Don’t Give Up on Geographic Expansion if You Aren’t Feeling Wealthy

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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.

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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