If you run your own business, you want to expand. Now, some of you may be yelling at your computer screen, telling me I’m wrong and that you want things to stay exactly as they are. Here’s why I disagree: expansion means something different to everyone and doesn’t have to include a bigger office or a second warehouse. If you want to get more clients, sell more product or simply see larger profits each quarter, you definitely want things to grow.
In a way, the only reason to start a business is to target expansion. Otherwise, you’re just looking to sell one item and call it quits. It’s important to disassociate expansion and 80-hour work weeks, even though the two often go hand in hand.
Think about what growing your business means to you, then try to marry that idea with your goals as an entrepreneur. Did you start a business out of a passion for the work, or because it seemed like the quickest way to make a buck? If it’s the former, putting in extra hours and opening a new location might not sound too bad. If you bought a business in hopes of retiring early, the thing your most interested in expanding is your bank account.
The following strategies manifest in different ways depending on the business. They address the overall idea of growth and how to approach it. If you read to the end and still don’t want to change a thing about your company or process, sounds like you’re in a good place. For those of you who read and think bigger might be better, I hope you get encouraged to start moving and shaking.
The idea of franchising can cause quite the accelerated heart rate. This option is very high-risk, high-reward, and going through it for the first time will have you losing sleep and fending off panic attacks.
Before you dismiss the idea, you should break down the concept and process. For many, the word franchise elicits visions of multiple storefronts, regional supervisors, dozens of managers and thousands of employees. Maybe this version of your company exists, but it’s certainly not the only way to expand.
Instead of a growth explosion, picture instead a business opportunity for another person. You’ve probably had days at the office when you wished there were two of you, and that’s essentially the model at the root of franchising: bring on another you to double the output and management oversight.
Of course, that’s still a scary proposition. For most business owners, they feel like the top of a solitary pyramid - another person in charge will either create conflict or decrease the quality of the work. Certainly, if you hire the wrong person, both of those problems might occur.
Looking through another lens, it’s easy to see why an additional party makes sense and how it can put a new twist on the franchising concept. As proficient and smart as you may be, there are probably a few areas in which you don’t excel at the same level:
● Content creation
Maybe you do all of these things exceptionally well, but you enjoy some of the tasks less than others. Perhaps your business thrives because you bookkeep like a mathematician, but your marketing ideas leave a lot to be desired. In these cases, you don’t need another you; you need another person.
If you want to follow a traditional franchise model, you can try to set up another person with another store. That might not suit your needs or meet your goals, in which case you can expand your company through an individual that brings increased ability and outreach. You can cut back on your workload, doubling the amount of time you’re able to put toward the projects your best at.
Something I’ve done in the past is incorporate professionals into my business who have expertise in different industries. Through my associates, I can branch out to work with professional athletes, medical practitioners and law firms. Wealth management allows flexibility by nature, but the people who surround me make it much easier to bridge into these disparate fields.
When you think of bringing in a partner, try not to look at the transaction too linearly. Think about the lateral moves that can grow your business while maintaining a strong foundation and leaving you with the control you want and need.
This might be the first thing you picture when considering expansion. If someone tells you they expanded their business, you likely assume they opened an additional store.
The concept scares off a lot of busy workers. If you’re slammed 12 hours a day keeping one shop open, why on earth would you be able to manage a second? This is a responsible, logical outlook, and it just might be the opposite of how you should perceive storefront #2.
Before considering this approach, you have to make sure you aren’t forcing the issue. If you don’t have the business history, the steady cash flow or the right location, a second operating facility can sink your enterprise before it even has a chance to grow. If you don’t see signs that a new building can help, don’t pursue this venture.
However, if the right pieces fall into place, there are reasons why a second location is easier to open than the first, and reasons why the effort can prove immediately beneficial.
If you own a business, you think about reducing your tax liability about 15 times every five minutes. The government is always eager to take a big slice of your pie, and you have to be diligent about protecting what’s yours.
A second location, leased or bought, will bring loads of expenses your way. While this is the exact reason why so many entrepreneurs skip expansion, it’s not a bad thing when profits are soaring and more and more of the money you earn gets eaten by tax collectors. Without putting productivity on hold or reducing revenue, you can put money back into your business, increase your overall worth, and hopefully not see too much taken directly from your pocket.
You know what’s a great way to get new customers through your doors? To literally bring them in through your new set of doors.
The old “location, location, location” adage really holds true when you’re talking about a second business location. I’m not just referring to how the new building should be somewhere accessible with lots of foot traffic, but how you have the opportunity to extend your business toward the right customers and demographic.
Depending on what you do, a visible storefront might not be important. A better option would be a suite inside an office building that houses other businesses that could use your services. You could also open a second location that’s smaller than your flagship store, using it to sell one particular product and make more people aware of your company.
The point is, you instantly become more visible when you have two locations. If you plan well and weigh the usefulness of a facility against the benefits of strategic geography, you can experience customer outreach like you never dreamed of.
If you’re afraid of opening store #2 because of how difficult it was to open store #1, remind yourself that this isn’t the same process. You already have an existing, self-sustaining business. You may be opening a new branch, but you aren’t irrevocably transforming what you have.
If the process doesn’t go perfectly, you can terminate your lease or sell the property. It’s important you don’t become overleveraged so that you’re able to recover, but a failed expansion doesn’t have to spell doom for your business.
You also have the opportunity to try new things with a second location. Depending on the specifics of the new building, you could offer new services and interactive experiences that will attract new business and impress existing customers. It’s not uncommon for companies to open a second store, find customers like that location better than the first, and then transfer all operations to the newer building.
Again, you do not have to open a second location in order to expand a business, and you shouldn’t even consider opening an additional branch if you’re still ironing out major wrinkles with the first location. However, you might fear expansion for the wrong reasons, so consider the pros and cons carefully before dismissing the idea altogether.
When you bring in another member of the team to help expand, or you allow someone to franchise your business, you assume lots of responsibility and risk. When you partner your company with another business that has a proven track record, you get to share the new responsibilities and additional workload, all while tapping into another company’s clientele.
You’ve probably heard the term mergers and acquisitions, and this type of alliance has the potential to lead in that direction. However, many partnerships allow business owners to maintain control while expanding outreach, services and manpower.
You can approach forming a partnership in a couple different ways. Some businesses will try to find a very similar enterprise and simply join forces. This is kind of like opening a second location, but all you have to do sign some paperwork and snap your fingers. Should you find an ally that comes with virtually the same business model, there will likely be a lot of focus on rebranding and nitpicking over protocol and procedure; choosing the right partner takes finesse and patience, so be careful before diving in.
A second option is to link arms with a company providing a completely different service in the same field. Think of cookbooks in kitchen appliance stores, personal trainers working out of an established gym, a production company creating exclusive video content for a Fortune 500 company. You can expand your business through a permanent partnership or a short-term contract, depending on what you do and who you do it with.
The biggest benefit of coordinating separate companies is almost always the client sharing. You will have plenty of promotion without spending a dime as your new partner hypes the exciting business venture while you do the same for them. You should see an immediate boost in leads, and if you’ve allied with the right business, you won’t see those numbers drop.
If you feel like you have opportunity to offer another business owner, think about what you might get in return. When you can arrange a partnership that delivers for everyone involved, you can grow your business in directions you never would have thought of on your own.
For the right person running the right company, there’s no better way to expand. Take whatever money you would otherwise use on marketing or a second location or hiring someone to share the workload and put those dollars into an established business with existing customers and an owner who’s looking to wrap their career up. Just like that, your business is bigger and diversified.
Purchasing companies is a common tactic for investors, and the approach is just the same for business owners. You buy a company and keep it running, creating an additional stream of revenue. However, if you already own a company, even if it’s not the same type of business, you add a branch that can benefit your original operation in a variety of ways.
Much like opening a second location, taking on a second business might sound like an immense amount of work. Having bought a business not too long ago, I can testify that you will be busy throughout the process. At the same time, you get the same promotional benefits that come with expanding to a new building, and you greatly diversify your company. If the business you buy doesn’t blend well with your existing model, you still own two businesses; if you are able to form a useful alliance and maintain ownership over both branches, you’ve made a very savvy move.
As seen with corporations big and small, businesses love to buy up and absorb the competition. It’s a different beast when you’re running a smaller enterprise, but it’s still a tactic you might have success with. If you have the capital and a competitor is deciding to close its doors, you might pick up more of their clientele through an acquisition than you would just hoping those customers choose to make you their new provider.
Until you acquire an existing business, it might seem like a crazy endeavor. Once you’ve reaped the rewards, it becomes clear why so many entrepreneurs love this strategy.
In some ways, this is both the easiest and the diciest of the expansion models. Going after new clients - whether it’s a specific segment of society or providing a new service for a certain type of customer - can be as simple as launching a product or an ad campaign. Companies do that all the time and it doesn’t sound like a big deal.
What makes this option tricky is the inherent branding risk when you switch things up. If your success with a certain age group hinges on product X, and you start pushing product Y too heavily, you run the risk of alienating loyal customers. If your attempt at growth forces you to neglect your main revenue sources, you’ll probably take a giant step backward.
The trick to avoiding this mishap is finding a way to get new markets interested in what you’ve already got. Instead of asking yourself, “what do the teenagers like these days?”, you should ask yourself if there’s any reason teenagers should buy what you’re selling.
Attracting new markets usually comes down to strategic marketing, and this is where you have to take extra precautions. Hiring any old marketing firm to go after a certain group doesn’t guarantee they’ll honor the branding and integrity of your company. If you don’t feel comfortable managing your own marketing, you should find an agent you trust to do it on your behalf. There are few guarantees when it comes to successful advertising and even fewer when you put a stranger in charge.
If you pull the right strings while staying true to yourself and your company’s mission, there’s a strong chance new customers will identify with that. That’s why going through the people you already serve who are already happy with what you provide often makes for the best outreach; lean on your success stories and see if you can make them resonate with new people who haven’t heard of your company. If you land on something that sticks, you’ll be able to tap a whole new corner of the market.
You can grow your business. If you love what you do and want to see continued success, you can find a version of expansion that doesn’t turn your world upside down and, hopefully, doesn’t cause you unnecessary stress. You don’t have to follow a specific model for growth, you just have to do what makes sense for your company and goals.
Before you push back on an opportunity to increase your enterprise’s capacity, try to pinpoint the cause of your hesitation. It might be that you actually love the idea of expanding your business and you just need to find the right way to go about it. Keep these strategies in mind and I’m certain you’ll find a smart, comfortable way to move forward.