Growing your Business
As the NFL Draft approaches many teams will examine future prospects in an attempt to add value and talent to their organizations. The days of a first round draft pick getting four years to learn their position is an extinct luxury. Any player drafted this year will have to exceed expectations this year or their selection will be considered a bust.
There is a striking parallel of the NFL yearly draft and predicting the best time to expand your business. If you’re overly conservative in your expansion strategy then you will miss the opportunities to add needed revenue to your bottom-line. If you expand too quickly, then you run the risk over strangling your existing entity.
Knowing the perfect time to expend your business can be very difficult to predict. Many of times new business owners jump at the opportunity to expend in an attempt to increase their bottom line only to find that they have over extended their resources.
There is such a thing as counterproductive growth. Counterproductive growth ties to the theory that just because you have the ability to do it, doesn’t always mean that you should. I am sure you have heard countless stories of business that competed in a race to dominate market share only to find that they are now floating long term debt.
When it comes to deciding if you should expand your business I would like you to consider two simple facts as you compile your strategy.
· Have you placed enough money in your escrow in order to deal with all of the contingencies?
· Is your decision to expand a based on a need or a want?
I am reminded of the executive decision of the late Al Copland who built a fried chicken empire called Popeye’s Fried Chicken and Biscuits. At the time of his decision to buy Church’s Fried Chicken Al Copland had position himself comfortably as one of the more dominate franchises in the country.
The opportunity presented itself to buy the then struggling Church’s Fried Chicken Franchise and this proved to be disastrous for Popeye’s. Despite the fact that Popeye’s was financially feasible at the time of the acquisition, the Church’s Fried Chicken brand on the other hand was drowning in debt. This decision to buy Church’s was the key factor in Al Copland filing for Bankruptcy and losing his majority ownership of both franchises in Bankruptcy Court.
In the example of Al Copland’s decision we can clearly see how expansion out of want leads to the destruction of a more financially stable enterprise.
There is nothing wrong with slow steady growth. Success in the early stages of your development can lead to a sense of bravado that can also lead to overly aggressive business decisions. Please keep in mind that conservative is the way especially in these uncertain economic times.
I ask that you apply what I call the 3N3 rule to all of your business decisions. The 3N3 rule will help your determine if your decision to expand is based on need, or want. Please allow yourself either three months or three years to determine if the direction that you’re contemplating is in the best of your business.
At the completion of the 3N3 rule I would like you to ask yourself if the decision is still in the best interest of your company. What you will discover at the conclusion of this principal is that time has a way magnifying or revealing elements that could affect the outcome of your future decision to expand.
The ultimate goal is to operate a profitable business no matter the size of the entity. Your plan for expansion should include a sales projection that will ad revenue to your bottom line only moments after the ribbon cutting ceremony, if not then you have just selected a first round bust.
Teresa M. Collo
