Tony Ozanne

Too many businesses today have made it to where they are with luck! They may have started without a business plan, had limited or no structured processes and had no goal or direction in how to succeed. A lot of businesses have failed within the critical timeframe for business of the first 5 years, but many survived too, whether by simple luck, or by hard work, blood, sweat and tears and they continue serving their clients and selling their products. Businesses who make it this far often start thinking about expanding their business and taking it to the next level. But what does this mean, and how can they do it, and do it properly?

How to Expand
Expansion has several options, and it isn’t always simply adding another location. Given the options, the first step is to determine what form of business expansion you are after, and how to execute it.

Physically open a new location – This is not always the best option, but too often this is what people think of when they think expansion. This potentially has a major financial cost to your business as replication costs and new locations, fit outs, stock, staffing etc. adds up quickly.
In order to open an additional unit you need to consider many internal factors, as well has having a solid understanding of the market, trade areas, and demographics of the new area:
• Ensure your operational systems and processes are documented, tested and proven;
• Have a training plan and recruitment process for people development;
• Ensure administrative processes, payroll, ordering, supply chain etc. are all in place and operating effectively;
• Make sure your current model is financially viable, and proven before opening a second. Are you going to need financing?
• Develop a separate business plan for the new location, and ensure the new location suits the target market, traffic counts and generators as well as fitting within your overall brand image.

Franchise your business – Franchising offers the potential to grow your business whilst maintaining equity, but also gives the opportunity for others to own and operate their own business. Franchise operated businesses traditionally outperform equity businesses given the increased motivation of ownership.
Franchising in itself is not a simple process, but there are resources available to facilitate the process and make it as easy as possible. Franchise advisors and consultants can help with the ‘systemising’ of the operation and developing the regulatory documents, brokers can help with the sales and expansion, and the Franchise Council of Australia (or your countries equivilent) has tools, resources and guidance to complete the process in a compliant manner.

Diversify your offering – Rather than going down the path of adding units, franchising or global domination you can simply sell more to your current client base, or find new target markets to sell new products or services to or add a new strategy to your overall positioning.

Options could include:

• Sell complementary products or services to your market
• Sell new ranges of products or services to grow your reach of ideal customers
• Facilitate educational classes as an offering to position yourself as an expert, and create a ‘sell from stage’ offering; be it one on one coaching, consulting etc. in your business area. i.e. financial expertise, health and wellness etc.
• Import or export your or others’ products to add to the reach or increase the range.
• Become a paid speaker or regular blogger to increase the reach to market on your knowledge topic.

By diversifying as your growth strategy, you can have multiple streams of income that can be used to counteract sales ebbs and flows, and obviously add to the overall sales and profit margins.

Develop other markets – If your current market is working for you and you have the urge to expand, look for others you can target to repeat the success. The more markets you are targeting, the more chance to increase the reach.

Focus on the basics – and do them well – Too often businesses get excited about expansion and taking over the world, but the basics just aren’t right! An early lesson I learnt from the QSR world regarding marketing was that ‘there is absolutely zero point in bringing new customers into a location if the experience is going to be crap’. Bottom line, ensure all your systems, processes, service standards, product presentation, location and image etc. are perfect before attempting any form of targeting new business or increased business.

It is much easier and less expensive to sell more to the current client base than to bring in new ones and by giving a potential new customer a negative experience as the outcome will be you have lost them forever.

If expansion is a key goal, do yourself the favour and have a ‘reality check’ of where you currently are in the basics. Get an outsiders perspective on the customer experience or the store image offered. As a business owner, how often have you looked at your business through the eyes of the customer. If in a retail outlet stand out the front and see what they see – the staff, the shelves, the floor, that damaged wall, the dirty vents in the toilet etc. All these small touch points may be turning away customers who are easy (and cheaper) to retain!

Get online – According to the 2013 Australain CENSUS, only 44.6% of small businesses had an online presence compared to 97% of big business, and more interestingly, 55.7% of businesses placed online orders but only 27.8% received or were capable of receiving an online order! On the flipside, consumers increased their online spending by 11.3% to $A14.9Bn in 2014 (NAB Online sales index, 2014) meaning that consumers continue to search and buy online, but  businesses are not always willing, nor capable to take or process the transaction, which is costing them potential business.

The days of saying, “I don’t need to be on this ‘Internet thing’, or social media is not for me” are not only antiquated, but plain stupid! People are looking for business, and looking online. They are then researching, comparing, seeking social proof, reviews or their service and any criticism. This forms a solid element of the buyer’s decision-making process. By missing this critical element of your business, there is a complete portion of your potential market that may be buying from your competitors. If you want to contribute to expansion – get online! One of the best things about working online is that everything can be tracked and measured so you instantly know al you key performance metrics and stats.

Create an alliance – Aligning yourself with a similar type of business can be a solid way to expand. By finding other business owners in the market who share your target market with their offering, or who has access to a new segment of your market can allow you to access them by utilising the resources of others.

An alliance, if created properly will have the alliance partner promoting and endorsing your product or service to the their clients which adds the 3rd party integrity to you and is done so for little cost to you. The key to an alliance is to be precise with working out the win-win equation with the partner. Are you sharing top line sales, commission per sale, profit splits or something else. If the thought of shelling out commissions or any of your own money for the sake of an alliance makes you uncomfortable, you need to get over it and look at the big picture. If you want to keep all the money to yourself, you’re potentially missing the big play – you need to align with other businesses that already have lists of prospective customers. It’s one of the fastest way to success for your business.

So if expansion has become a strategy you are considering exploring step back and take a real honest look at what expansion actually looks like, and whether there are alternates to simply adding another location. You may be suprised to find that a more effective, and potentially less expensive opportunity exists to expand and give you those added returns that you are seeking. If you are unsure which way to progress, do the smart thing and get an outsiders perspective and point of view. It can be a worthwhile investment in your business.

Good Luck!

Tony Ozanne

Business Coaching Canberra

Tony Ozanne is an experienced Business Coach and Strategic Advisor to small to medium businesses across Australia. With experience on both sides of the franchising spectrum spending 23 years with the world’s largest restaurant chain Yum Restaurants International before becoming a franchisee himself when starting his coaching practice, he has seen the good, the bad and the ugly of the industry. Using his vast experience in this sector Tony now helps business owners build systems, process and planning into their model. Contact Tony at tony@tonyozanne.com