertising using your main, broadly-focused company’s name. Rather, you want to use that name to prop up advertising efforts for your new business, building up your new company partly by feeding off of your current success and reputation.
After you get your DBA name, don’t forget to go online and register for a related domain name as well so you can begin building an online presence for the new company.
Decide if you should pursue a parent/subsidiary structure.
There are two options available to you: The first is simple—you just run two companies as sole proprietorships and use the reputation of one to bolster the other—and the second option is a bit more complex. You can create a parent/subsidiary structure, which could help legally protect your main business from being sued or losing its assets due to the subsidiary company’s actions. If you incorporate or turn your business into an LLC, you can treat it as a parent company, and then list it as the owner of any subsequent corporations or LLCs. All of the income from subsidiary businesses will typically flow into the parent company, minus some taxes if the company is a C-Corp, and the parent company is, at least from a legal standpoint, a bit safer. Just keep in mind that any legal action against the parent could put the subsidiary companies at risk as, technically, those subsidiary companies are the parent company’s “property”.
This structure can also be a bit complicated to create, so pursuing it makes more sense for those businesses looking to create sub-companies in high-risk fields, such as real estate.
Spread the word!
Your business has customers, a following and a reputation—as has already been said, you must use those things to your advantage. Tell your customers about your new business, associate it with your old business when advertising, and take the opportunity to specialize the services or products your new business offers. Your old business should feed customers into your new one and, on occasion, your new one can lead its customers to your old one. The profit from these ventures goes to the same place, and having two businesses really increases your total market coverage. So push, advertise, build and plug whenever possible!
Running one business is hard enough, and two will truly push you to your limit, but if you’re confident in your employees and the status of your original business, then it could be worth trying to re-focus your efforts on building up some aspect or service of your company as its own venture. Just remember to treat the new business like you did your old—protect your intellectual property by filing for trademarks or copyrights, incorporate or form an LLC if you think you need to, and file all of the necessary paperwork to ensure everything is legal and recognized by the state. After that, it is all up to you to use your business acumen to build up the new company and support both ventures.