How to Make Your Business Grow
June 8, 2017
Many business owners who have been in operations for a few years feel the urge to grow.
No matter what type of business you have, there are basic principles when it comes to growing. And one formula might not work for everyone but there are many options and strategies out there.
The natural option for many businesses that sell directly to the public is to open a second location.
Companies that operate in the retail industry such as restaurants or clothing stores have the option to open a second location and it might make sense under certain circumstances.
When a business owner wants to open a second location there are specific things that need to be in place before making such a big commitment.
Does the business have enough capital to buy new equipment, supplies, inventory and to make tenant improvements? And, most importantly, does it have enough money to survive the first year of operations? These are all questions that should be answered before taking this risk.
Staff is also an important element. It is crucial to have people that you trust and can work with. They need to understand your working philosophy and values before you even decide to expand. And keep in mind that you will not be able to be present at both places at the same time so you need good managers and people you can delegate responsibilities to.
You should also do your homework. Does the new location mirror your current region demographics? If you are established in an upper middle class community and want to move to a low to moderate income community does that make sense? Or if your products and services are sold primarily to a certain ethnic group, such as Hispanics, and you are opening a second location in a region where there are hardly any Hispanics, will your concept survive? Many Mexican restaurants make this mistake.
Other businesses in non-retail industries sometimes do not need to open a second location. But they may be in a position to grow by expanding their territory. Manufacturers and wholesale companies fall in this arena.
A few years ago I had a candy manufacturing and wholesale company in San Diego. We began to expand outside of San Diego by offering our product to other wholesale companies and retail stores in Southern California. I began to approach cash and carry places in Los Angeles and wholesale candy companies in Orange and Riverside counties.
But if I wanted to expand outside of Southern California it would’ve taken me a lot more than just showing up to these companies and presenting my product.
If I wanted to sell in Northern California or even Arizona or Nevada I would’ve had to hire more salespeople to cover these areas and figure out ways to store and transport the product to these places. And maybe expand my existing warehouse to produce more product which will means more capital.
Another way to grow a company is by diversifying operations. Many large conglomerates in the world do this all the time by expanding their product line or by purchasing other businesses or competitors in the industry and expanding their products and territories in the world.
Even entertainers like popular singers do this. There are some performers who may already have a good career as singers, but in an effort to grow they come up with their own line of clothing or even start acting in movies. Some actors even start to produce their own films or start their own business like selling baby products to take advantage of their fame.
Diversifying is a way to offer something different to your existing clientele. Banks do it all the time by purchasing other companies, like insurance or investment companies, in an effort to consolidate operations and offer more products and services to their existing base.
A good way to grow a company also is by eliminating your intermediaries.
If you sell produce in a wholesale capacity why not start to grow your own product. I have known many produce companies that buy land in Mexico and start to grow product. I also had a recycling client a couple of years ago who wanted to open up his own processing plant and process his own product.
Whichever method you utilize to grow your company you always have to do the numbers first to see if it makes sense. Make sure you have the staff to support you and the capital needed to grow. And always do your homework. Do your research and make sure the probabilities of success are in your favor.