Are you planning for Growth in your business?
One of our Aspire clients operating at a healthy growth rate is coming to terms with the realization that sooner or later they need to establish a permanent presence in another state. New business opportunities are taking them there on a regular basis and the logistics of travel is catching up with them. Although, they are able to get some compensation for travel time and expenses, it is a fraction of the amount revenue generated when on-site with clients. Plus, constant travel just gets old.
In a recent discussion, the ownership group of the company concluded that in spite of the growth in business from this market, it would still be at least a year before they would be ready to pull the trigger and have a location there. Initially, there was a “so we can shelve that ‘til next year” exhale in the room. But I think they all quickly realized that would be a recipe for failure if they didn’t start thinking more strategically about preparing for this over the course of the next 12 months, if that was to be their goal.
Anyone who has went through the process of expanding locations whether it is across town or across the country will tell you location #2 is often the most difficult of all. It is the first time the rubber meets the road with all the systems and processes you’ve created to scale your business. There is still a lot of “You don’t know what you don’t know” during this time. There is nothing wrong with making a few mistakes along the way, but today’s business environment can be brutal and unnecessary mistakes can be costly. Social media has created a platform that can destroy years of credibility if a few negative reviews gain traction. A couple missteps with a key account or customer may take years to repair.
With that said, here are few questions to consider if growth is on your horizon…
How well have we systematized our business? If your business struggles to run without you as it is today, it is going to be a train wreck at a second location. It’s time to unload what is in your head and the heads of all your star performers and capture it on video, get it put in a manual, or both.
What will the capital requirements be? This can sneak up on you, it is easy to underestimate the cost of a physically duplicating a business. Pull yourself up out the weeds of your business and take a broad look at all the additional capital that will be required to open another location; additional vehicles, rent, business licenses, insurance, equipment, and salaries. Be conservative, the last thing you want to do is open a new location and find out your actual startup cost is 25% more than you projected.
What will our business look like with 10 locations? This really gets you thinking at a higher level about your business, not just for location #2, but a bigger picture. What does the Organizational/Accountability Structure look like? What can be centralized? What can’t? Accounting? Marketing? Phone/Communication Network? Banking options? Really addressing this question before the first shovel of dirt is turned can pay dividends in the long run.
How well have you researched the market? Depending on the business choosing a new location to “set up shop” could cost a few thousand dollars or several million. It may not be in your budget to hire an independent company to research the best geographical spot on the map for you. But, that doesn’t mean you can’t use some common sense analysis for potential business in an area. Whatever your product or service is, make a some general observations on the area your considering. Establish some criteria and see what kind of grades the proposed receives.
Are you ready to “let go”? This is often the toughest one to come to terms with. It is easy to say you’re ready to let go and totally another to actually do it. For any business to scale, the owner(s) have to be willing to let go. You won’t be able to be at two locations at the same time and sure as heck you will never be at 10 locations at one time. You have to get comfortable with the idea of letting go.
Our client’s business has a bright future and the opportunities they have in the years ahead should be exciting for them. As we move through this next year we’ll be answering the questions listed above and many more. So, when they’re ready to make the permanent move into that new part of the country, they will be doing it knowing they have put themselves in the best position to succeed, not only for themselves but their customer’s success too!
What about you? Which of these do you think is most critical? Are you planning to add a new location? If you have already opened additional locations, what is one area you underestimated in the process? On a scale of 1 -10, how well do you plan for growth?
As always, we value your comments in the space below.
Chris Steinlage Kansas City Business Coach