Is geographic expansion really an optional growth strategy? As soon as someone on the other side of the globe orders one of your products from your website, you have been thrust into geographic expansion, right?
Although an investment in bricks and mortar locations is not always necessary, attraction of more customers in a variety of locations requires intentionality. Some basics:
Consider your marketing. Are you conveying that you truly welcome purchases from customers based in Beijing or Shanghai if your website hasn’t been translated into Mandarin or Cantonese? Which currency are you prepared to receive? Can you handle letters of credit? Most midsized companies don’t have enough money to appeal to every country. You can start with English speaking countries. When you are ready to tailor your marketing messages to specific countries and cultures, consider using the services of companies like WELOCALIZE, Inc. To listen to my interview with their CEO, Yewell Smith, visit www.TheGrowthStrategistShow.com.
Consider your approach to sales. It makes a HUGE difference if your sales professionals clearly respect people from a variety of cultures. It pays to bring in coaches who can teach you and your employees about cultural nuances. Although my years of traveling 250,000 miles/year are behind me, I have worked with clients in 33 countries and enjoy learning about different cultures. But I feel like a neophyte compared to other globe trotters. Maybe that’s good because no one should get complacent. Before I travel to a new location, I like to read books, go online, review recent news articles, and brush up on language and the pronunciation of peoples’ names.
Consider your approach to customer service. Are you sensitive to different time zones? Have you developed strategic alliances around the globe to provide technical support and problem solving on a local basis? If you place expatriates, are you ready to handle local laws and regulations related to payroll? Check out www.Expaticore.com.
We have found that memberships in the Global Speakers Federation and the World Association of Women Entrepreneurs (FCEM) have been helpful to us. Plus we have appreciated the help provided by the US Chamber of Commerce and US Embassies around the world.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Several of our B2B clients are convinced that organic growth is THE only way to go as they expand into other locations. These companies establish research budgets to identify places with the best potential and surface people within their industry who know the target towns and want to be their employees. The corporate headquarters owns the physical assets of the branches (buildings, equipment and inventory), provides administrative services (accounting, human resources, legal), pays for the overhead, and supports marketing. Corporate headquarters also provides reasonable base salaries for the new branch managers, business plans, and incentives based on generating gross profit.
Several other B2B clients swear by geographic expansion through acquisition. Instead of trying to find completely new areas and guess at the potential, they look for underserved towns. Instead of looking for people who view themselves as employees, they look for people who have exhibited some entrepreneurial traits. Those local entrepreneurs usually have established customer bases and gained positive reputations, but hit plateaus. Having a larger corporation fund inventory, marketing, and administrative costs provides the boost the entrepreneurs need to keep growing. The entrepreneur trades some of his/her independence for the money paid for physical assets and a head start in the town. But the past few years has brought financial challenges for even the most experienced executives of privately held midsized companies. What can you do if you want to expand geographically but cannot afford to do organic growth or acquisitions?
The relationship between local and corporate leaders is at the top of the list of success factors when it comes to geographic expansion so it’s important not to waste time wondering whether the relationship will be called a joint venture, a merger, an equity deal or franchising. We have found that once the parties involved have a non disclosure/non-compete agreement signed, it helps to assign responsibilities for each line item in the financial statement…one row at a time. The discussion that flows from such a process is absolutely fascinating…and the resulting summaries of responsibilities provide sufficient information for your attorney(s) to tell you the type of deal involved.
We are currently helping a few clients with this process. With one company, their new branch in the northeast will involve a joint venture and their new branch in the southeast will involve an equity deal.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieve accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search. 2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
If you read my weekly blogs, you undoubtedly also know that I host a weekly on-line radio show called The Growth Strategist™. I’m in my seventh year hosting it and just LOVE hearing about what people have done to make growth strategies like acquisitions, franchising, market expansion, etc really work. My guests are all Presidents/CEOs of midsized companies (typically $20 -200Mil/yr) so they are all bright and experienced. Most convey enthusiasm and are articulate. We are coming up on our 300th show soon (YEAH!) plus I’ve provided strategic guidance to over 800 consulting clients over the years. The point is…by now I can hear some distinctive patterns. Some of the patterns may not be surprising. But in a way, if they are so predictable, wouldn’t you think that more executives would be addressing them by now?
For example: When I am rehearsing with the President/CEO of a family-owned business, I usually get candid responses to questions about target markets, primary customers, and key products.
Don’t get ahead of me here. Of course, I can’t start with questions about succession, exit strategies, or executive compensation. Heck…an executive doesn’t have to be running a family owned business to be reluctant to talk about all of that.
Take a step back from all of that. The answers from executives of family owned businesses seem strained when the topics of strategic alliances, joint ventures, or acquisitions come up. The implication is that internal relationship issues make negotiations with outside entities more difficult. These days, that fact would certainly turn “family owned” into a handicap because customer expectations are going up and up. The cost of trying to do everything yourself is becoming prohibitive. Plus the world is getting smaller and smaller. Today, a family must proactively address relationship issues that slow down strategic analysis or decision-making. It sure comes across in media interviews. The radio guests who attract new business opportunities as a result of appearing on my show have conveyed openness, clarity of direction, a capacity to interact with a wide range of people, and an understanding of how deals are struck.
I’ve also noticed that most of the female executives avoid directly answering questions about strategy. I repeat, my guests are all Presidents/CEOs of midsized companies. These are accomplished executives! I’ve been amazed how many times I have had to encourage (no, plead) with the female guests to share the logic behind major decisions like acquisitions, new products, or geographic expansion. Several have been reluctant to directly respond to the straight forward question about their gross revenue… even though the numbers are plastered all over press releases and resources on the Internet. And when these reluctant female executives do share their gross revenue, they provide too much explanation. It sounds almost like an apology. Some of them are running $Bil businesses! Why on earth are they apologizing to anyone?
There are undoubtedly several understandable reasons for the reticence to just talk, but frankly, my experience as a talk show host has given me new insight about why so many corporations have been reluctant to appoint successful women business owners to their corporate boards. The major search firms who are looking for board members screen shows like mine. They must be concluding that the female guests CAN’T think strategically or CAN’T keep up with a high level discussion. That’s very sad.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com
You probably know a few family owned businesses that are headquartered in the northern half of the United States that have a second office in Florida or Arizona. If your company has viable prospects and/or customers in Florida or Arizona, the second location pays off in two ways. Real business growth can be accomplished plus the second office can help the founder of the business spend winter months in a warmer climate, ease into retirement, and deduct at least some of the costs associated with the second location.
But, recently, I was brought in to help a 4 location family owned business with its strategic thinking and implementation planning. During a speech, they had heard me say that “one secret to achieving accelerated growth with sustained profitability™ is to reverse the phrase.” So, they were not surprised when I started our discussion with questions about what drives their profitability.
It didn’t take long to discover what has been draining their profitability. The four locations!
The Colorado location was selected because one son enjoys skiing. The Florida location was selected because the father enjoys golf. The Manhattan location fed the daughter’s Broadway show and retail therapy habit. The youngest son enjoyed surfing, so you probably have already guessed that their fourth location is in California. Hey…it could have been Hawaii!
Not to be harsh…but let’s ask the honest question about the real purpose of this family business. Apparently, the business serves as a mechanism to fund/support preferred lifestyles for members of the immediate family. But once that self serving goal has been met, can the business ever really grow? It wasn’t surprising to learn that profitability and limited cash flow were chronic recurring problems for them. Imagine how de-motivating this pattern would be for their employees. I wondered if this family actually believed that their customers hadn’t picked up on their real motives.
It would take a little while to add more customer-centric thinking to this family owned business, but it is possible.
It is one thing to make sure your family business rewards the hard work of relatives who increase the value of the enterprise on a daily basis. It’s another to make business decisions with little consideration of customers and employees.
Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com
Even with all of the information available on line, physical presence and being accessible still matter for most service firms. So you’ve concluded that your service firm should expand and become a regional entity with multiple offices. Should you invest in executive talent for your headquarters and send your sales-oriented employees out into the field to attract new regional accounts? Should you leave your headquarters alone and recruit/hire branch managers who would then hire their own teams? Should you consider equity deals or franchising to attract more entrepreneurial leaders for the new offices? Should you strike a series of strategic alliances deals with complementary companies that already have visibility in your desired expansion area(s)? Or should you acquire competitors?
If you got tired just reading that paragraph, slow down and DO NOT start exploring which types of deals will be involved. There are great resources available to help you with the structure and logistics of various deals, but they only pay off once you are centered.
You probably need a bit more market research about the region. What is the size of that market…REALLY? Who are your best prospects? Where do they live? What do they read, listen to, and join? Whose advice do they take? Which firms are they currently utilizing? What is the difference between the results your firm achieves? Do you know for sure that the region NEEDS what you have to offer? What is your window of opportunity? How quickly should your expansion be accomplished?
You may end up with a combination of organic growth, acquisitions and equity deals. The best part is…you’ll know why.
Make sure you are good at market research and analysis before you lose yourself in deal making. My 30+ years has taught me that the negotiation of deals between people who are not centered leads to indecision so the process drags on and on and on. And those are the most expensive deals.
Will Morey Sr. had a small construction business in the 1950s and took a chance to start building properties for him and not just others. He was one of the visionaries who could see that the Wildwoods (NJ) had great potential. Dozens (or is it hundreds?) of L-shaped motels with swimming pools were built back then and Wildwood became a unique destination. Hawaiian. Circus. Music. Caribbean. You name the theme. A Wildwood motel had it. The Doo-Wop Era was good to Wildwood.
Will Morey’s sons (Will Jr. and Jack) have also had vision. Like most resort areas, things changed for the Wildwoods. At one point, so many young people visited the island that safety became a concern. The casinos of Atlantic City brought increased competition for adult visitors. The attention spans of younger people shortened. Family vacations at the Jersey shore now compete against video games, iPhones, and computers. The Morey’s have had to find ways to stay ahead of trends, ensure security, and help the leaders of the 5 towns on the barrier island work together for the greater good.
Early on, the skeptics laughed at the Morey’s when they proposed ideas like huge concert events or intertwined water slides and roller coasters on the beach. Receptivity improved as the Morey’s ideas panned out, and lots of people made money when they worked together. Residents were more trusting by the time a new convention center was proposed for the Wildwoods. Inevitably, some people resented the Morey family as they became more successful. But today, when leaders of the 5 towns debate significant decisions (like the pros and cons of height limits for new condo construction), one of the first questions raised is “What do the Morey’s think?” Will Morey Jr. and his brother Jack would be the first to say that they haven’t always done everything right, but they know that they have consistently tried to keep the best interest of the entire Wildwood Island in mind.
Today, the Morey’s own and operate the 3 state-of-the-art amusement piers along the boardwalk in Wildwood, New Jersey. They also own and manage four hotels in the Wildwoods, and as developers, they built 500 townhouses to establish beautiful Sea Point Village in the Diamond Beach area of the Wildwoods.
Give it some thought. Do you have the greater good of an extended community in your mind as you consider ideas that could drive profitable growth for your business? Do you have the Morey’s patience and perseverance? Are you willing to admit when you are wrong? Are you utilizing skills to make other people look good and not just yourself?
Log on to www.business.voiceamerica.com or www.TheGrowthStrategist.com to listen to my June 29, 2010 interview with Will Morey Jr.
My father is now in his late 80s and has been fully retired for several years now, but he is physically active and mentally alert. He’s an avid fan of the Washington Redskins so the “mentally alert” part might be questionable (just kidding).
So one question is should he try to learn how to surf the Internet, send/receive email, have a texting function on his cell phone, and/or be part of Skype video phone calls? Most of the time, he feels like the window of opportunity for him to learn how to use a computer “has passed him by, it’s too late for him to take all of that on, and it’s just not worth the effort.” Is he right? His grandchildren (and children) would LOVE to be able to interact with him more often without having to spend so much time and money traveling long distances to visit him. He’s convinced that if people really want to be with him, they will recognize that, at this point in his life, everyone should come to him. I know some home based solo practitioners who sound like my father when it comes to social media (Twitter, Facebook, LinkedIn).
Your long term employees may feel the same way when asked to participate in strategic planning, help change the business model, relocate, or learn new skills. Even during a recession, there needs to be enough incentive (a really good reason) for people to face the unknown, learn new skills, and pick up speed. There’s a great deal of comfort involved with knowing what you are doing. Who likes to feel stupid or embarrassed?
When your business is engaged in a significant change, we all need to try to spell out the “what is in it for me? (WIIFM).” No news there, right? But then watch peoples’ reactions. If you think you have provided good opportunities and reward for folks to learn, grow, try, stretch….and some clearly choose to opt out…it’s time for career development discussions. No one has to be miserable. Leaving non- learners in place is a disincentive to the people who are stepping up.
Mike Lackland, the President of Storage Assets, Inc., was my guest on The Growth Strategist™ within my recent series about the impact of real estate on strategic planning. The Lackland’s continue to have profitable growth with a business model that includes several bank financed properties. They now have over two dozen locations in NJ and PA.
The Lackland’s have learned a great deal about identifying land opportunities, working with local planning boards, adding revenue to sites through cell towers and billboards, etc. And it’s particularly interesting to hear the precision of Mike’s language about how they (NOT the banks) have long been establishing their loan-to-value comfort zone.
Mike believes in continuous learning so it should be no surprise that when their company needed more precision in financial scenarios, budgets, projections, and financing. Mike brought in a part time CFO for a few years. One clear result was that Mike now thinks like a CEO AND a CFO. 99% of the companies their size would have stuck with just their Controller, paid more money to a CPA firm, not received tailored improvements, and not advanced the CEO’s financial acumen.
To listen to my full interview with Mike Lackland (first broadcast on May 26, 2009), log on to www.business.voiceamerica.com or go directly to www.TheGrowthStrategist.com.
This blog is a way for YOU to quickly benefit from my multiple complementary roles.
My life is filled with interactions with bright, ambitious, active people:
· President/CEO level across industries and continents as guests on my weekly radio show
· fellow directors on business and economic development boards
· “C Suite” consulting clients with award winning distribution companies, construction related businesses, professional service firms and/or technology driven enterprises.
· Case study participants and expert contributors to my books and articles
· Richly diverse audiences for my speeches focused on business growth
· Private investors, venture capitalists, angels, and bankers who welcome opportunities through my role as an intermediary
· A robust network of complementary resources (lawyers, accountants, speakers/trainers, consultants, coaches, researchers, and other service providers)
· And more
Therefore, my weekly blog at here and at www.TheGrowthStrategist.com is a place for me to share timely practical examples of how you can succeed in Achieving Accelerated Growth With Sustained Profitability® through:
o adapting the approaches being used by the 2% fastest growing companies to your situation
o being centered despite recessions, distractions, and other challenges
o capitalizing on opportunities to have a true competitive advantage
o executing growth strategies (specialization, geographic expansion, franchising, joint ventures)
Of course, I do not disclose proprietary information….but information in my blog entries is the real deal.
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