Are You Ready for Expansion?
How do you know when it’s time to grow?
I know I’ve said it before: Growth is not for everyone. Expanding your team into different locations may not be for you. However, if you find you’re referring a lot of business out to another market – especially if that market is someplace nearby – it might be time to consider hiring a talented expansion partner to drive that business.
So, what is expansion? How does it work?
Expansion itself requires using a centralized hub that can deliver admin, lead gen, and leadership services to both your team locally and to at least one other market. It involves hiring an expansion partner in another location who will leverage the resources of your central hub.
Expansion can be extraordinarily profitable because most of its expenses are being absorbed by the hub naturally anyway. In other words, the expenses are created at the hub, so when you open that expansion team, it’s adding very little to the expense side of the business; almost everything you bring in is on the profit side. (Consequently, If you closed down the expansion location, your expenses would remain pretty much the same.)
When your hub isn’t at full capacity – it could handle more work if you brought it in – every additional expansion sale is almost all profit because it’s merely using the resources you already have.
For instance, when we expanded from Wasilla into Anchorage – which was our first expansion – it made so much sense. We are barely 35 minutes from Anchorage, their average listing was 100,000 dollars higher than it was in Wasilla, and the turnover ratio was much quicker. Plus, it was so close to our current hub.
Expansion is a fairly simple concept, which people sometimes make far too complicated. However, keep in mind that when you cross state lines where licensing laws come into play, it’s a very different animal…and something we’ll cover in a future blog.
For us, Anchorage was a slam dunk. But, before you jump into expansion with both feet, there’s still a critical element you have to consider. If you’re not already highly profitable, expansion isn’t probably the next logical step you want to make. You need profit to grow into an expansion; you never want to put your hub business…your local business…in jeopardy or at risk. Even though you’re not expanding geographically, it takes five to six months for that new location…or new geographic arm…to start producing consistent business.
When you decide to expand, your leads should be taking you there, or talent should be pulling you there, and you should have the profitability to go there.