How To Grow A Franchise Location Into A Chain
1. Know thyself. Colorado Springs, Colorado, strategy consultant Tom DeCotiis, who has advised a number of chain operations, says that before anything else, entrepreneurs must be clear about their motivations for going multiunit. “They may think they have to grow to make money,” he says. “That’s probably not the best reason.” Rather than financial motivation, look for motivations such as the desire to share opportunities with others or to express a personal vision.
2. Know when to grow. If you’re drawing a lot of customers from outside your normal market area, consider adding a unit, says Jerome Katz, entrepreneurship professor at St. Louis University. Ask credit card companies for your customers’ ZIP codes. Then think about a place where a lot of people who resemble your customers live and shop. Says Katz, “That becomes an area for natural expansion.”
3. Go slow. Rather than starting with a nationwide rollout, take baby steps, Katz says. Add a second shift in your first location, and an e-commerce operation if it suits your business, before expanding to another location. Adding a shift lets you try out new managers and get comfortable with handing over some control. E-commerce forces you to develop systems similar to the ones you’ll need for a second location. Another option is opening a temporary or seasonal store in a mall kiosk, for example, to give another location a low-cost try.
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