Expansion can be a challenge for small businesses
By Joyce M. Rosenberg
Associated Press
NEW YORK — John Anthony's travel company has offices that are quite far-flung — including locations in Dallas, at Notre Dame University in Indiana and the University of North Carolina. Tracy and John Panase's four Cookies By Design stores are situated much closer together, in and around Philadelphia.
Associated Press
Although they're dealing with varying distances and different kinds of companies, these small-business owners have achieved the same goal — managing multiple operations when they can only be in one place at one time.
Small-business owner Tracy Panase inspects a batch of special-run cookies at her Cookies by Design shop in Blue Bell, Pa. She and her husband run several branches of their store in Philadelphia and neighboring suburbs and are successfully managing the multiple operations.
The idea of expanding a business beyond its first store, branch or office can be daunting for a new company owner, especially with the economy still uncertain. But sometimes an opportunity comes along that's too good to pass up — another business is up for sale, or franchise locations become available.
For Anthony, who started his company in Dallas, the decision to expand came as he won contracts with big schools including Notre Dame and the University of North Carolina. There was no choice but to open distant offices in order to carry out the business.
But he has some advice for owners thinking of opening up a second location: Don't do it too quickly. "Get it right first and then do it," he said.
For many owners, expansion is the natural result of their companies' growth.
Alex Hiam, an author who also runs a management training consultancy under his own name, said, "I sat for 10 years or 12 years at a desk in Amherst, Mass., and realized I was missing a lot of opportunities. I've grown by opening up a second office in San Francisco."
Making far-flung locations work requires several critical factors, starting with managers you can rely on to run an operation for you.
Panase said she doesn't worry about the stores and their 45 employees when she or her husband aren't there.
She said of the manager of the couple's oldest store, "she's been there a long time, and is very trustworthy." And, she said of another store manager, "we moved her over because we had a great deal of confidence in her ability."
In picking a manager for a new location, owners need to decide whether to transfer a worker from an existing site, or hire someone new. Panase said she and her husband decided to keep their veteran employees at the older locations because those stores were already in such capable hands. That also allowed the Panases to focus more of their own attention on the newer stores.
Once you've got good people in place, "communication, like any other relationship in life, becomes absolutely critical," said Anthony, CEO of Anthony Travel Inc. And not just with employees — Anthony surveys customers at his company's different sites to get anecdotal evidence of how the offices are faring.
Business owners contemplating other locations will, if they're not already working with a personal computer and the Internet (or at the very least, fax machines), need to invest in technology. Without these aids, it can be very difficult to keep track of revenue, costs, inventory, etc.
James A. Schriner, a partner at the accounting firm Deloitte & Touche in New York, said owners considering another location should look at the distance between their home base and the other site or sites, and determine if managing from afar will work. Too long a distance, or too difficult a journey can make it harder to run the company.
On the other hand, he said, "if they're too close, you'll start cannibalizing your own labor market."
Logistical problems might also come up if you want to expand in another state — for example, there might be regulatory requirements you'll need to comply with.
These are some of the practical considerations. There are also more subtle, emotional aspects to expanding a business to another site.
Hiam noted that many entrepreneurs used to doing everything themselves need to change the way they approach their companies if they're going to succeed with more than one location.
