Why so many businesses stay mom & pop? Considerations for multi-unit business expansion.

Multi-Unit Business Expansion

Technology reduces tasks in many areas of business today making it much easier for companies to expand. Growth can increase brand recognition, build value for employees and customers, create a wider range of products and services for a larger geographic area, and generate economies of scale.

However, there are still many challenges to prepare for when managing multiple locations. You will need to make sure each location is run with the same quality and consistency modeled after the strengths that made the first location a success.

Know your objective

Single-unit owners usually focus their objective on the family legacy and financial security for family members, helping the community, or personal development. When the opportunity comes along to expand, the risks and rewards are spread out over several years.

The skills required to manage multiple units is a little different.  It is necessary to learn how to manage and develop people instead of managing locations. The objective may change to economic development, building a brand, or dominating a market segment, and expansion can happen quickly.

This is a huge undertaking and you want to be prepared for anticipated challenges rather than surprised by sudden complications that derail your progress like unknown markets, aggressive competitors, and unfamiliar terrain.

What is your strategy?

Your strategy is to make your business processes easily duplicated to be more efficient as you simultaneously deal with increased customer demands.  This will take some analysis and documentation of your current methods and procedures to find out what can make them more organized and readily imitated. Reorganize current staff for new management duties and training opportunities to expand their roles and skills. This includes a partner or staff tied to the purchase of an existing business.

How will you execute your plan?

Rework your business plan by updating your financial data, marketing plan, and strategy to create an expansion implementation plan. Your business will need financial support to grow and the business plan outlines your ideas in detail so you can earn the money needed to grow the business, apply for business loans, or talk to investors. Outline the business’ history of accomplishments, the intended goals, current buildings and equipment, and employees. Develop a timeline and focus on a structure that will optimize your business value.

What might interfere with your execution?

A lack of knowledge on the demands of multi-unit business operation and the time or personnel to properly implement the plan can end in disaster. Experts can evaluate the financial details about the business using current statements showing expenses, income, and net worth and determine the costs related to the expansion and projected profits over the next year. A business value is based on either assets, market value, or earnings and also provides information for a business plan document that is easy to read and accurate. Experts help determine whether to bring in a temporary executive to keep the project focused on potentially training your staff in new technology and methods or starting a new company with new equity separate from existing cash flow instead.

Weighing the risks and rewards for growth includes drawing on the experience of a lawyer or CFO dealing with other multi-unit business owners and expansion plans.

 

Thinking about expanding your business?

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