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Archived - How to Grow a Business through Duplication

Cookie cutter and cookie dough

Cookie cutter and cookie dough

To be a truly successful entrepreneur , you must plan to grow and expand your company. One way to grow your business is through duplication, which means taking your current business model and replicating it in other locations. This is also known as the “cookie-cutter” approach, since the same formula is used over and over again. Many businesses grow by duplication, including restaurants, retail stores, fitness clubs, movie theaters and medical practices.

There is a margin of safety in duplicating your business because you are repeating a model that you have already proven to be successful. This approach does, however, require management skills beyond those required for operating a single location, such as building selection and management, financial skills and operations oversight.

You’ll also have less control over your new locations, and will need to take special care in hiring your management. When you originally chose your business , it may have been because of your passion, interests and/or expertise. Anyone you hire to run your new locations will need similar knowledge and skills and, ideally, your passion.

Growth by duplication can either be on a small-scale or a large-scale.

Small-Scale Duplication
If you own a profitable business and your customers are located within a ten-mile radius, start by adding another location outside of that area (so you’re not competing with yourself). This could accomplish two goals:

  • Double your sales.
  • More than double your earnings, since some fixed costs are now spread over two locations. You may also lower your costs by purchasing your supplies and inventory in bulk.

Large-Scale Duplication
Continue to open more locations of your business, expanding over an increasingly widespread area. In addition to increasing your sales and profits, you could:

  • Franchise your business, allowing you to continue to expand geographically and increase your profits, without the employee-related costs and issues.
  • Go public, allowing a greater access to capital and a higher valuation of the company.
  • Become a candidate for acquisition by a larger company.

Examples of Growth by Duplication
Growth by duplication is not ideal for all businesses. Businesses with questionable potential include:

  • Professional or specialized practices (where your individual expertise is the cornerstone of the business).
  • Businesses that require a high investment in machinery, upkeep and working capital. Don’t over-borrow money to open new locations.
  • Manufacturing businesses where efficiency is based on centralization.
  • Product or service businesses where you are the sole key person.
  • Web-based/online businesses.
  • Some service businesses (H&R Block does well at income tax service).

Businesses with good potential for duplication include:

  • Retail stores.
  • Restaurants, especially fast food.
  • Franchisors: McDonalds, Subway, 7-Eleven, etc.
  • Businesses with a high demand in other geographic locations. For example, a wholesaler of plumbing supplies in San Francisco may open a branch in Sacramento and over time grow branches throughout Northern California.

Keep in mind that growing your business does not mean you should not still try to improve it. While you expand geographically, continue to improve your business by expanding your products and services, streamlining operations, running a new marketing or advertising campaign, hiring new sales staff or offering ongoing training for employees.

Don’t be afraid to take a note from your competitors. Your most successful competitors are often the best resources to learn from. For example, Sam Walton, the founder of Walmart and Sam’s Club, didn’t invent the discount department store business. He learned it from Sol Price, who pioneered the industry with the Price Club stores in California.

“I probably have traveled and walked into more variety stores than anybody in America,” Walton said. “I am just trying to get ideas, any kind of ideas that will help our company. Most of us don’t invent ideas. We take the best ideas from someone else.”

Whether you decide to grow your business by duplication or other methods, take some time to develop your plan for growth. Don’t let poor planning or fear get in the way of seeing your business reach its full potential.

For more help with how to grow your business, complete the MOBI Business Expansion Course , which will walk you through getting your financial controls in place, hiring the right team, lowering your costs, developing your negotiating skills and executing your growth plan.

Aug 11, 2017