Fearless Business Growth By Diversification and Expansion
Part 2
Industry experts have identified diversification as the number one (#1)way to grow your existing cleaning business. There is much to be said for that thinking in today's service market place. In addition to adding volume, becoming the one stop for all your customers' needs is a way to encourage longevity in clients and become a valued resource for them.
Adding to your income stream by diversifying, whether it's addition of commercial cleaning to a residential service or maid service to a commercial operation, adding a window cleaning division, a floor care division, tile and grout cleaning or concierge personal service, all are possibilities for revenue growth and expansion. Many opportunities exist for the entrepreneur.
Here are some questions to ask
- Am I playing to win?
- Or am I playing "not to lose"?
- Is my challenge to go against the herd mentality where everyone is going in one direction and I am going the opposite way?
- Am I the business owner who will stay the status quo and may someday be by the wayside wondering what happened?
Adopting the "Fearless Business Growth" mentality means exploring all the options that exist for adding volume and profit to your existing core business.
Fearless means mentally being open to taking risks, hiring people, learning new techniques, developing new strategies and not being satisfied to just let business happen on its own.
Fearless means being prepared to take advantage of opportunities as they come along and acting on them.
Fearless means adding revenue streams from many sources so that the effects of a slowdown will be minimal. Having many profit centers is the key here.
Several avenues for growth and profitability through diversification come to mind:
EXPANSION: adding new complimentary services to your existing clients. This would be like adding carpet cleaning or tile and grout cleaning to your residential or commercial clients.
- Easiest and fastest way to expand
- Least risk as you already have the client
- Can be done through partnerships with other local businesses who specialize in these services (carpet cleaners or window cleaners for example)
- Can be done in house
- Can be a profit center with little or no start up costs
- Target is your existing customer base
DIVERSIFICATION: targeting a new market with your existing goods and services. This would be offering cleaning service to a completely new market like beginning a commercial division when your core business is residential cleaning or offering carpet cleaning as a stand alone business attracting a new customer base.
- Slower to realize profit
- More risk is involved
- More due diligence is required
- Should be treated as a startup with funding-equipment and systems
- May want to operate under a separate name
- Target is separate from existing customer base; construction cleaning companies, property managers, commercial or residential prospects, window washing prospects or realtors (for move outs and foreclosures) are some examples
GEOGRAPHIC EXPANSION: offering current services to a new geographic area
- Can involve second office
- Difficult to manage without strong supervision
- Requires much time of owner in initial stages
- There will be start up costs realized
When thinking about diversification and expansion, several key issues come to mind. Some include:
- Adding volume does not guarantee profit
- Caution must be given so as not to dilute your core business profits
- How do I market to and find customers for the new division
- How do I price my new services
- What kind of staff will I need
- How will I fund the new venture
- Do I have a marketing and business plan in place for the new venture
- How can I secure additional training and expertise for expansion
CAUTION -- what can cost you real $$$ when expanding or diversifying?
- Lack of funding for new operation
- Lack of understanding of industry profit margins for new venture
- Lack of understanding of YOUR financial health
- Taking on too much, too soon
- Ineffective staffing and management
- Lack of attention to core business
- Lack of technical knowledge in new specialty
There are many opportunities in our industry for Fearless Business Growth and as with all ventures; planning, analyzing and professional execution are part of the equation. To eliminate those elements from your growth path is a sure recipe for disaster and business failure.
Success is yours for the taking and with proper goal setting, marketing and business budgets and careful monitoring of all facets of your business, that success will be yours.
Sharon L. Cowan is the former President and CEO of a multimillion dollar regional commercial and residential cleaning company. She has a passion for helping fellow business owners reach their potential and realize their dreams. Sharon is a popular speaker and workshop leader. She has been a guest speaker and seminar leader for BSCAI and ARCSI and twice won marketing awards from the BSCAI. Sharon holds workshops throughout the country teaching cleaning business owners how to maximize profits and grow their businesses. Sharon can be reached at 772-563-7320 or www.cleaningbusinessconsultinggroup.com
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