Why You May Not Want to Start a New Business

As entrepreneurs, it's tempting to embrace change—often, the very nature of business demands it. But as Shannon wisely pointed out in the latest episode of "Keep What You Earn," starting a fresh venture comes with considerations that go beyond the excitement of a new brand or the thrill of untapped markets. Before leaping into the process of birthing a new business entity, let's take a step back and examine the implications it holds for your business's legacy and financial health.

The Allure of a Fresh Start

Change is enticing. It’s human to crave new beginnings, whether it’s rebranding or exploring burgeoning industries. However, as Shannon mentions, opting to create a new business entity instead of pivoting within an existing one can bring unintended consequences that many don’t anticipate.

The Age Factor

One of the most significant invisible assets of your business is its age. A mature business presents a chronicle of stability, resilience, and experience. It's a testament to your long-standing presence in the market. Lenders and investors don't merely look at the current state of affairs—they scrutinize the journey your business has traversed.

Lending Limbo

Consider a scenario: You've run a successful enterprise for eight years, and now you're pivoting. You decide to start anew, but two years down this new line, you seek a loan. The banks, however, see a toddler struggling to walk, not the experienced marathon runner that is your entrepreneurial spirit behind a new name. They demand proof that your infant business has the legs to stand on its own, which is more than just a hassle—it could be the barrier between you and essential growth capital.

In the delicate dance with banks and financial institutions, history matters. The legacy of your older business cannot be transferred by mere association—it’s tied to the entity itself.

DBAs: A Simple Solution

Instead of jumping through the legal and financial hoops of establishing a new business, consider the beauty of a DBA—Doing Business As. This allows your existing company to operate under a new name, a façade that opens up new opportunities without disowning its heritage. Through DBAs, as Shannon points out, you're not performing an invasive operation; you're instead putting a new jacket on a body that already has a strong backbone.

Preserving Equity and Value

When you retain your original business structure, you also preserve its equity and value. As time progresses, your business not only grows in size but also in worth. And should the day come when you decide to sell or exit, a business that showcases a rich history will inherently hold more value than one that's just left the starting blocks. It's about building upon a foundation that's already recognized for its substance rather than constructing a new one from scratch.

Taking The Thoughtful Next Step

Diving head-first into starting a new enterprise often feels like the answer to an entrepreneur's yearning for expansion. But as Shannon suggests, it's imperative to consult professionals and consider the multifaceted impact of such decisions. A "reboot" of your business can seem exciting, but your future self might not thank you for the extra complexities when it comes to things like financing and business valuation.

In Closing

Shifting business identities doesn't require a leap into the unknown. You can, and perhaps should, anchor change in the legacy of what you’ve already built. Next time the wind of change beckons, remember to assess the breadth of your sails. Consider how you can harness the winds without cutting ties with the very entity that brought you to the open seas.

As Shannon reminds us, your business's story is worth continuing—not just for the narrative but for the financial and reputational capital it brings. "Keep What You Earn" is about being shrewd with your assets, and sometimes the most prudent move is to build on the hard-won reputation that your existing business already owns.

What you'll hear in this episode:

04:40 Consider business continuity when starting new ventures.
07:17 Add value, understand long term impacts, pivot.

If you like this episode, check out:

The Power of Diverse Mastermind Groups for Comprehensive Growth

How to Break Free from the Corporate 9 to 5

Best Ways to Negotiate Business Deals

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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.