How to build your Business
When you first started your business, you
probably did a lot of research. You may have
sought help from advisors; you may have
gotten information from books, magazines
and other readily available sources. You
invested a lot-in terms of money, time and
sweat equity-to get your business off the
ground. So...now what?
For those of you who have survived startup
and built successful businesses, you may be
wondering how to take the next step and
grow your business beyond its current status.
There are numerous possibilities, 10 of which
we'll outline here. Choosing the proper one
(or ones) for your business will depend on
the type of business you own, your available
resources, and how much money, time and
sweat equity you're willing to invest all over
again. If you're ready to grow, we're ready to
1. Open another location. This might not be
your best choice for business expansion, but
it's listed first here because that's what often
comes to mind first for so many
entrepreneurs considering expansion.
"Physical expansion isn't always the best
growth answer without careful research,
planning and number-planning," says small-
business speaker, writer and consultant
Frances McGuckin , who offers the following
tips for anyone considering another location:
Make sure you're maintaining a consistent
bottom-line profit and that you've shown
steady growth over the past few years.
Look at the trends, both economic and
consumer, for indications on your company's
Make sure your administrative systems and
management team are extraordinary-you'll
need them to get a new location up and
Preparea complete business plan for a new
Determine where and how you'll obtain
financing. Choose your location based on what's best
for your business, not your wallet.
2. Offer your business as a franchise or
business opportunity. Bette Fetter, founder
and owner of Young Rembrandts , an Elgin,
Illinois-based drawing program for children,
waited 10 years to begin franchising her
concept in 2001-but for Fetter and her
husband, Bill, the timing was perfect. Raising
four young children and keeping the business
local was enough for the couple until their
children grew older and they decided it was
time to expand nationally.
"We chose franchising as the vehicle for
expansion because we wanted an operating
system that would allow ownership on the
part of the staff operating Young Rembrandts
locations in markets outside our home
territory," says Bette. "When people have a
vested interest in their work, they enjoy it
more, bring more to the table and are more
successful overall. Franchising is a perfect
system to accomplish those goals."
Streamlining their internal systems and
marketing in nearby states helped the couple
bring in their first few franchisees. With
seven units and some time under their belt,
they then signed on with two national
franchise broker firms. Now with 30
franchisees nationwide, they're staying true
to their vision of steady growth. "Before we
began franchising, we were teaching 2,500
children in the Chicago market," says Bette.
"Today we teach more than 9,000 children
nationwide, and that number will continue to
grow dramatically as we grow our franchise
Bette advises networking within the franchise
community-become a member of the
International Franchise Association and find a
good franchise attorney as well as a mentor
who's been through the franchise process.
"You need to be open to growing and
expanding your vision," Bette says, "but at
the same time, be a strong leader who knows
how to keep the key vision in focus at all
3. License your product. This can be an
effective, low-cost growth medium,
particularly if you have a service product or
branded product, notes Larry Bennett,
director of the Larry Friedman International
Center for Entrepreneurship at Johnson &
Wales University in Providence, Rhode
Island. "You can receive upfront monies and
royalties from the continued sales or use of
your software, name brand, etc.-if it's
successful," he says. Licensing also minimizes
your risk and is low cost in comparison to the
price of starting your own company to
produce and sell your brand or product.
To find a licensing partner, start by
researching companies that provide products
or services similar to yours. "[But] before
you set up a meeting or contact any company,
find a competent attorney who specializes in
intellectual property rights," advises Bennett.
"This is the best way to minimize the risk of
losing control of your service or product."
4. Form an alliance. Aligning yourself with
a similar type of business can be a powerful
way to expand quickly. Last spring, Jim
Labadie purchased a CD seminar set from a
fellow fitness professional, Ryan Lee, on how
to make and sell fitness information
products. It was a move that proved lucrative
for Labadie, who at the time was running an
upscale personal training firm he'd founded
in 2001. "What I learned on [Lee's] CDs
allowed me to develop my products and form
alliances within the industry," says Labadie,
who now teaches business skills to fitness
professionals via a series of products he
created and sells on his Web site,
Seeing that Labadie had created some well-
received products of his own, Lee agreed to
promote Labadie's product to his long
contact list of personal trainers. "That
resulted in a decent amount of sales," says
Labadie-in fact, he's increased sales 500
percent since he created and started selling
the products in 2001. "Plus, there have been
other similar alliances I've formed with other
trainers and Web sites that sell my products
for a commission."
If the thought of shelling out commissions or
any of your own money for the sake of an
alliance makes you uncomfortable, Labadie
advises looking at the big picture: "If you
want to keep all the money to yourself,
you're really shooting yourself in the foot,"
says the Tampa, Florida, entrepreneur. "You
need to align with other businesses that
already have lists of prospective customers.
It's the fastest way to success."
5. Diversify. Small-business consultant
McGuckin offers several ideas for
diversifying your product or service line:
Sell complementary products or services
Teach adult education or other types of
Import or export yours or others' products
Become a paid speaker or columnist
"Diversifying is an excellent growth strategy,
as it allows you to have multiple streams of
income that can often fill seasonal voids and,
of course, increase sales and profit margins,"
says McGuckin, who diversified from an
accounting, tax and consulting business to
speaking, writing and publishing.
Diversifying was always in the works for
Darien, Connecticut, entrepreneurs Rebecca
Cutler and Jennifer Krane, creators of the
"raising a racquet" line of maternity
tenniswear , launched in 2002. "We had
always planned to expand into other
'thematic' kits, consistent with our
philosophies of versatility, style, health and
fun," says Cutler. "Once we'd begun to
establish a loyal wholesale customer base and
achieve some retail brand recognition, we
then broadened our product base with two
line extensions, 'raising a racquet golf' and
'raising a racquet yoga.'"
Rolling out the new lines last year allowed
the partners' current retail outlets to carry
more of their inventory. "It also broadened
our target audience and increased our
presence in the marketplace, giving us the
credibility to approach much larger retailers,"
notes Cutler, who expects to double their
2003 sales this year and further diversify the
company's product lines. "As proof, we've
recently been selected by Bloomingdale's, A
Pea in the Pod and Mimi Maternity."
6. Target other markets. Your current
market is serving you well. Are there others?
You bet. "My other markets are what make
money for me," says McGuckin. Electronic
and foreign rights, entrepreneurship
programs, speaking events and software
offerings produce multiple revenue streams
for McGuckin, from multiple markets.
"If your consumer market ranges from
teenagers to college students, think about
where these people spend most of their
time," says McGuckin. "Could you introduce
your business to schools, clubs or colleges?
You could offer discounts to special-interest
clubs or donate part of [your profits] to
schools and associations."
Baby boomers, elderly folks, teens,
tweens...let your imagination take you where
you need to be. Then take your product to
the markets that need it.
7. Win a government contract. "The best
way for a small business to grow is to have
the federal government as a customer," wrote
Rep. Nydia M. Velazquez, ranking Democratic
member of the House Small Business
Committee, in August 2003. (Click here to
read that article.) "The U.S. government is
the largest buyer of goods and services in the
world, with total procurement dollars
reaching approximately $235 billion in 2002
Working with your local SBA and SBDC
offices as well as the Service Corps of Retired
Executives and your local, regional or state
Economic Development Agency will help you
determine the types of contracts available to
you. The U.S. Chamber of Commerce and the
SBA also have a a Business Matchmaking
Program designed to match entrepreneurs
with buyers. "A fair amount of patience is
required in working to secure most
government contracts," says Johnson & Wales
University's Bennett. "Requests for proposals
usually require a significant amount of
groundwork and research. If you're not
prepared to take the time to fully comply
with RFP terms and conditions, you'll only be
wasting your time."
This might sound like a lot of work, but it
could be worth it: "The good part about
winning government contracts," says Bennett,
"is that once you've jumped through the
hoops and win a bid, you're generally not
subject to the level of external competition of
the outside marketplaces."
8. Merge with or acquire another business.
In 1996, when Mark Fasciano founded
FatWire , a Mineola, New York, content
management software company, he certainly
couldn't have predicted what would happen a
few years later. Just as FatWire was gaining
market momentum, the tech downturn hit
hard. "We were unable to generate the
growth needed to maximize the strategic
partnerships we'd established with key
industry players," Fasciano says. "During this
tech 'winter,' we concentrated on survival
and servicing our clients, while searching for
an opportunity to jump-start the company's
growth. That growth opportunity came last
year at the expense of one of our
Scooping up the bankrupt company, divine
Inc., from the auction block was the easy
part; then came the integration of the two
companies. "The process was intense and
exhausting," says Fasciano, who notes four
keys to their success:
Customer retention. "I personally spoke
with 150 customers within the first few
weeks of consummating the deal, and I met
with 45 clients around the globe in the first
six months," notes Fasciano. They've retained
95 percent of the divine Inc. customer base.
Staff retention. Fasciano rehired the best
and brightest of divine's staff.
Melding technologies. "One of the reasons I
was so confident about this acquisition was
the two product architectures were very
similar," says Fasciano. This allowed for a
smooth integration of the two technologies.
Focus. "Maybe the biggest reason this
acquisition has worked so well is the focus
that FatWire has brought to a neglected
product," says Fasciano.
FatWire's acquisition of divine in 2003 grew
its customer base from 50 to 400, and the
company grew 150 percent, from $6 million
to $15 million. Fasciano expects no less than
$25 million in sales this year.
9. Expand globally. Not only did FatWire
grow in terms of customers and sales, it also
experienced global growth simply as a result
of integrating the best of the divine and
FatWire technologies. "FatWire finally has
international reach-we've established new
offices in the United Kingdom, France, Italy,
Spain, Holland, Germany, China, Japan and
Singapore," says Fasciano. This increased
market share is what will allow FatWire to
realize sustained growth.
But you don't need to acquire another
business to expand globally. You just need to
prime your offering for an international
market the way FatWire was primed
following the integration of its technologies
You'll also need a foreign distributor who'll
carry an inventory of your product and resell
it in their domestic markets. You can locate
foreign distributors by scouring your city or
state for a foreign company with a U.S.
representative. Trade groups, foreign
chambers of commerce in the United States,
and branches of American chambers of
commerce in foreign countries are also good
places to find distributors you can work with.
10. Expand to the Internet. "Bill Gates said
that by the end of 2002, there will be only two
kinds of businesses: those with an Internet
presence, and those with no business at all,"
notes Sally Falkow a Pasadena, California,
Web content strategist. "Perhaps this is
overstating the case, but an effective Web
site is becoming an integral part of business
Landing your Web site in search engine
results is key-more than 80 percent of traffic
comes via search engines, according to
Falkow. "As there are now more than 4
billion Web pages and traffic on the Internet
doubles every 100 days, making your Web
site visible is vital," she says. "You need every
weapon you can get."
Design and programming are also important,
but it's your content that will draw a visitor
into your site and get them to stay. Says
Falkow, "Putting together a content strategy
based on user behavior, measuring and
tracking visitor click streams, and writing the
content based on researched keywords will
get you excellent search results and meet the
needs of your visitors."