Small to Big – Scaling Up Your Business
Chairing the session at the ISBN conference on how to develop the infrastructure for growth was a fascinating experience. The ISBN membership is rich with expertise in this area. What is well understood is that taking a successful salon and assuming it can be simply transposed to a new location while the profits pour in is desperately naïve. Yet we see it all the time in the industry.
By the time you get to the size that qualifies you for ISBN membership, you will know there are so many other factors you need to consider before you can scale up to multiple locations and sustain them.
The cost involved in moving from a single salon to multiple stores can be high and the business plan needs to accept that profits will be slow to build. My father didn’t make a profit for the first five years after launching Sports Clips. There are more than just the obvious overheads to consider. As well as needing more employees and product, you need more managers and trainers as well as a solid marketing program.
The other mistake some make is over-complicating the offering. Effective systems and procedures will ensure consistency across the brand but if they are overcomplicated they can quickly become unmanageable as the company expands. When Sports Clips launched, people questioned why we cut out 50% of the population, especially as women were then seen as most profitable for hair salons. But Gordon understood that keeping the proposition narrow would make it easy to roll out across the country.
A successful plan for growth demands the right checks and balances in place from the start to keep a tight control on the brand, as scaling up inevitably increases the distance between the brand owner and those delivering the service. Financial reporting gives only a part of the picture; monitoring in person is also vital.
Location is another key consideration. How far should the new salon be from existing ones? Too close and you risk cannibalizing your clientele; too far away and you’ve got a headache with logistics, from managing the supply chain to monitoring standards. The last thing a small group wants is having to be constantly jumping on a plane to visit different locations.
Successful transition from small to big requires people, and this is the obstacle that most salon groups find most difficult to mount. A strong focus on education helps drive growth of good staff from within the business, but you also need strong recruitment and retention policies to attract and keep your staff. A new location doesn’t need just an excellent manager; it also needs a rock star trainer on board to ensure it becomes a feeder salon for the next new location.
Multiple licenses drive growth organically. If you award multiple licenses to new franchisees they have their eye on new locations from day one. Once the first salon is established, the team is growing and the licensee understands the business completely, the motivation to open salon number two will already be there. Some brands make it prerequisite that franchisees buy multiple licenses, while others add sweeteners to reward expansion. Franchise organizations think big, and multiple licenses get franchisees into the same line of thought from the start.
The last lever for ratcheting up growth is marketing. A structured marketing program that is easy for your people to access must be part of the package for any franchise operation or growing salon group. This takes investment and a consistent strategic approach. Everything rests on marketing and it will be the biggest bill in the business, but no company can grow without it.
Pretty much everyone at the conference session was well-versed on all these different features of a successful business, and while obviously some are better at putting it into practice that others, we all recognized the micro aspects of developing a business capable of scaling up are as crucial as the macro aspects.