If you’ve been running your business for several years, chances are your growth is slowing down or stagnating. So far you have achieved a lot – you’ve built a strong team, a loyal customer base, and learned many hard lessons along the way. But now you’re looking for a new wave of excitement that also helps grow your company further.

“What’s next?”

Let us introduce you to spin-offs – a strategic growth opportunity that’s helping more companies innovate, attract new capital, and stay agile in an increasingly competitive market.

In this post, we’ll explain what spin-offs are, how they benefit small and medium-sized businesses (SMBs), common mistakes to avoid, and how to explore this path effectively.

What Is a Spin-off?

A spin-off happens when a company takes a business unit, project, or internal innovation and turns it into an independent company. This new entity gets its own leadership, its own resources, and often its own identity, while still staying loosely connected to the parent company (through shared equity, partnerships, or mutual interests).

Big corporations like eBay (spun off PayPal) or IBM (spun off Kyndryl) have used this model to great success. But this isn’t just for the giants—more SMBs are exploring how to create a business spin-off as a tool to grow without distracting from their core business.

Why Is Now the Right Time for Founders to Explore Spin-offs?

Founders often think that growth means “more of the same”- more customers, more sales, more features. But real innovation sometimes requires building something new.

A spin-off could be your way to explore:

• A product idea that doesn’t quite fit under your current brand
• A tech solution your team built internally that could be a product on its own
• A market you want to test without disrupting your core business

If you’re searching for growth strategies for small and medium businesses, spin-offs might just be the answer.

Why Spin-offs Are a Game-Changer for SMBs

For founders looking to scale beyond their current operations, spin-offs can unlock a whole new set of opportunities. Here’s why they work:

1. Stay Focused Without Limiting Growth

Instead of stretching your current team thin chasing a new idea, a spin-off gives you a dedicated unit (with the right talent and resources) to pursue that opportunity.

2. Faster Execution, Fewer Bottlenecks

A smaller, independent team can move faster. No legacy systems, no layers of approval—just focused execution.

3. Lower the Risk

Got a bold idea? Spinning it off into its own entity can protect your main business from financial or reputational risks if it doesn’t pan out.

4. Attract Fresh Capital

Investors love clarity. When they can invest in a focused, high-growth venture (instead of trying to understand how it fits into a broader company), they’re more likely to jump in.

5. Build Specialized Teams

Spin-offs for SMBs allow you to create laser-focused teams with expertise tailored to the new business. That means better products, happier customers, and a stronger path to scale.

Common Mistakes to Avoid

While spin-offs can be incredibly rewarding, they’re not a plug-and-play solution. Here are some traps to avoid:

1. No Clear Strategy
   Don’t spin off just for the sake of it. Make sure there’s a strong business case—and that the new entity aligns with your broader vision.
2. Underestimating Costs
   Creating a new business means legal paperwork, tech setup, hiring, and more. Budget accordingly or risk a rough takeoff.
3. Duplicated Resources
   Be smart about shared services. Without coordination, you might end up doubling expenses instead of cutting costs.
4. Team & Culture Confusion
   Your people need clarity. Keep communication transparent to avoid confusion, demotivation, or cultural drift between the parent and the spin-off.
5. Weak Investor Story
   If you’re planning to raise money for the spin-off, don’t leave investor relations until the last minute. Build a compelling story early.

Ready to Learn More? Join Us at the Venture Builders Meetup

Curious how to do a spin-off?

Join us at the upcoming Venture Builders Meetup, where we’ll dive deep into the spin-off playbook – how to evaluate opportunities, structure the new entity, attract the right talent and investors, and avoid the common pitfalls.

You’ll hear from founders who’ve done it, investors who back it, and experts who can help you get started.

>> Reserve your Seat – Seats are limited, so grab yours early.

Let’s Talk About Your Growth Strategy

Wondering whether a spin-off makes sense for your business?

Schedule a call with our consultants, and we’ll help you explore the best growth strategies for small and medium businesses – including whether launching a new venture is the right next move.

>> Book Free Consultations