Andrew Youderian
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March 20, 2015
Here’s what an average day for someone running multiple businesses often looks like. They wake at the crack of dawn, check emails, check sales from last night, check inventory levels, check in on orders going out that day, check back on orders being processed that day, make a cup of coffee, send a tweet, check emails again, field phone calls from their wholesaler, return phone calls from customers, check email and finally get to take a swig of coffee. And that’s just before 9 a.m.
As nuts as this may sound, it isn’t far from the truth for many entrepreneurs juggling several eCommerce businesses. Multiple business owners and podcast hosts Andrew Youderian and Bill D’Alessandro discuss how to manage your expectations when you’re running two or more businesses, why so many entrepreneurs take this difficult path and tips for making it work if you do.
There’s plenty of conflicting viewpoints about running multiple businesses. One school of thought believes it’s completely doable as long as you’re prepared for the amount of work ahead. On the flip side, some would say it’s virtually impossible to make another business successful until your original venture can practically run itself.
Either way, owning and operating a single business requires lots of juggling. When you add another venture into the mix, you’re not doubling your workload, you’re probably tripling it. Running two businesses does not mean each one will require an even split of time and energy.
Essayist Paul Graham is a venture capitalist that broached the topic of dividing your time in an essay called “The Top Idea in Your Mind”. His hypothesis is that the human brain can only handle one big long-term idea at a time, the “top idea”.
He writes: “I realized recently that what one thinks about in the shower in the morning is more important than I’d thought. I knew it was a good time to have ideas. Now I’d go further: now I’d say it’s hard to do a really good job on anything you don’t think about in the shower.”
Even those that are seasoned at running two or more businesses will eventually hear their subconscious tell them that it’s time to cut down and stop doing so much. It is far easier to build momentum when you put all your energy into one idea.
If you are already in charge of running multiple businesses, you know firsthand that the highest cost you’ll pay will be in mental task switching. Microsoft did a study about interruptions in the workday and found that 40-50% of people never went back to the task they were working on when they were interrupted. In fact, you probably won’t even get to the end of this blog post without checking out a YouTube video, looking at an email or making yourself a sandwich.
This is the ultimate entrepreneurs dilemma. You’ve got your first business off the ground and it’s going well. It’s not in a place where it can run itself, but you’ve got another business idea that is keeping you up at night. So why not just start it?
“The business you haven’t started yet that you just know will be wildly successful is always more attractive than the one you’re working on right now,” says Andrew. “But it’s almost always a bad idea to pull the trigger on starting it.”
It’s a challenge to make one single business successful. It’s even more challenging to try and keep one going while you ramp up an additional one. As tempting as starting a new business may be, you need to build systematically if you want them all to succeed.
Once you can live off your first business and have automated systems in place, then and only then should you prepare yourself for another venture.
The business you haven’t started yet that you just know will be wildly successful is always more attractive than the one you’re working on right now.”
Getting good systems in place is key when you are doubling your workload. First there’s the everyday tasks to keep the business at status quo, which should be relatively easy to systemize. But moving forward, you’re the sole person responsible for taking the business to the next level. If you’ve got two eCommerce sites up and running, you need to be able to process all those orders in one place. Automation, VAs or finely tuned standard operating procedures will help keep orders going out and money coming in.
As the owner, this step is necessary so you’re able to knock things off your growing to do list. Take a look at some of the legendary entrepreneurs like Jack Dorsey and Elon Musk. The way they grew their businesses was to hire key employees and managers that could handle strategic growth opportunities. And as Elon Musk will undoubtedly attest to, the most qualified candidates that can really help you grow your business in the right directions will also be the more expensive ones. This can be problematic for business owners that don’t have the capital to hire top-notch employees.
For more details on how to systemize your business and team with SOPs, see our post on managing a virtual team across 5 time zones.
If you’re in the position to focus on more than one business, try to direct your efforts on one thing at a time.
“Focus on one business for an extended period to get the best efficiency results,” says Andrew who recently prioritized the past six months on migrating his store from Shopify to Magento and is now spending the next six months on improving the eCommerceFuel private forums.
Your most productive days will be when you can devote yourself entirely to one business, rather than wasting an entire morning playing whack-a-mole with emails. If you can emerge yourself in one venture for a full day, week or month at a time, you’ll have better efficiency results than trying to jump back and forth between businesses.
“Focus on one business for an extended period to get the best efficiency results,” says Andrew.
Easier said than done. “For me it’s the classic entrepreneurial ADD that’s the hard part,” says Andrew. “And seeing something that you want to be doing that has potential.”
Businesses can take awhile to mature and grow up, which can also cause a bit of unrest on the part of the entrepreneur. But if you can wait it out and let one business mature first, adding another enterprise to the notch on your entrepreneur belt will be more worthwhile.
There are two solid cases that are worth pursuing if you think you’re ready to add another business to your plate, even if your first business isn’t in an optimal self-sustainable state.
Some business ventures by nature will take more time to get off the ground than others. If you’re starting a new eCommerce business in a niche that will require some time to scale up in name recognition or building market share, it might be worthwhile to just go for it.
One thing to consider is the fact that you’ll be allotting tons of your time and energy into a business that isn’t getting any revenue. “It’s going to be an attention split with your current business even though your current business is generating 99% of the revenue,” says Bill.
Keep the lack of financial rewards in mind as you put out tons of energy into a project without a ton of rewards.
There are some great opportunities for adding another business to your plate if you’ve already got proven expertise in a field or niche.
Starting a second business may make sense if many of your existing customers will carry over. For example, if you sell high-end face oils and your customer is going elsewhere to buy their hair products, it’s an excellent opportunity to leverage your knowledge about the niche and use your existing customer base.
“This might go faster compared to someone with a cold start, but that doesn’t mean it will justify the amount of time it’ll take me away from my revenue-producing business, “ says Bill.
Just make sure you know you have a real, unfair advantage so you can ramp your additional business quickly.
There are certain situations where your business might just max out.
Let’s say you’re the top seller for high-end avocado peelers where you’re number one in Google and you’ve got the business to where you only need to give it 5 hours of your time a month. This is a great time to go into something else where you’ll have more up room to grow.
“In that case, sell avocado mashers or guacamole bowls instead of kitchen knives,” says Bill.
Again, here you’ll want to utilize your current customer base to optimize your next venture where there’s much less incremental work involved than compared to starting from scratch.
On rare occasions, you may see a screaming business deal or an opportunity that appears “too good to turn down”. But if you’re still working on getting business #1 up to speed, should you take the plunge?
“This is the hardest thing for any entrepreneur. You have to learn to deny yourself. It’s not saying no to someone else – it’s saying no to yourself,” says Bill.
As much as you’ll try and rationalize the decision and talk yourself into it, here what will likely be the outcome: neither business getting the attention it deserves.
The bottom line is that once the eCommerce business bug has bit, it’s hard to take it slow and steady focusing on just one venture – especially once the ideas keep on coming. But if you focus your energy on building one business at a time that can practically run itself, you’re well on your way to being a successful multi-business guru.
Have Bill and Andrew scared you out of being a single owner running multiple businesses? Or convinced you to do it? Let us know in the comments below or by chatting with Andrew and Bill directly in our private forum.
24 Comment
I’m guilty of starting a second ecomm business before my first one was self-sustaining. At the time I was too new to e-commerce to realize the ramifications of running two unrelated businesses and I was having so much fun with my first one I thought I’d have twice as much fun with two. I don’t regret starting my second business but it is definitely a challenge to stay focused and I’m not doing some of the things I’d like to to grow my businesses because I’m having to spread my time between them. So I would agree with Andrew that it would be better to hold off on adding additional businesses until the first one is well off the ground.
Don’t minimize the effect of starting a second company will have on your existing employees. I found out the hard way when I started a second venture that took up 90% of my time for a couple years. The employees felt like I left them out on an island to fend for themselves; no longer did they have a leader, no longer did “their” company have a direction. They were jealous and envious they could not work on the “new, shiny toy”.
It ultimately caused my #2 and best employee to leave. Luckily he came back a year and a half later, but only once I became focused again and he could feel secure that I was working on our future, not just my future.
BIG BIG lesson. I have since shut down the second company and to be honest, I’m much happier having a singular focus. It’s not as sexy as telling people you are a multiple business owner… the next Richard Branson, but for me, the rewards are much greater.
Really great point on how taking on too much can affect the whole staff, not just the owner. Thanks Josh!
Before starting business #2 there are a couple thing I would always look at first.
1. Your supply chain: if your not mfg direct when your a giant in a space do that first
2. Customer acquisition: so often I see exlusivly ecommerce businesses you can aquire customers offline that have never googled your product.
3. Retail distobution your the biggest ipad charger with an alarm clock and pen. Why not make a play at best buy?
Usually it’s better to dig deeper for water than to start another hole.
Love that phrase Nick – “it’s better to dig deeper for water than start another hole”. Nice, and I agree.
Good quote Nick, so true.
I love this: Don’t Start Business #2 Before You Can Live Off Business #1
If you don’t think B1 will ever get to the point that you can live off of it…
>> First look at the other players in your space. Bet they’re doing something you aren’t. Do it too.
>> Still not there? Maybe that’s as big as it gets. Automate it as much as you can – if it isn’t pulling a living wage (I use 2500/month take home as my benchmark) then try all you can to reduce how much of your time it takes.
My main biz pays all the bills+ and I spend about 4 hours per day on it. I am in the process of starting an entirely new business now, and I ma amazed at how much time it takes. Partly I think becasue it is just so much more complex now than it used to be.
Dave, if you don’t mind me asking what niche are you thinking of entering. I have a hundred plus list of product niches and out of all them I decided to go with cut throat razors and men’s grooming.
My first business is still just going. However sales have been a lot slower than I anticipated and it’s not getting the traction I want it to. So I’m going through a process of redesigning the website, still a lot of work to do before that one goes live 🙂 I just wonder will I ever be able to live off the income it generates, just sounds a like dream to me at this stage.
Oh goodness, multiple business syndrome over here!
Ha! What’s your current count, Toby?
LLC’s? 3.
And 3 other main projects. Oh and 20+ in the works.
Haha
Great Post Andrew and very well written. I think in order to be able to run 2 businesses, (ecommerce sites) systems and processes are really key to achieve success. What do you think about perhaps partnering up with someone else? maybe that would mean splitting profits 50/50 but considering your partner is actually motivated to work, and owns hald the business, couldn’t that make it easier to start a second business without much fear of work-overload? or would it not be worth it since you would have to split monthly income and eventually final sale if thing went that route.
Mitesh – I am entering jewelry accessories and also back pain relief. I already have manufacturers signed up, and am selling (in a small way) into those markets already. I always land suppliers first thing. If you can’t get quality product with good margins, why bother?
Tony – for every partnership you show me that is going well, I can show you 100 horror stories. Someone once said always keep all of your equity and I think that’s right. People and situations change. I can always eliminate anyone from my life/business with zero cost at my whim. (Except ex-wives – you can get rid of them too, but not at no cost.)
Great post! Hits us right where we’re at.
We have had Biz #1 for about 7 years and it’s about as automated as it can be. It pays the bills when we give it at least 3 hours a day. There is a certain level that can’t be automated and we’re unwilling to bring in on-site staff at this point. Been there, tired of that.
Biz #2 I spent all of last year on, and it’s related to Biz #1. It’s basically private labeling what we sell in Biz #1. It’s languishing bc I burned out on it. This blog post is a real eye opener on what we may have done right and wrong with that model.
Biz #3 is taking all our time now. It is related to both #1 and #2 in some ways, but I think I have a MUCH deeper well I can dig into for #2. But these holes I started in #3 are already profitable, and can be automated with just another month at it. But my motivation may not have been anything more than avoidance of #2.
Before starting a new business, I always ask myself ONE SINGLE important question.
Will this shiny object distract me from working on all the other stuff I need to get done with my existing businesses?
If the answer is YES, then I start that business.
Now, please excuse me because I just had another great business idea….
It’s nice to get into the head of a serial entrepreneur! You are definitely an idea guy, Lars – but one that makes them a success too!
Great article, the temptation is always there but you need to stay focused.
Definitely agree, after having tried two-at-a-time.
I think another way to talk about switching costs is “good enough-osis”. Even if you do return to interrupted tasks to finish them, you won’t allow yourself that freedom to push the envelope a little bit more in that direction. You’ll stop as soon as what you’ve done is “good enough.” Over time I think “good enough” creeps up on you. Someone else *is* pushing the envelope, and eventually you’re behind the times.
Awesome post. Handling multiple businesses is not hard if you know how to manage them. If you want to your business to be successful, you have got to have an incredible team to do that. Work with A Graders. This is the only way of making your business extremely successful.
Love this post –I can really relate. I’ve started dozens of ideas. I’ve promised myself I am not starting anything for an entire year in 2015. It’s the end of March and my mind is already drifting. I have no idea why I want to complicate my life so much? My mind swirls around a realm of possibilities.
Guilty as charged. Andrew, Bill- Thanks for addressing this thoughtfully.
My experience is about as negative as could be. But, as Andrew has set such a great precedent of transparency with eCommerce Fuel, I’ll go as deep as I can comfortably go in the realm of a comment.
My endeavor had me generating at peak, ~xx,xxx month (A comfortable living )… I was able to get to this revenue number in about 6-7 months of time online. I’d been steadfast focused and things were rocking. I automated a number of the systems and was getting to a point where I felt comfortable adding to the mix. The workload afforded more time, so I bit on the “new opportunity”.
Then the bottom fell out for site number 1. My margins were getting hit pretty hard, my eCommerce platform provider was going to be shutting down, and my Google Merchant Center (G.M.C.) integration crashed. Amidst the new business launch with investments already made, I had to get my G.M.C. integration fixed, plan a platform migration, and figure out how I was going to protect my margins.
I was able to get margins stabilized and sales on a nice recovery via manual integration to G.M.C., so on to the migration. I had about 200 products online ranging from $10 – $5000 and my average sale floated between $200 and $350.
Unfortunately, the migration was the killer. While I did my best to manage 301 redirects, notify all of the customers, etc… the SEO hit was almost instant. As it turned out, the 301 redirects put in place were not properly integrated (this one is on me as I didn’t properly test that they were working) and as such… all that work was gone. Roughly 60% of my business was organic and I was just starting to see repeat business. Even with good traffic from Google Merchant Center, conversions tanked to the extent that I couldn’t recover. Looking at reserves… I made the decision to cut losses and scrap both.
Lessons learned…
1) Focus
2) While Hindsight is 20-20, do a better job of evaluating platforms. Had I launched on the platform I migrated to, business “would” be doing just fine.
3) Closely watch your niche. Make sure you’re doing the right things to attract and keep customers.
For the record, the initial platform was MagentoGo, the second was Volusion. I continue to work with Volusion and Shopify… Will NEVER use Magento for anything ever again.
I totally agree about being overzealous about multiple projects. And when it comes to the “migration part”, however dependent on your market, sometimes there is only so much growth at an “organic level” you can do. (And I’m not talking about just SEO, but even brand/marketshare)
I tried going up against the “Big A” on something using a Custom Built platform that cost me hundreds of thousands of dollars because I did all the research necessary regarding the platform and had seen that “custom” was the way to go.
However the wake-up moment was, that I could only go so far without “big money” behind it, and would rather not hand over my hard work and money to investors. So rather, just set it on auto-pilot and focus on other ventures.
So sometimes, “letting go” is important, without having to kill it totally. That’s the nice thing about the online space as opposed to physical retail, is that you can keep something afloat in the “operational status” without having to shut it down entirely.
As for my experience with Magento, it’s actually very robust and developed for enterprise (We actually develop for it), but that’s obviously much different than the “Magento Go”… so yes…., the root planting is definitely important.
Very useful info. Focus is definitely the key. Also if you just do a little each day (only has to be one small task) then you will get there eventually!