Expanding Your Business: Opening A Second Store

What's to love about the Second Shop …

There are a lot of cool reasons to expand to the next location. First, it makes sense from a financial standpoint. You can spin off a satellite location with a team of plumbers and a field supervisor. Keep the administrative, financial and marketing functions based at the "Mother Ship" location. When you crunch the numbers, they get downright delicious with the Second Shop.

Second, the Second Shop provides life-enhancing opportunities for the ambitious, entrepreneurial people at the First Shop. Have you ever had an employee leave your shop to start a business of his own? The Second Shop can be a win-win alternative. Consider a profit sharing or stock opportunity for a successful Second Shop launch.

One more consideration … "Line extension" is a popular approach to business growth. I am not a big fan of expanding your offerings to the same customer base. For each trade, you'll need operations manuals, training center, marketing and branding strategy, financial models, etc. Whew. If you are located in an area with small population, you may be well served to diversify. However, if you have a hefty market area (200,000 population) consider the Second Shop to expand your core competency. Even as a franchisee, consider what would make more sense for your expansion … a different franchise or another location with the same franchise? With a Second Shop, you can take your established systems and replicate them. Your brightest and best team members can train, or become, the new team at the Second Shop. Easy. At least, relatively easy.

So why do so few Second Shops exist?

Here's what I can share about why very few pull it off and how to beat the odds.

The pull of the river …

There is a river of inertia in this industry. Most shops are small. I guesstimate that 80% of all shops have 3 or fewer trucks. Of that 80%, most are one person outfits. Should you put your boat in the river of this industry, that's where inertia will take you. Should you decide to grow a multi-shop company, you'll have turn your boat around and paddle up-river. Unfortunately, you'll have to bear the taunts of your fellow plumbers. They may call you a gouger or a sell out. It may be easier to go with the flow.

The success of the First Shop …

Suppose you succeed at growing the First Shop to 5-7 trucks. That would mean that you have systems and good people willing to use those systems. That requires that you delegate and manage and work on your business … instead of in your business every day. You may be enjoying your hard-earned success. You do not have to go into the office every day. You've got some money socked away. Life is pretty darn good at this point and you may just lose the fizz to tackle that Second Shop. There's nothing wrong with this scenario. You may lose interest as your current level of success eclipses anything you thought you would achieve in this lifetime. A Second Shop could get your juices flowing again. Especially when you consider the opportunities you would be creating for your wonderful, hardworking team members.

The lure of Perfection …

Author Jim Collins says, "Good is the enemy of Great." He suggests you fight being just good enough and pursue greatness. Makes sense. I would add …

"Perfect is another enemy of Great."

So often, with a really kickin '5-7 truck outfit, the lure of Perfection starts to complicate the company. Simple systems that can be easily trained and duplicated crumble under the development of even-better systems. Basic, functional financial statements become 30 page affairs with each account sliced ​​into a dozen sub-accounts. Simple Sales tracking (a check if you sold it, a zero if you did not) become multi-page spreadsheets that require a CPA and an audit before the results can be posted on the "Jumbo-tron" in the break room. If you want to expand, you have got to keep it simple. Ask ask ask these questions every time you or a team member is tempted to get fancy with your current, working systems …

"If I did not have this detail of information, what would I lose?"

"Could I easily replicate this system at a remote location?"

"What decision will I make with this new information?" If it is only interesting, but not leading to a better, faster, more profitable decision … skip it. You'll have to fight fancy every step of the way to your Second Shop.

If you want to, you could create the Second Shop. And the Third, Fourth, etc. You could apply a sound strategy that includes Business Planning, Financial Management, Marketing, Acquisition, Operating Manuals … a Customer Service and Sales-focused culture … and an undaunted determinism. Does this idea get your attention?

What do you think? Ready to expand to the Second Shop?