Due to a lack of sales, X company has opened and closed a number of offices. If expansion isn't their next course of action, what is?
A company I recently starting selling services for is interested in expansion of offices in various cities and acquisition of lower performing staffing companies. Yet, they seem to open, then close offices due to a lack of follow through, sales, etc. How does a business owner know when they can expand or what their next step is? Aren't there other things needed to consider first?
It is not good to expand. It might be fraud action or aim less movement to accumulate, money,clients,misguiding to bankers,etc. . No financer will come like this.
It is good plan for MLM marketing only.Thanks
Thank you to all who answered this question. Your insight is of value to me and although I am not in a position at present, I would hope that the working relationship could evolve into a meeting of the minds or a think tank, in which I would propose many of your thoughts, suggestions and recommendations.
Business contraction is not necessarily a bad thing. Have seen many companies expand beyond their means - operationally, logistically and financially - due to lack of proper due diligence. When expanded into other cities was there a marketing plan, a demographics plan, etc., in place. Did anyone go and visit these sites to ascertain the worthiness of expansion into these markets? Homework was not sufficiently done.
They need to make sure they have developed a strategy and do their market research in advance. I have seen companies expand but that they are busy with other priorities. They also need to look at do they want to increase services with current clients or within their current markets as cost to open a new market even if it involved M&A there will be costs in regards to personnel, marketing etc. They need to set strategic priorities and make sure the office expansion is included so that they dedicate enough resources to it being successful
Julie, there is not enough information to give you a useful answer but what you did share suggests the company lacks focus, is in need of some operational reorganization, a plan, a strategy and a direction.
To open then close then reopen is not a good indicator of a management team that understands its market and more importantly, it's target: hence lack of sales.
Most likely you are not in position to suggest alternatives to them, but if you are, then depending on their size they need the caliber of a firm that can conduct an analysis, develop with them a plan of action that is steeped in implementation, follow through and, some automation.
That's based on what you describe. Of course there are additional criteria inherent in the firm that a turnaround specialist can uncover and work with the management team to overcome but it will take investments involving time, resources and a clearly defined objective.
Hope this is useful.
Julie like the others I do not have sufficient facts to offer more than a cursory bit of guidance. It seems to me that they are exhibiting the "shiny penny" syndrome. If it shines, pick it up and... typically this sort of behavior is indicative of a business owner (and team) that is 1) insecure, 2) immature or 3) uncertain about their own core values and intent. Let me ask you this, do you feel comfortable there? If not I suggest you follow your instinct and move on. I wish you all the best and if I can be of any assistance do not hesitate to reach out.
If this is the same client you referenced in your other post, I can tell you that the problem is him.
Micromanaging is bad at a single location and inhibits productivity, but on a larger scale with multiple locations it will doom the company to failure.
If you really want to help this client, you need to sit down with him and explain that a good system with good people is what he needs to expand his business. And he has to LET GO, and let his employees work for him.
This does not mean a laissez faire approach, where he just takes what comes, there needs to be a system of checks and balances, and accountability in place that allows managers to manage their particular business units yet still be accountable for the results.
You will need to have good reporting and performance metrics in place to measure the success of the individual managers and they should have regular meetings with the owner, but he must allow the to do their jobs.
I would suggest you look at whether or not the sales process is an effective one. By knowing you have a sales process that works and generates the revenues targeted in a area, then that sales process should be replicated in new areas that have a similar customer profile for those that are successful. A strategy of trying to increase company revenues by opening new locations without a sound sales strategy is a house of card and is seldom successful. Here is a guideline for an effective sales process: http://www.collaborationhq.com/blogposts/how-do-i-close-more-sales Best of luck.
The trick is to only buy companies that already trade with your specific target market. They do not necessarily need to be trading in the same commodity however. Therefore an electrical contractor might target a failing mechanical & air-con company with a similar customer profile and expand their own services in other locations to include M&A-C while at the same time boosing the sales of the purchased company with a new stream of Electrical. I also recommend they hire a suitably qualified business coach with excperience in this area (and not a consultant - as the coach will ask insightful qustions based on experience, and will provide helpful models/examples for the owner to consider, whereas a consultant must provide advice and rarely has all the amnswers) - but then I would say that wouldn't I! Seriously - this is a tricky one that needs some serious skills.
It seems to be a strategy without the means to carry it out. For instance, if the idea is to penetrate a market by acquisition of lower-performing companies, they might be able acquire them for a good price, but do not seem to have the wherewithal to transform these acquisition targets into high performers, making the model unsustainable. This is ultimately very damaging and distracting to the core business, not to mention the lives that are being disrupted.
Thus, expansion just to get bigger is often a bad idea. The reason is that you are expending resource to broaden your reach when the 'product' may not be good enough. Attending to improving the quality of the product, the management model of opening and operating new offices, the research as to what communities need the services, the ability to develop a turn-around culture, are a few of the things they might want to consider, before depleting all of their resources and good will on failed efforts.