EO Melbourne members share their business expansion experiences and tips.
When treading on unfamiliar environments, you will need all the guides and pointers you can find to steer your business in the right direction. Entrepreneurs from EO Melbourne share their respective journeys along with a few tips on how to expand one’s business to new territories.
AARON SMITH, KX PILATES
Now with his brand present in Australia and Asia, Aaron Smith, Founder of KX Pilates, had to surpass the hardships of starting and growing a business. “I opened KX Pilates in Melbourne in February 2010. With 10 studios under our belt and a team in place to continue the growth in Melbourne, my wife Andi and I decided we would move to Sydney for two years to open and run the first flagship studio in Surry Hills,” Aaron recounted.
They researched on their competitors, studied the demographics of their market, and assessed their studio accessibility. Along with that, they matched as much as they could their Melbourne business. “It was an incredibly hard slog, but after 6-12 months, we saw huge success,” Aaron professed. It also helped that two of their best owners/trainers moved to Sydney with them to take on the other best locations available.
Aaron attributes the success of their expansion to PEOPLE. “The culture of the business also came with us. The brand has seen success in all other major Australian cities with the assistance of our Melbourne or Sydney-based trainers, moving to those places long-term.” On the international front, the same happened as they opened in Jakarta, Indonesia in 2018 with an incredible business partner, which they hope to replicate in China at the end of the year.
Aaron’s tips to those expanding to a new environtment are:
Do your research and grow in one place properly first. So many businesses just 'assume' that because their business has worked in one city/state or even country, it will work everywhere. This couldn't be further from the truth. Test out the market first, do you research on similar competitors in your space and start lean and build from there.
Drop the ego. Yes, it's great to say you are now in multiple cities, states or countries. But if you can continue to focus and grow your business in one place first, then do it. Fewer businesses in more locations is a recipe for disaster if you are not prepared. Higher expenses with travel and being farther away to manage your team will make running your day-to-day business tougher. Business is hard enough, so why make it harder if you don't have to?
Find the right people with the right brand fit and local cultural experience. You need to be able to trust them that they will do right by you and the brand. Our strategy is not just about putting dots on the map. It's about opening in a new country with the right person who will grow your brand in that place the way you want it to be done.
DION CASTLE, STRUBER
Expanding in various states of Australia is doable, although it’s not a walk in the park as Struber CEO Dion Castle explains how they enter new territories. “We've gone into three states and then doing the fourth and the fifth state at the moment. Each state is on a different level of a journey.”
Working primarily with governments and large enterprises, Dion admits that there’s a lot of high barriers to entry. Recognising this reality, they use data to understand the market and time their entry effectively. Once they have looked into the data, they conduct in-depth stakeholder analysis and assess what is required of them, particularly in terms of skills and talent. At the same time, they think of the branding and marketing elements needed in their work, as well as do lead generation and build their databases. Also, they focus on providing value to the industry, looking after the long-term interests of their clients.
“That's the early stages,” Dion remarked. “Once you're able to move through that, the next phase is about maintaining relevancy to your customers in the new markets. It’s continuing the same level of energy when you entered the market and sustaining that over time, showing that you are an active participant in the geographic region and finding ways to continue to support the agenda of the enterprise or the government and the community at large. Also, you continue to expand the talent locally step-by-step, ensuring that you've got the right team members to be custodians of what your company stands for. These are people who can continue the founder-led philosophies that made your company great in the first instance and continue on that legacy further afield.”
Going through all these activities in expanding his business, Dion shares some of the key learnings that he gathered from his journey. These are his guiding thoughts on expansion or entering into new markets, which requires people to do their homework, do their research upfront and make sure that they have the right pieces to support that:
‘Go slow to go fast’ and ‘ measure twice to cut once’. Doing data analysis and looking at your timing and your activity, try not to make rash decisions, particularly around talent that join your organization. Talent needs to join for the right reasons and at the right time and any rash decisions on talent will inevitably lead to churn and turnover. In our game, we need to make sure that the talent matches or is above and beyond the expectations of our customer base. Finding the right talent can take time, and you have to be okay with the fact that it takes time.
Note that investing in your geography will cost you two to three times more than what you planned or anticipated for it to cost. Even with your best projections, it will cost two to three times more and will take two to three times longer to do it right. If you think you can get away with it at a cheap budgetary expenditure level, it will still cost you a lot more because you'll have to pay for the learnings through the journey. And there's a lot of learnings that you will undergo during an expansion.
Make sure that you have an incredible supportive leadership and start to build that early. You need to try and identify as early as you can who will be the custodians in your new location to be able to carry the legacy forward. Leadership is something that takes the longest amount to build. However, you can purchase leadership but you can't purchase loyalty. You have to work to build loyalty over some time.
While you're going through this journey, you need to measure to get better. You need to constantly measure your performance against your objectives of entering the new state or region. It includes tracking your performance in the short intervals using reports and data that you collect to be able to show patterns and behaviours on how you're performing in your expansion efforts.
Don't be afraid to turn on and invest more or wind down a region based on the information that you get. Such information can be gathered not only from internal sources but also external sources in the economy, such as changes within the macroeconomic context. From there, you can adjust your strategy accordingly. At the very worst, have an exit plan. But in the markets that we operate in, it's a calculated investment, so an exit is only a very last resort, but would likely come back with a return mission in the future.
JOHN BEVITT, HONEYCOMB
Honeycomb, an innovative market research and customer insights agency, have consultants in Melbourne & Sydney, servicing clients Australia-wide. John Bevitt, Managing Director of Honeycomb, has a few tips for businesses that are considering to add a new product in their offer or to expand to new territory, whether it’s a geographical market or another industry:
Get to know your potential customer and make sure you’re solving genuine problems. Many times, a client has come to us with a product or service they are developing on the hunt for a potential customer or market to buy it. The most innovative products and services are those solving genuine problems. A lot of the research that we do helps businesses identify and develop these solutions by understanding the customer journey and their mindset, attitudes and pain points experienced throughout it. Start by talking to a few of your potential customers and identify patterns. From there, do a short survey with a larger group of prospects to validate these patterns and ensure they’re representative of the broader market.
Communicate clearly and stop trying to sound fancier than you are. We have found that we get the strongest response and greatest uptake when we demystify what we do for clients. By focusing on the outcomes and benefits of the service we provide, clients are given certainty around what needs to be done and why, as well as confidence in their ability to explain this to stakeholders. The temptation that commonly occurs is to package up a solution and put a fancy name on it with limited context behind how it works or what value it provides. While this can generate intrigue, it also creates a lot of resistance as clients find it difficult to understand or explain to their stakeholders.
For B2B Businesses, make sure you’re also delivering value to the human aspect, not just to the ‘client’ or business. When asked who my clients are, I usually respond, ‘Brand X’ and ‘Brand Y’, not Joe from Marketing or Monica from Product. As such, it can become a bad habit instead of adding value to the businesses you work with and the people in them. During COVID-19, a lot of our clients were fearful or uncertain. To help them, we brought them together and hosted virtual forums to share their experiences, strengthen their networks in the industry and validate what they were doing against each other. The sole agenda was to give the people we work with an ounce of certainty and confidence about the future and how to plan for it.
Taking into account these entrepreneurs’ experience and learnings in their expansion journey, they can be your compass and guidebook for business growth as you embark on what you may consider as your uncharted territories. It is better to equip yourself as you take your first step on unfamiliar environments rather than take the plunge without much preparation.
If you have an expansion experience or story to share, send us a message at communications@eomelbourne.org or drop us a note at the comments section below.