Grow? Now? In fact, many small businesses are ready to take advantage of the opportunities a tough market offers. So, for those businesses with compelling reasons to spread their wings and the ability to do so in a smart, focused way, the answer is “yes.” In fact, says Ted Mallett, vice-president of research and chief economist at the Canadian Federation of Independent Business (CFIB), it’s much easier to grow nationally today than it was in previous decades. Why? Technology.
“The ability to service customers remotely, to communicate at any time and in many different ways, makes it easier to spread out,” Mr. Mallett says. “In the past, it was only larger companies with branches dotted around the country that could do that effectively.” No more.
Going national is really a question of would, should and could, says Dave Valliere, chair of the entrepreneurship and strategy department, Ted Rogers School of Management at Ryerson University. In other words, think about what you would do, what you should do and what you could do before taking the leap.
“Is this a good idea at all? Why do you want to go from regional to national? What’s the benefit of doing that? Is it to diversify, so if you are selling in Eastern Canada you can tap into Western Canada in case the growth rates are different?” Mr. Valliere says. “There are benefits just in growing because small businesses are fragile and you need to achieve a certain size, particularly in these difficult times, in order to have a robustness to handle a few problems along the way. You should want to grow to improve your odds of survival.”
Whether you should grow or not comes down to whether a national market exists for your product or service. Just because you have a market in your region doesn’t mean it exists across the country. “There are regional differences and in some industries those can be very important,” Mr. Valliere says. “Don’t assume there is a national market. You need to verify that the national market exists.”
Suppose it does: The customers who want what you are selling in British Columbia will also want it in Quebec, and for the same reasons. Then you need to think about whether you have to make any changes to your strategy to satisfy those new customers. “For example, if you are going from the West to the East, you are going to have to make the language changes,” Mr. Valliere says. It doesn’t stop there. Customers in other regions might want to be sold to in a different way. The demographics and tastes may be different. You may need to distribute differently.
“You are going to be up against different competitors, new regional players that you didn’t even know about. And you don’t have a good idea how they are
going to react to you suddenly showing up. Don’t assume what works at home is going to work there too. You are going to have to experiment,” Mr. Valliere says.
Once you’ve found that the national market exists and your strategy can work in other regions, what will it take to execute that strategy? This is the “could” portion of the equation. And it comes down to whether or not you have the ability to sell in these new regions. “Are you selling something online? That’s easy,” Mr. Valliere says. “But maybe you need a physical presence in the new locations. Are you going to get an agent in the new location to sell for you? Are you going to open up a remote sales office? What will it take to sell to those customers and do you have the wherewithal to do that?”
Think infrastructure, operational capabilities, after-sales support, marketing, HR and the scope and structure of your organization.
“In some ways, expanding nationally is a microcosm of expanding internationally,” says Becky Reuber, professor of strategic management, Rotman School of Business. “Get help. If you can do it through existing firms, it’s a good way to get your feet wet.” She offers the example of a company that provides cleaning services to businesses and those businesses have operations in other parts of the country. “That’s one way to expand – through your existing customers that are already national,” Ms. Reuber says.
“Be wary of establishing a physical presence and do it smart if you have to do it at all.”
This means addressing what going national means for your business. Do you need bricks-and mortar outlets dotting the country? What is national? Is Vancouver, Toronto, Montreal national enough for your customers? Do you need to be in all provinces?
“Are you in an industry whereby you have to have a physical presence close to your population versus shipping products to specific regions from a more central location?” says Chris Van Staveren, partner, transaction service, KPMG Enterprise Services. “For example, printing businesses can typically ship/provide services from a central location. Retail businesses on the other hand, will have to be close to their customers.” And that requires skill sets you may not already have. For example, in a retail expansion, you have to develop real estate expertise.
Small business owners going national will also have to understand the different provincial regulations that will affect your business. For example, health and safety rules tend to be provincial. Inter-provincial trade regulations may affect your strategy going forward.
The next challenge: How do I maintain company morale in a down market?
Mary Teresa Bitti – Financial Post
