10 Ways to Grow Your Biz
Looking for a way to kick your biz up a notch? Here are 10 practical methods to super-size your startup.
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When you first started your business, you probably did a lot ofresearch. You may have sought help from advisors; you may havegotten information from books, magazines and other readilyavailable sources. You invested a lot--in terms of money, time andsweat equity--to get your business off the ground. So...nowwhat?
For those of you who have survived startup and built successfulbusinesses, you may be wondering how to take the next step and growyour business beyond its current status. There are numerouspossibilities, 10 of which we'll outline here. Choosing theproper one (or ones) for your business will depend on the type ofbusiness you own, your available resources, and how much money,time and sweat equity you're willing to invest all over again.If you're ready to grow, we're ready to help.
1. Open another location. This might not be your bestchoice for business expansion, but it's listed first herebecause that's what often comes to mind first for so manyentrepreneurs considering expansion. "Physical expansionisn't always the best growth answer without careful research,planning and number-planning," says small-business speaker,writer and consultant Frances McGuckin, who offers the following tips foranyone considering another location:
- Make sure you're maintaining a consistent bottom-lineprofit and that you've shown steady growth over the past fewyears.
- Look at the trends, both economic and consumer, for indicationson your company's staying power.
- Make sure your administrative systems and management team areextraordinary--you'll need them to get a new location up andrunning.
- Prepare a complete business plan for a new location.
- Determine where and how you'll obtain financing.
- Choose your location based on what's best for yourbusiness, not your wallet.
2. Offer your business as a franchise or businessopportunity. Bette Fetter, founder and owner of YoungRembrandts, an Elgin, Illinois-based drawing program forchildren, waited 10 years to begin franchising her concept in2001--but for Fetter and her husband, Bill, the timing was perfect.Raising four young children and keeping the business local wasenough for the couple until their children grew older and theydecided it was time to expand nationally.
"We chose franchising as the vehicle for expansion becausewe wanted an operating system that would allow ownership on thepart of the staff operating Young Rembrandts locations in marketsoutside our home territory," says Bette. "When peoplehave a vested interest in their work, they enjoy it more, bringmore to the table and are more successful overall. Franchising is aperfect system to accomplish those goals."
Streamlining their internal systems and marketing in nearbystates helped the couple bring in their first few franchisees. Withseven units and some time under their belt, they then signed onwith two national franchise broker firms. Now with 30 franchiseesnationwide, they're staying true to their vision of steadygrowth. "Before we began franchising, we were teaching 2,500children in the Chicago market," says Bette. "Today weteach more than 9,000 children nationwide, and that number willcontinue to grow dramatically as we grow our franchisesystem."
Bette advises networking within the franchise community--becomea member of the International Franchise Association and find a goodfranchise attorney as well as a mentor who's been through thefranchise process. "You need to be open to growing andexpanding your vision," Bette says, "but at the sametime, be a strong leader who knows how to keep the key vision infocus at all times."
3. License your product. This can be an effective,low-cost growth medium, particularly if you have a service productor branded product, notes Larry Bennett, director of the LarryFriedman International Center for Entrepreneurship at Johnson & WalesUniversity in Providence, Rhode Island. "You can receiveupfront monies and royalties from the continued sales or use ofyour software, name brand, etc.--if it's successful," hesays. Licensing also minimizes your risk and is low cost incomparison to the price of starting your own company to produce andsell your brand or product.
To find a licensing partner, start by researching companies thatprovide products or services similar to yours. "[But] beforeyou set up a meeting or contact any company, find a competentattorney who specializes in intellectual property rights,"advises Bennett. "This is the best way to minimize the risk oflosing control of your service or product."
4. Form an alliance. Aligning yourself with a similartype of business can be a powerful way to expand quickly. Lastspring, Jim Labadie purchased a CD seminar set from a fellowfitness professional, Ryan Lee, on how to make and sell fitnessinformation products. It was a move that proved lucrative forLabadie, who at the time was running an upscale personal trainingfirm he'd founded in 2001. "What I learned on [Lee's]CDs allowed me to develop my products and form alliances within theindustry," says Labadie, who now teaches business skills tofitness professionals via a series of products he created and sellson his Web site, HowToGetMoreClients.com.
Seeing that Labadie had created some well-received products ofhis own, Lee agreed to promote Labadie's product to his longcontact list of personal trainers. "That resulted in a decentamount of sales," says Labadie--in fact, he's increasedsales 500 percent since he created and started selling the productsin 2001. "Plus, there have been other similar alliancesI've formed with other trainers and Web sites that sell myproducts for a commission."
If the thought of shelling out commissions or any of your ownmoney for the sake of an alliance makes you uncomfortable, Labadieadvises looking at the big picture: "If you want to keep allthe money to yourself, you're really shooting yourself in thefoot," says the Tampa, Florida, entrepreneur. "You needto align with other businesses that already have lists ofprospective customers. It's the fastest way tosuccess."
5. Diversify. Small-business consultant McGuckin offersseveral ideas for diversifying your product or service line:
- Sell complementary products or services
- Teach adult education or other types of classes
- Import or export yours or others' products
- Become a paid speaker or columnist
"Diversifying is an excellent growth strategy, as it allowsyou to have multiple streams of income that can often fill seasonalvoids and, of course, increase sales and profit margins," saysMcGuckin, who diversified from an accounting, tax and consultingbusiness to speaking, writing and publishing.
Diversifying was always in the works for Darien, Connecticut,entrepreneurs Rebecca Cutler and Jennifer Krane, creators of the"raising a racquet" line of maternitytenniswear, launched in 2002. "We had always planned toexpand into other 'thematic' kits, consistent with ourphilosophies of versatility, style, health and fun," saysCutler. "Once we'd begun to establish a loyal wholesalecustomer base and achieve some retail brand recognition, we thenbroadened our product base with two line extensions, 'raising aracquet golf' and 'raising a racquet yoga.'"
Rolling out the new lines last year allowed the partners'current retail outlets to carry more of their inventory. "Italso broadened our target audience and increased our presence inthe marketplace, giving us the credibility to approach much largerretailers," notes Cutler, who expects to double their 2003sales this year and further diversify the company's productlines. "As proof, we've recently been selected byBloomingdale's, A Pea in the Pod and Mimi Maternity."
6. Target other markets. Your current market is servingyou well. Are there others? You bet. "My other markets arewhat make money for me," says McGuckin. Electronic and foreignrights, entrepreneurship programs, speaking events and softwareofferings produce multiple revenue streams for McGuckin, frommultiple markets.
"If your consumer market ranges from teenagers to collegestudents, think about where these people spend most of theirtime," says McGuckin. "Could you introduce your businessto schools, clubs or colleges? You could offer discounts tospecial-interest clubs or donate part of [your profits] to schoolsand associations."
Baby boomers, elderly folks, teens, tweens...let yourimagination take you where you need to be. Then take your productto the markets that need it.
7. Win a government contract. "The best way for asmall business to grow is to have the federal government as acustomer," wrote Rep. Nydia M. Velazquez, ranking Democraticmember of the House Small Business Committee, in August 2003."The U.S. government is the largest buyer of goods andservices in the world, with total procurement dollars reachingapproximately $235 billion in 2002 alone."
Working with your local SBA and SBDC offices as well as the Service Corps of RetiredExecutives and your local, regional or state EconomicDevelopment Agency will help you determine the types of contractsavailable to you. The U.S. Chamber of Commerce and the SBA alsohave a Business Matchmaking Program designed to matchentrepreneurs with buyers. "A fair amount of patience isrequired in working to secure most government contracts," saysJohnson & Wales University's Bennett. "Requests forproposals usually require a significant amount of groundwork andresearch. If you're not prepared to take the time to fullycomply with RFP terms and conditions, you'll only be wastingyour time."
This might sound like a lot of work, but it could be worth it:"The good part about winning government contracts," saysBennett, "is that once you've jumped through the hoops andwin a bid, you're generally not subject to the level ofexternal competition of the outside marketplaces."
8. Merge with or acquire another business. In 1996, whenMark Fasciano founded FatWire, a Mineola, New York, content managementsoftware company, he certainly couldn't have predicted whatwould happen a few years later. Just as FatWire was gaining marketmomentum, the tech downturn hit hard. "We were unable togenerate the growth needed to maximize the strategic partnershipswe'd established with key industry players," Fascianosays. "During this tech 'winter,' we concentrated onsurvival and servicing our clients, while searching for anopportunity to jump-start the company's growth. That growthopportunity came last year at the expense of one of ourcompetitors."
Scooping up the bankrupt company, divine Inc., from the auctionblock was the easy part; then came the integration of the twocompanies. "The process was intense and exhausting," saysFasciano, who notes four keys to their success:
- Customer retention. "I personally spoke with 150customers within the first few weeks of consummating the deal, andI met with 45 clients around the globe in the first sixmonths," notes Fasciano. They've retained 95 percent ofthe divine Inc. customer base.
- Staff retention. Fasciano rehired the best and brightestof divine's staff.
- Melding technologies. "One of the reasons I was soconfident about this acquisition was the two product architectureswere very similar," says Fasciano. This allowed for a smoothintegration of the two technologies.
- Focus. "Maybe the biggest reason this acquisitionhas worked so well is the focus that FatWire has brought to aneglected product," says Fasciano.
FatWire's acquisition of divine in 2003 grew its customerbase from 50 to 400, and the company grew 150 percent, from $6million to $15 million. Fasciano expects no less than $25 millionin sales this year.
9. Expand globally. Not only did FatWire grow in terms ofcustomers and sales, it also experienced global growth simply as aresult of integrating the best of the divine and FatWiretechnologies. "FatWire finally has internationalreach--we've established new offices in the United Kingdom,France, Italy, Spain, Holland, Germany, China, Japan andSingapore," says Fasciano. This increased market share is whatwill allow FatWire to realize sustained growth.
But you don't need to acquire another business to expandglobally. You just need to prime your offering for an internationalmarket the way FatWire was primed following the integration of itstechnologies with divine's.
You'll also need a foreign distributor who'll carry aninventory of your product and resell it in their domestic markets.You can locate foreign distributors by scouring your city or statefor a foreign company with a U.S. representative. Trade groups,foreign chambers of commerce in the United States, and branches ofAmerican chambers of commerce in foreign countries are also goodplaces to find distributors you can work with.
10. Expand to the Internet. "Bill Gates said that bythe end of 2002, there will be only two kinds of businesses: thosewith an Internet presence, and those with no business at all,"notes SallyFalkow a Pasadena, California, Web content strategist."Perhaps this is overstating the case, but an effective Website is becoming an integral part of business today."
Landing your Web site in search engine results is key--more than80 percent of traffic comes via search engines, according toFalkow. "As there are now more than 4 billion Web pages andtraffic on the Internet doubles every 100 days, making your Website visible is vital," she says. "You need every weaponyou can get."
Design and programming are also important, but it's yourcontent that will draw a visitor into your site and get them tostay. Says Falkow, "Putting together a content strategy basedon user behavior, measuring and tracking visitor click streams, andwriting the content based on researched keywords will get youexcellent search results and meet the needs of yourvisitors."
Karen E. Spaeder is a freelance business writer living inSouthern California.