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?
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Dec 28, 2014
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
Jul 17, 2014
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.
Jul 17, 2014
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.
Jul 16, 2014
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
Jul 15, 2014
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.
Jul 15, 2014
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.
Jul 15, 2014
Julie
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.
Jul 15, 2014
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.
Jul 15, 2014
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.
Jul 15, 2014
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.
Jul 15, 2014
To growth is not only about open more offices or purchase potential competitors. In order to establish a financial profitability during the growth you need to analyze what´s your best option on the market, and where the other part of the customers buy from, then develop an analytical plan to attack that area, even if is not the same strategy your competitors are using to capture their share of the market. You need to be creative in how to aproach new customers and very smart on how to spend the money to bring them aboard. Specially in the era of the social networks you should analyze wearer to invest, maybe first on growing your marketing strategy on the social networks, modify your marketing strategy to even create a new brand of the same product, etc.. What I can see that is falling on that company is strategy. They can potentially growth with out the need of new offices (will need to see the case in specific, but for the few information you shared, it seems the case).
Jul 15, 2014
Develop tools and methodologies to optimize, monitor and control their sales OR Re-profile their existing customers to develop new products and services.
Jul 15, 2014
I would like to tell you that , Number of sales is based on Number of clients where in , Now a days most of the companies only working to get new clients rather than providing potential services which will generate sales .
First thing to be consider only what kind of clients you want to target , where you will get that and what kind of services or products you can serve them . if you have this so nobody can harm your business . i do understand that it will take time but trust me in beginning that will make you pissed off but later when this will work you will be fly like everything ...
Potential , Trustworthy and retain customer should be your target rather than target on new client to sell .
Jul 15, 2014
Without knowing the the type of industry in which X company is competing for business all you can get is generalizations for answers. Essentially, ti increase profits you either have to increase sales or reduce costs. Of course, there are limits to cost reduction, so the real issue is how to increase sales. Again, by not knowing the industry it's not possible to be specific. Good luck.
//Leonard
Jul 15, 2014
That's still their wishes but I think thta's more and more through an international sales team or independent sales agents so these people develop themselves at their own costs.
Jul 15, 2014
One other thought to bear in mind is the degree to which your client's business is shifting/could shift online. This changes the need for office presence, which becomes more of a brand-building and post-sale customer service on the ground than a sales outlet. Not sure if this applies in this case, but a lot of services are now moving away from face-to-face experience to self-serve online.
Jul 15, 2014
I agree with Carrie, you have to know your clients needs and then see what your company brings extra in comparing with the competition. Just opening and closing doesn't help the trust in your company.
Jul 14, 2014
I agree with this comments,how ever you need concult to give tou full info about the contry market and other companies in that country,ofcourse with good market reseaech
Jul 14, 2014
It seems as though they are operating in a very opportunistic way. Th problem is in the opening and closing they will be creating a negative impression in the community, with customers and with those employees they take and and then fire. They need to do some basic work on marketing and demand - if there isn't the demand then it makes no sense to expand like this. It always seems to come down to basics.