Editor’s note: At some point, every business needs to expand. Sometimes that’s moving to a new city, sometimes it’s just finding a bigger headquarters. We talked with landscapers and lawn care operators to get some behind-the-scenes insight into how they’ve expanded their own businesses. Keep this guide handy as you plan your own expansion so you don’t make the same mistakes. – Chuck Bowen
Case study - Noon Turf Care
by Anne Michelsen
Founded in Hudson, Mass., in 2007, Noon Turf Care services primarily residential lawn care accounts in the Boston area. Now headquartered in neighboring Marlborough, Mass., the firm opened a second location servicing south Boston in March. Owners Matt and Chris Noon plan to add a third branch in north Boston in the spring of 2014.
Noon Turf Care’s recent expansion into the Boston market offers an outstanding example of how careful analysis and planning helped a company successfully relocate and expand without compromising profitability or service. Here’s how they did it.
Start with questions. Noon Turf Care’s expansion was a well-planned, highly orchestrated endeavor. The Noon brothers spent a great deal of time in the months before the move researching markets and potential new locations, as well as gathering employee feedback.
“We didn’t just jump into it. We really thought it out and created a strategy,” Matt Noon says. He emphasizes that the most important thing initially for a company considering an expansion is to be sure it makes business sense. “Ask yourself, ‘Why are you expanding?’ Are you expanding just for the sake of it? Or does it support what you’re trying to accomplish, what your vision is? Does it adhere to your growth strategy?’”
Noon adds that a written expansion plan, including your timeline, financial goals and the physical amenities you will need in your new location, is an invaluable tool both for facilitating a smooth expansion and in securing the necessary funding.
Opportunities from expansion. The Noons had to set up a new structure as they planned their expansion. Instead of opening a chain of semi-independent service centers, they created one regional central office to house the company’s entire support staff, including finance and bookkeeping, inbound and outbound sales, phone service, and marketing. The central office includes a fully equipped call center, and is capable of supporting multiple service centers, each with its own garage, warehouse, and fleet of vehicles. Routing is also handled efficiently from this central location.
Identifying a market. Just as important as designing a business model that would support their vision was choosing the most profitable regional markets for expansion. The Noons looked for markets similar to the ones they were already doing well in. They considered factors such as proximity to the central office, population growth and density, wealth ratings and presence of competition.
Employee feedback. As soon as the Noons settled on their plan, they began soliciting feedback from their bankers, mentors and employees. Months in advance of announcing the expansion, they started asking about how specific changes – such as having a certain employee work remotely – might work out. They also used open-ended questions, such as “What are the most important things you need to be successful at a particular task?” or “How would you feel if you didn’t have certain things at your fingertips?”
|Click the image above to see the full expansion flow chart.|
The Noon brothers consulted their field managers when choosing new service center locations. By doing so, they were able to identify the properties that would most effectively support efficient operations, and avoid investing in extra amenities that their people don’t consider important. They also placed high importance on finding locations close to where employees live.
“I start with the employees before everything,” Noon says. “You need happy employees. If those people aren’t happy they’re going to deliver mediocre service. We drive a hard ship, we’re not pushovers, but you need to make sure your employees’ needs are met.”
The right building. Once they had a clear picture of what their needs and priorities were, they had to find acceptable facilities.
“Make sure a potential new location is close enough to your target market and has the amenities you need as well as enough space. Features like a proper loading dock or enough water pressure can make a huge difference in productivity,” Noon says. He also advises renting from a professional landlord when possible. “Bottom dollar places aren’t always the best deal. A professional company will take care of problems timely, which can save you a lot of down time.”
The brothers also for facilities with room to grow. “Moving is expensive,” Noon says. “We bit off a little more than we can chew right now (with our new locations), and that was on purpose. We’re occupying only about 60 percent of the space we have. That way, we won’t have to move again for a long time.”
10 Tips for Successful Branch Expansion
1. Learn from leaders. Matt and Chris noon are participants in continuing education through Harvard Business School. It pays to seek out mentorship, whether through formal education or through fostering relationships with industry leaders.
2. Know why you’re expanding. Don’t open a new branch on a whim. Make sure your plans make business sense.
3. Replicate your successes. When entering a new territory, go with your strengths. Look for markets that are similar the ones you’re most successful in now.
4. Have a written plan. Include your timeline, financial goals and the physical amenities you will need in your new location.
5. Leverage your existing assets as much as possible. Set reasonable financial limits, and utilize your non-financial assets, such as your social network, whenever possible.
6. Choose your real estate carefully. Make sure a potential new location is close enough to your target market and has the amenities you need as well as enough space. Talk to your managers for their input on what they need.
7. Look for a professional landlord. You want to rent from someone who will take care of problems quickly.
8. Plan for growth. Moving is expensive. It’s better to move into a space that’s a little too large than to have to move again too soon.
9. Know the laws and regulations that will apply to you. Make sure you have the required permits if you’re expanding into a new state or municipality.
10. Make marketing a priority when entering a new market. Your biggest asset is your client base. Invest in a good mailing list and advertising to grow your clientele, especially in the first two years of operation.
Setting up shop. The move was planned to minimize interruption of service.
Noon and his brother tested the new arrangement for about six months before committing to opening their second branch. They prepared for the launch of the new service center by establishing one route in the new market that is first serviced from the original location, then transferring the route to the new branch once it opens. The practice helps seed the market and provides revenue for the new facility in its first months of operation.
They also invested significantly in marketing the new location, including advertising and purchasing mailing lists.
“Especially the first couple years, you really want to splash the market to make sure people know you’re there and you’re going to stay,” Noon says. “The worst thing you can do is start to market and then stop. You don’t want to send an inconsistent message.”
The author is a freelance writer based in Wausau, Wis.
Contractors share their best (and worst) ideas when it comes to setting up shop.
by Chuck Bowen
Chapel Valley Landscape dominates the suburban Maryland market with a focus on high quality projects and outstanding customer service. The company exists at a weird place in the industry – it’s the big guy to most of its competition, and a smaller guy to the national companies.
So, when James Reeve, president and CEO, wants to grow, he looks for submarkets – places where ValleyCrest and Brickman don’t have a large presence, and where Chapel Valley will be the most professional contractor on the block.
“The idea is that the big, sophisticated guys aren’t there yet. Then you’ll be a standout among the locals,” Reeve says. “You’re bringing something new to the marketplace. You can really get in and own that market early. When you bring that level of sophistication to the market for the first time, you have that opportunity to be what everyone else gets compared to.”
He used this strategy in Richmond, Va., about 150 miles from the home office, where Chapel Valley has a $2 million commercial maintenance branch.
The company had been doing work there for many years, but in 2005 decided to set up a dedicated shop.
Reeve’s advice: Make sure your home market is covered first and then see if expansion into a new market is really worth your time and energy. “People think it’s great because it’s new,” he says. “They get all excited and then six months later they’re all burned out. The worst thing you can do is have a failed start because next time you’re doomed.”
Brad Johnson knows when he needs to set up a new shop. “When we can’t fit all our trucks in the warehouse, we know it’s time,” he says.
Lawn America has a 14,500 square foot facility in Tulsa, but with growth averaging about 15 percent every year, eventually everyone doesn’t fit inside anymore. And instead of trying to find a larger facility that’s central to all the areas the company services, Johnson decided to find several smaller buildings that are spread out.
So now he has three suburban satellite offices of about 3,500 square feet that dispatch about a half-dozen trucks each. The branches are headed up by a team leader with at least six years of experience who understands the Lawn America brand, culture and core values.
The offices use the same phone and computer systems as the Tulsa headquarters, and everyone has access to the same data thanks to cloud-based servers.
Johnson is quick to point out that the branches were chosen to be closer to markets Lawn America was already servicing, not to expand into a new market. The satellite branches cut about an hour’s drive time for crews, allowing them to service more accounts each day.
“And we found it helps to build our team stronger,” Johnson says of the satellite system. “We’re very team oriented, and by splitting them off geographically, they don’t get lost in the shuffle of the morning routine. They help each other more.”
The moral of this story is: Don’t let your business cards dictate your business plan.
Here’s the backstory: HighGrove Partners had its headquarters in Atlanta and offices in Charlotte and Raleigh. CEO Jim McCutcheon had the three cities printed on the bottom of his business cards to show how expansive the company was.
“My ego played a part in it. Every time I had to print my business cards, I thought this was pretty cool,” McCutcheon says. “It’s absolutely and utterly the worst reason to do this.”
The company had expanded to Charlotte after a good client had offered a big job there, and the market was good – the branch was doing $4 million a year.
McCutcheon knew he could double the size of the Charlotte branch, but it would take a lot more effort. And the office was four hours away from HighGrove’s headquarters. He decided to close the branch and focus those efforts on growing his market share in Atlanta.
“The opportunity is much better here,” he says. “I could quadruple the size of the business as opposed to just doubling. If I can deploy these (resources) in Atlanta and focus it, will that be a better for us as a company.”
Heading to a new market because of a single customer is risky because “all of your eggs are in one basket,” McCutcheon says.
To mitigate that risk, he recommends contractors with a similar opportunity ask their current customers if they also have work in the same new market. That immediately diversifies your customer base in the new market and leaves you less exposed if that first client decides to fire you.
“For anybody that’s going to expand to a new city or location, unless there’s an absolutely, identifiable, strategic reason, you shouldn’t be doing this.”