Originally Published Sep. 25, 2014.
Branching out geographically is a way to grow a business. But small business owners who want to expand their operations often don’t know the best ways to go about it. Duplicating current success in another market requires careful planning and execution.
BlackEnterprise.com surveyed the members of Young Entrepreneur Council, an invite-only organization comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. BE asked the collective: What is one do (or don’t) for expanding a business outside of your region (city or state)? Here’s their response:
1. Do Leverage Digital Marketing.
We do very little business in the city where we are headquartered, which means our marketing strategy is highly focused on referrals and inbound digital marketing. Rather than rushing out to hire local salespeople, focus on connecting with your target clients via online forums and industry-specific content. Then plan visits to connect in person with the connections you make via social media.
— Mary Ellen Slayter, Reputation Capital
2. Don’t Forget Your Operating Agreement(s).
Never forget, you typically need an operating agreement for each state outside of your own that you begin to expand into.
3. Do Commit to a Real Investment.
If you’re going to
expand into new regions, you need to calculate — and commit to — the real costs of this endeavor. Expansion can be an expensive investment; consider costs for business development, building a team, office space, etc. If you’re going to do it, you really need to do it, so make sure you can afford the expense.— David Ehrenberg, Early Growth Financial Services
4. Do Be Present and Ask Questions.
Simply travel and be present to get all your questions answered about expanding your business. Talking to other business owners by meeting industry people at networking events and getting insider information about that region allows you to make realistic decisions, which can save you money and time.
— Firat Parlak, Awesome
5. Don’t Expand Before Proving Your Model.
It’s critical not to expand your business before you’ve proven it works in at least two locations. The process is: (1) Find something that works. (2) Replicate it. (3) Scale it. That is, if you are a local e-commerce website, start the business in your hometown. Prove it works. Next, replicate it in another city (preferably with different demographics). If it works, it’s time to scale it quickly!
— Kristopher Jones, ReferLocal.com
6. Do Find the Right Person/Partner, Not Just the Right Place.
Make sure that you align yourself with business partners who fully embrace your passion and mission. It’s vital to choose people first, geography second.
— Kuba Jewgieniew, Realty ONE Group
7. Do Join Networking Organizations Right Away.
Assuming you have no connections or relationships in that business, go out and make them. Make sure you are not pitching yourself around to everyone, though; that’s a turnoff. Instead, ask yourself how you can provide value to every person you meet, and (genuinely) expect nothing in return. In the end, those who give more, end up getting more.
8. Do Use Your Network.
We recently launched an Influence & Co. office in New York, and one thing we did right before the launch was reach out to anyone we know who is in New York. We asked for advice on where our VP launching the office should live, where he should work out of in the short term, and who he should know. He already had a community of support when moving out there, which made the launch a lot easier.
— Kelsey Meyer, Influence & Co.
9. Do Have a Talent Strategy.
When expanding into a new market, you need a talent strategy. This includes (1) an operational understanding: local laws, regulations, tax implications, and salary data for the market; (2) a growth plan: Candidates will want to understand your plans for expansion and what it means for them; (3) a hiring strategy: a plan to determine how you’ll attract, interest, and persuade candidates to join you.
- Susan LaMotte, Exaqueo
10. Do Get to Know the Area and Its Demographic Well.
It is imperative that you get to know the area you are moving into and the consumer habits you are trying to attract. While this may seem obvious, many people forget to do that and move into the wrong areas, and market to the wrong people. Another crucial aspect is to remember that people tend to have pride in their cities, so speak to them as if you are one of them, not coming in from above.
- Samira Far, Bellacures Franchising L.L.C.
11. Do Understand the Essence of Your Brand.
You can’t just replicate bricks and mortar or color and fonts to make yourself present in a new market. Deeply understand what makes you who you are, and replicate the culture and mentality through communication, hiring, and repetition. Often test whether or not you’re consistent by asking questions which highlight strengths and weaknesses of your brand compared to your home market.
- Reid Carr, Red Door Interactive
12. Do Factor in Profitability First.
When 87AM goes into a new market, we look simply at profitability: How long will it take to get us there (under 90 days is required); and what’s the gross potential of the market for our services (minimum 15Â times multiples of servicing the market from an existing office outside of that city).
- Adam Cunningham, 87AM
13. Do Focus on Client Quality Over Quantity.
Entering a new territory is like starting a new school. No matter what your previous reputation, you have to prove yourself all over again and the fastest way to do this is by associating with the right crowd, whatever the right crowd means to you. Focusing on the quality of clients over the quantity at first helps position your brand in a new market and build the right audience by association.
– Jess Levin, Carats & Cake
14. Do Listen.
The biggest danger is assuming that what worked in one market will work the same in another. Obviously, you need to have a plan, but you also need to be flexible based on the situation you actually encounter on the ground.
- Basha Rubin, Priori Legal
15. Do Hire Locally.
DO make a local hire. Your representative on the ground must be steeped in the “climate” of that region — cultural, political, social, etc., for two reasons. They must relate to their job relative to the local environment and feel its pulse — especially with a new expansion. Also, you don’t want to couple someone’s move with a new job. Those are two life stressors at once, and therefore best to avoid!