Since the last post(s) I made...

[Kerwin]

The last time I posted on this forum I got called an idiot by a few people for a big mistake I made. I set up a second limited company, but instead of making myself the shareholder, I made my other limited company the sole shareholder. This had the knock-on effect of disqualifying me from a large percentage of startup bank accounts as the company was then classified as being under corporate ownership (which is true, but I didn't realise this was a major issue which was entirely my fault but in my defence, it is not exactly easy to find that information as it is usually buried deep in the terms and conditions). I also got called an idiot for starting a second limited company in the first place. Since then, I've built the first stages of the website for my primary company, done some market research, talked to some people who are interested in the idea and more admin things. I still don't have an accountant though which I want to remedy as soon as possible.

Anyway, I've been thinking about this, and I honestly think that having the second limited company was the best option. It is a completely separate business idea that would interact with the first limited company but would be completely separate in terms of what it does and who it sells services to. I learnt my lesson about corporate ownership, but I still think a second company would be the best vehicle for the idea.

What I am hoping for from this thread is some constructive feedback on why it is a bad idea. I know I'll have to double my expenses with accountants etc. as there are two companies instead of one, but I knew that when I made the last post as well. I want to keep them separate so that if one business fails, it doesn't bring down the other one with it which is what would happen if I just lumped everything under the banner of the main company. This second company is a bit riskier as it is primarily a cryptocurrency business (no I am not planning on starting a cryptocurrency exchange) so there is certainly that argument to be made.

Anyway. Constructive feedback is welcome. I've never claimed to know everything, and I'm sure I'll make mistakes in the future, but then everyone does that.

 

[Financial-Modeller]

...I want to keep them separate so that if one business fails, it doesn't bring down the other one...

depends which one fails!

 

[Alison Moore]

First, I need to say I know nothing about ******-currency... but in general terms, the main disadvantages are double the overheads and double the fees. Plus there might be some confusion if both companies deal with the same customers and suppliers. Also HMRC may see it as a way of avoiding paying tax (for example, if you're doing it to keep both companies under the VAT threshold.). However if both are VATable and are doing different things, I think it makes sense to keep them separate.

 

[mattk]

On top of what @Alison Moore says, your main issue will be clearly defining how costs and income are allocated across to the two companies and recording then appropriately.

For someone starting out, facing the steep learning curve in the first year of administering a business as well as doing the actual work, it seems one unnecessary headache.

 

[The Byre]

What I am hoping for from this thread is some constructive feedback on why it is a bad idea.

I have just completed a list of the 12 most usual mistakes that start-ups make, based in part on posts made on this forum and also on my experience. They range from the rather frequent 'No market', through to not reading and understanding contracts and entering partnerships without a shareholders' agreement - and so on.

Three that I feel you might be in danger of committing are (1) over structuring, (2) taking your eye off the ball by doing several things at once, and (3) insisting that everyone else is wrong and you are going to prove that they are wrong. Call that last one not listening to advice.

Anyway. Constructive feedback is welcome. I've never claimed to know everything, and I'm sure I'll make mistakes in the future, but then everyone does that.

Roughly half of all your decisions are going to be wrong. They will range from slightly wrong, though to a full-on Homer Simpson 'Doh!' event or two.

The 'Biggie' is 'No bloody market in the first place!' but not listening to what others (and customers in particular) tell you is pretty much 'up-there' in the first five or six.

When I started my first proper business back in about 49BC, on Mondays I wrote down all my mistakes for the previous week. It became a very long list pretty quickly! With time, it got shorter and shorter as I tried (not always successfully) to not repeat my mistakes.

I still make mistakes - it's all part of the game.

 

[Mark T Jones]

There are far too many unknowns for any of us to tell you what you should or shouldn’t do - however in our world, individuals with multiple businesses ring small alarm bells

Small, because sometimes there are good reasons and strong controls in place. More often however, the owner is being too smart for their own good, or simply spreading themselves too thin. There is a saying that goes ‘if you have one business you give it 100%. 2, you give each 40%, 3 you give each 20% and so on.

 

[Mr D]

The last time I posted on this forum I got called an idiot by a few people for a big mistake I made. I set up a second limited company, but instead of making myself the shareholder, I made my other limited company the sole shareholder. This had the knock-on effect of disqualifying me from a large percentage of startup bank accounts as the company was then classified as being under corporate ownership (which is true, but I didn't realise this was a major issue which was entirely my fault but in my defence, it is not exactly easy to find that information as it is usually buried deep in the terms and conditions). I also got called an idiot for starting a second limited company in the first place. Since then, I've built the first stages of the website for my primary company, done some market research, talked to some people who are interested in the idea and more admin things. I still don't have an accountant though which I want to remedy as soon as possible.

Anyway, I've been thinking about this, and I honestly think that having the second limited company was the best option. It is a completely separate business idea that would interact with the first limited company but would be completely separate in terms of what it does and who it sells services to. I learnt my lesson about corporate ownership, but I still think a second company would be the best vehicle for the idea.

What I am hoping for from this thread is some constructive feedback on why it is a bad idea. I know I'll have to double my expenses with accountants etc. as there are two companies instead of one, but I knew that when I made the last post as well. I want to keep them separate so that if one business fails, it doesn't bring down the other one with it which is what would happen if I just lumped everything under the banner of the main company. This second company is a bit riskier as it is primarily a cryptocurrency business (no I am not planning on starting a cryptocurrency exchange) so there is certainly that argument to be made.

Anyway. Constructive feedback is welcome. I've never claimed to know everything, and I'm sure I'll make mistakes in the future, but then everyone does that.

Over the past several years I have got 3 businesses running. Two were set up to be hands off, running without me having to do everything. I keep an eye on them for a couple of minutes a day or so and just head off problems before they grow.
One business takes up a lot of time - and was built to be hands on.

Balancing time spent has to be worked at. Could not run either of the two hands off businesses in the same way I do the hands on.

And problems can crop up that were never anticipated. That's when you can find yourself losing focus as you fight fires rather than progress forward.

It can be done, spreading your attention. If you have not built it into the business model you risk losing more than one business.

 

[Lucan Unlordly]

My biggest problem running two interacting but very different businesses, was that physical retail orders would need to be done during the day, and online software related enquiries - serving the voluntary sector - would nearly always come in and need to be dealt with during the evening and at weekends. Very difficult to avoid an ever changing overlap!

With hindsight I may have been better off concentrating on one side and getting to a higher level first.

 

[Kerwin]

First of all, I want to thank each and every one of you for your feedback. I'm going to make sure listening to what people are telling me is my top priority and I'll try harder to listen to feedback. It's just when you are called an idiot it tends to put you on the defensive and rather than making you listen to what you are being told you tend to just think of the person as being a bit of dick and ignore all their future posts (yes I am a sensitive person and I know that is also a problem in business).

I've stopped doing everything until I can find an accountant and a solicitor so I can get some professional advice from people who have much more detailed information on my plans. I need an accountant anyway and I need a solicitor to draw up my privacy policy and my terms of service so getting those two professionals involved now will help in the future.

But thank you all for being polite. I really appreciate all of the advice and if you have any more I'd love to hear it. I'm also actively looking for cofounders so I can spread the load a little bit and get someone elses view on my decisions. Hopefully from someone with more experience than me.