It takes a village not only to raise a child, but also sometimes to boost a business.
Twenty-six years ago, when Dany Holdstein started Dany Holdstein Two Worlds Dance & Fitness, his 2,000-square-foot space in Greenvale included a dance/workout studio and a very small gym. "There were no real professional dance companies in Long Island at the time," says Holdstein, who studied with Martha Graham.
The last decade brought changes. "I was the only business of this type in the neighborhood," Holdstein says. "Now there's a competitor on every other corner."
Two Worlds had grown to a 10,000-square-foot facility offering dance and fitness training for kids and adults. But a year ago, as Holdstein eyed his increasing competition, he contemplated his next move to stay ahead of the pack. He realized he was sitting on a treasure -- an enormous complex -- and came up with the idea to create a fitness center.
TENANTS ADD VALUE
Over the last year, he has taken on four tenants, including Hot Ryde indoor cycling, which relocated from Roslyn, a Zumba entrepreneur, an Irish dance school and a trainer who works with professional athletes. The trainer, Gail Bannister-Munn, whose clients include New York Jets and Islanders players, joined the hub because she needed her own private studio as well as access to a full-service gym.
Next will be Dave Concannon's Gravity in Motion, an athletic performance training center for adults, children and teens. Work is being completed on an indoor zip line and rock climbing wall.
"It makes sense to have all this at one place; it's all body awareness," Holdstein says.
Having a master of each trade in one spot is a great way to expand without a lot of risk, experts say. "Typically, when companies try to be a one-stop shop on their own, they fail because you can't be an expert in everything," says George Athan, chief strategist for MindStorm Strategic Consulting in Manhattan.
If Holdstein had started his own spin classes, he might not have attracted as many customers as the established Hot Ryde. "He doesn't have to build from scratch, and there is power in bringing their following into the hub -- all tenants benefit," Athan says.
There aren't any formal partnership agreements. The businesses are tenants who pay rent, bringing additional income for Holdstein. He estimates the change has boosted his revenues by 40 percent, to $850,000 annually.
"The idea is for everyone to work with each other, to not compete," says Holdstein, who will add one more tenant, perhaps something targeted to seniors during the quiet early afternoons. "Beyond that, we'll need a new location," he says, jokingly.
It's been a little more than a year, and so far the synergy is working, he says. Typically in July and August, the 600 kids who take dance classes during the school year are at camp or away, but this year, Hot Ryde parents and customers of other tenants brought their children and filled the void.
For all the pluses, "clustering" is not without challenges. If businesses become competitive, some synergistic benefits could be lost. "This threat can be avoided . . . if Dany includes 'scope of business' and noncompete clauses in the lease agreements," says Rick Bisio, a FranChoice business consultant in Bradenton Beach, Florida.
There can be no inferior or isolated businesses in the mix, adds Paul Schwada, director of Locomotive Solutions, a Chicago consulting company. "A lame business weakens the whole thing," he says. "He doesn't have control of every business, which is a trade-off to the risk mitigation. He can't fix a bad business."
And an "isolationist" business defeats the purpose. Ideally, companies cross-market and co-promote. "Think of the family with a mom interested in a kickboxing class, the daughter in dance and the other daughter who wants to rock climb. They're more likely to frequent the businesses if they cross-promote program specials and discounts," Schwada says.
When picking partners, think of the three C's: "capable, complementary, compatible," says Glenn Hoetker, a professor at the W.P. Carey School of Business at Arizona State University, in Tempe.
Holdstein is optimistic. "This kind of thing works for Dunkin' Donuts and Baskin-Robbins," he says. "It's about joining forces."