Managing Multiple Businesses

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"The businesses are complementary, but different," Huang says. "VHA [founded in 2001] was doing so well, with year-over-year growth, that I felt ready" to start ERI in 2006.

Huang was acutely aware of the need to capitalize on trends. An earlier venture into entrepreneurship, with a wireless company he founded in the late 1990s, failed partly because he was so focused on daily operations that he missed new opportunities. "I went back to Taiwan and saw an innovation that would have made us the first ones in the space, but I was managing all the existing stuff and missed the opportunity," Huang recalls.

Foreseeing the potential for revenue growth at ERI, which with 10 employees now earns more than its older sibling, Huang established it as a C-corp, which he believes may make it more attractive for eventual acquisition or investment. "VHA is an S-corp and may not have a lot of potential buyers. I'm fine with that. But ERI has a lot of potential," Huang says.

Staying within a related space—both in geography and mission—is an important key for success in multiple business ownership, Gillespie-Brown says. "Doing something related, that you know something about, and keeping them in the same building or very nearby, is crucial," he says. "Managing two very diverse companies, with different markets and a wide variation in locale, would be a major risk."

Not Too Far Away

He experienced the pains of remote management when he emigrated to the U.S. and opened a company in Silicon Valley while retaining ownership in a company in his native U.K.

"It was a 'cat's away, mice will play' situation. Most employees need close supervision, and as soon as I was remote, things went downhill," he says. "If you are trying to manage a business that you're more than a day-and-back away from, it's going to be very problematic."

Chan hasn't had that problem: Paperspring is located a few steps across an alley from Charlie Chan Printing's headquarters. "We've had wonderful cross-promotional opportunities between the two businesses and garnered new clients on both sides," he says. Having a brick-and-mortar printing shop stand behind his Internet company lends it credibility that many of his startup competitors lack, he says.

But he admits that running two companies requires a tricky balancing act: "One of the dangers is spreading yourself too thin and distracting the staff." Another danger is jealousy or fear among staff or investors, who may worry that a CEO's new darling will be distracting to the detriment of the initial venture.

"I have to be very careful about my time and make sure there's no favoritism," Chan says. "When it works well, opening the new business reinvigorates the entire company. There's a chance for upward mobility, it wakes everybody up, and they realize that the company is growing."

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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