How to Transition From One Business to Another
Transitioning between two businesses is complicated, especially as an owner, but it does happen. You’ll start a business, get it up and running, find yourself with some free time, and decide to start pursuing something else on the side. Before you know it, that new business is up and running and either taking up more of your time, or making way more money, and the old business doesn’t seem as interesting. There’s nothing wrong with shifting your focus to another business either. You just have to make sure you transition the right way or you could find yourself split between two very demanding worlds.
Keep everything separate.
First, and most importantly, you have to keep everything involved with the two businesses separate. This includes assets, funding, loans, and accounts – don’t mix anything up. Overlap is confusing and can cause legal problems. Plus, you want these two businesses operating completely independent of each other, lest you lose both by closing or selling one. I’ve seen a lot of business owners try to transition to a new company they’ve started, only to find that the reason that business had been doing so well is because it was being supported by the old business. Separating the two companies allows you to make sure they can operate independently, and it makes closing or selling the old business way easier.
Tie up any loose ends.
You can’t just decide to stop showing up for work. Your employees, vendors, partners, and customers depend on you to oversee the transition process. That process could just be to dissolve the company, which means you need to inform everyone you have a working relationship with, as well as the state and possibly local government, of the dissolution, pay off any outstanding loans, and then liquidate the business. If you plan to sell, or leave the company to an employee, you’ll probably need to find a Mergers & Acquisitions firm to help you transfer or sell. However, you should know that only 20-25% of businesses put on sale are actually sold, so don’t depend on the sale to fully bankroll your new venture.
Plan and delegate.
Focus on the key items for each business first. What needs to be closed out, what needs to be opened, what do you absolutely have to do? It’s really easy to find yourself spread thin during transition, so knowing what needs your immediate attention will help you cover as much ground as possible. A new business usually needs entrepreneurial savvy more than a closing business does, so chances are good you’ll be spending more of your time in your new office than in your old one. That means you should also learn to delegate whatever work you don’t have time to do. An M&A firm, for example, can help with selling the business, and an old manager can keep the company running day-to-day while you finalize everything. Don’t hesitate to use your old team or outside help to ensure everything goes smoothly.
As someone who has already started their own company, you know firsthand how difficult and demanding a new business can be. Imagine doing all of that work while having to keep an old business running until you can unload it. If you plan to transition between businesses, then you’re in for a busy few months. There’s just no avoiding this kind of work. But you can make your life a bit easier if you approach the transition in the right way. Keep your two businesses separate, make sure all of your obligations are met, and don’t be afraid to ask for help.
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About Deborah Sweeney
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.