Avi Goldstein Discusses the Right Time to Open a Second Business
Establishing a profitable business is an accomplishment — but knowing how (and when) to scale up that company and create diversified revenue streams is the real trick. The ability, ingenuity, and courage to do so successfully is what separates the entrepreneur from the small business owner.
As the owner of both HotelRooms.com and Luxury Connections, Avi Goldstein long ago achieved entrepreneurial status. As the internet became a household word in the late 1990s, most saw it as a means to chat with strangers. With his keen eye and innovative spirit, Goldstein saw the opportunity to build something special.
In June of 2000, Goldstein purchased the domain name HotelRooms.com, built a website around it, and launched a business that would revolutionize the travel industry. These practical steps, viewed as commonplace today, garnered him the reputation as a visionary in his sector. Avi Goldstein saw the future and had the confidence to dive right in.
Fast forward ten years. With that one venture under his belt and having attained exponential growth, Avi Goldstein saw another opening in the travel marketplace. He launched Luxury Connections, a strategically under-the-radar travel site for VIPs that caters to luxury flight, hotel and villa accommodations.
Today, Avi Goldstein is highly regarded in the industry, by travelers of all stripes, as well as brokers, airlines, hotels, and resorts. His entrepreneurial credentials speak for themselves. Although primarily known for his gregarious personality, warmth, attention to detail, and relationship building, veterans in the field often speak of his uncanny foresight and savvy business sense.
Avi Goldstein graciously agreed to outline a few of the ways successful business ventures can determine if it is time to expand:
Consider Your Reason for Expanding
According to Avi Goldstein, the reasoning and philosophy behind one’s desire to expand is just as critical as the timing. Unfortunately, some overly eager business owners see themselves as big time entrepreneurs and jump the gun. As Avi Goldstein states: “I am all for dreaming big, but making the decision to launch head-first into additional ventures requires significant self-reflection. A thorough analysis of one’s motivation is critical. Growth for growth’s sake is a frivolous pursuit.”
Before moving forward in any way, it is essential to “interrogate” your own inspiration. Never open a second business to boost your ego, relieve your boredom, rush your original business plan, or fund your current venture. Instead, second businesses should be built on a foundation of ability and opportunity. The ability must be evaluated in terms of will, time, and resources. And the opportunity in terms of pinpointing an untapped market combined with a unique angle on production.
Ultimately, your motivation behind expanding will often prove an effective indicator determining whether your second venture will flop or succeed. If your inspiration emanated from solid market research and industry insight, as well as a personal commitment to double your efforts, it is far more likely you will excel with an expansion.
Analyze Your Capital
Once a first business establishes itself and finds its groove, many entrepreneurs make the mistake of believing a second venture will automatically follow suit. According to Avi Goldstein, the opposite is often true. Like the first business, opening the second requires significant funding. If your intention is to have the first business fund the second, don’t move ahead without a reliable backup plan. You do not want to sacrifice the first business to start a second.
Before moving forward with a business expansion, consider the many costs and whether your capital can realistically cover them. A second lease, doubled inventory, and a larger payroll are all elements to factor in. If you cannot cover basic startup costs without jeopardizing your existing business, it is best to find alternative ways to grow your company and increase profits.
When it comes to buying a home or retail location, it is true that location is everything. While businesses that operate largely online are immune from these concerns, an analysis of “geographic” specifics is important when opening a second business.
Once you have overcome the issue of capital detailed above, the next step is finding a suitable “location” in the market. In most cases, this requires considerable research of platforms and online spaces in order to execute effectively.
Additionally, if your new business would share clientele with your first company, you will want to position your new business in a way that avoids overwhelming or stressing customer loyalty and the dedication of your contacts. A worst-case scenario would be relying on current clients to support the new venture and that backfiring. It is possible to sabotage your new venture by oversaturation. In other words, you do not want to become your own competition and lose clients to yourself or completely.
Assess Your Management Capacity
If you are a hands-on entrepreneur who thrives on managing every detail of your current business, you are likely going to struggle when it comes to launching your second. You cannot be in two places at once. In order to grow, a business owner has to admit defeat in the battle to remain an omnipresent employer and manager. He or she will need to – to some extent – let go. To commit to delegating duties as needed. This is not for everyone, so it must be considered in advance. Can you hire trusted, skilled team members who are dedicated to realizing your vision? This is as much an objective question as a subjective one.
Aside from this dilemma, Avi Goldstein highlights the importance of assessing your current team, especially in regard to management potential. You might be up to the challenge, but are they? It is always worth it to take the time to cultivate a workforce of skilled, reliable employees that you can depend on to get the job done. However, when opening a second business, if your current team is expected to step up, include them in the process. Gauge their willingness and commitment to the growth. You will not only learn about your team and employees, you will generate enthusiasm and energy as you all take the next big step together.
Create a Plan to Diversify
If your second business operates in a similar industry as your first, as Avi Goldstein’s does, you will need to ensure your new venture is diversified just enough to reach a new customer base. This is similar to what we discussed earlier. After all, the ultimate goal is to expand your current pool of clients in order to create growth, not just split your existing customers between two separate companies.
The key, according to Goldstein, is making sure that your new business offers a novel product to a distinct target audience. In Goldstein’s case, the second business grew directly from the first in that Luxury Connections served a niche lacking in HotelRooms.com. HotelRooms.com offered consumers a range of hotels around the world. Its strengths were value, price comparisons, and breadth of options. Luxury Connections filled a void because Goldstein saw that there was a client-base not necessarily looking for the best deal, but rather the best experience. Its selling points were luxury, exclusivity, and concierge services, while at the same time offering convenience and competitive rates.
Although the two co-exist in the same sector, they ultimately provide varying services to distinct clientele. After confirming his motivations and operating within these parameters, Avi Goldstein was able to successfully expand his portfolio, reaching new audiences and creating more growth.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes