Geographic expansion: What is really important?

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This post in Tim Klabunde’s not-so-frequently updated blog is several months old, but the topic is close to my heart (and some hard personal experience): Geographic Expansion Lessons Learned.

He observes from interviews with others who have expanded an AEC practice: I add my observations from first hand experience (and some failures) in expanding geographically, including internationally.

The right person leading the charge is the most important factor in the success of a new branch office.
The geographic leader needs to have enough vision to be ready forgo short-term reward (immediate salary/commissions and time) to build the longer-term objectives. The leader also needs intrinsic talent. You cannot sub this work to a junior. (Yes, I erred at times in both of these manners,)
Two key people are needed for a geographic expansion, a Rainmaker (someone who can bring new work in the door) and a Principal Designer.
Perhaps only one person is needed, as one of the commentators below outlined. The true Rainmaker is both a seller/doer, and is ideal for leading the expansion. You can often call on back-up resources in head office or even offshore for the design work.
An expansion needs to be viewed in a positive light both from the new office, as well as the existing offices. ?A geographic expansion should provide multiple people with opportunity for growth throughout the company.
This is a given. Expansion will generally create a spirit of excitement and opportunity. You need to be thoughtful though about the expenses and risk, and the morale destruction that occurs when an expansion project fails.
The right combination of people is the key ingredient to a successful geographic expansion.
In many cases, you can expand with one person, working from his/her home. You can add resources and staff on a revenue-in basis.
When a new office opens it is not ?business as usual,? individuals opening a new office must be prepared to work 2-3 nights per week becoming involved in the local community and in the industry.
Yes, the expansion will require relationship building and communicating to build acceptance and belonging.
Responsibility and autonomy for the new office must be given. The individuals in that office need to feel as if it is their actions that will result in the success or failure of the office.
This is correct, but you need to have guidelines and performance-based standards, or expenses will go through the roof.
Support staff is not critical for the establishment of a new office
Virtually all “administrivia” should be avoided. Design systems so that the “chores” are handled through head office or remote services. ?You don’t want to build a remote administrative bureaucracy.

There have been three comments so far:

Agree on #1, but wanted to add that the ideal scenario is to have the ?lead POC? of that office be both a Rainmaker AND the Principal Designer. It?s somewhat rare, but the most respected leaders that I have worked with possess both qualities.

Interesting article. It strikes me that the success of geographic expansion can be summed up with the importance of having the ?right? or ?key? people involved. Seems like that is often the tipping point between success and failure.

I agree with (original comment). The right person needs to be both. And #6 is a must. A branch office, to be a successful startup, must drive an entrepreneurial spirit. And to sustain it, it must be left alone to create its own culture, obviously based on the foundation of the corporate culture.

Personal experience, including this company’s mixed track with expansion including internationally, validates these points. Our greatest successes and sustainability occurred when we had the good fortune to work with a publisher who accepted performance based (commission) compensation, took charge of relationship-building in his community, and developed his own initiatives and markets, while drawing carefully on the corporation’s resources.

My biggest failures included these mismanagement gems:

  • I set up a duplicating administrative management system in a remote office. The remote administrator kept finding more and more “work” to do, requiring hourly pay, enough that she felt she needed to hire her (incompetent) relative to help out, adding even more to the hours. Meanwhile sales declined to virtually nothing because the local sales rep was not a shining star with enough competence to (a) sell effectively and (b) to overcome the overpowering administrator. We almost crashed the business before I solved the problem by firing everyone. The remote publication survived when a competent sales representative in head office took over the accounts/market with phone sales, until we ultimately discovered another remote (but much better) local publisher, who set out to build relationships in his area — and added additional publications/products without any local administrative staff.
  • I hired a competent “stand em up shoot em down” salesperson to lead our local U.S. office. This guy could sell, but he didn’t have much business management experience, nor did he understand the importance of building longer term relationships. Still, we were making piles of money, for a while. He proposed we hire a former colleague to work with him, and he would grow the business in a new market. The new market didn’t respond as well as the existing one, and the second sales representative didn’t have nearly the right level of skills/experience. Meanwhile, we expanded our administrative and editorial costs, even as we added other markets/publications under his rather ineffective and self-serving leadership. I think you know where this went.

Geographical expansion can certainly be an exciting growth opportunity. Just be careful. You need the right level of autonomy and control, and you need to foster/encourage entrepreneurial responsibility within a disciplined framework.

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