When is it time to branch out?

It’s no small feat to open a new branch of your business. When does expanding locations justify the time and cost? Four panelists on Lawn & Landscape’s Business Builders Summit “Branching Out” panel discussed just that.

For John Munie, president of Focal Pointe — a company which has grown into four states in the last year — some pretty simple math led to the decision to start branching out.

“As you keep growing, you start sitting down and doing the math and realize that if we take our labor and the cost of fuel… when that math starts to add up and equals a lease payment — it’s time to consider it,” Munie says.

Munie adds that just having a physical building somewhere isn’t going to make for a successful branch. There have to be consistent sales driving that decision as work doesn’t just find you.

“Having a facility out there isn’t going to help you grow,” Munie says. “Sales will help you grow.”

Joel Sullivan, vice president of Sullivan’s Landscaping, agrees with the fact that time is money.

“Take a look at your indirect time,” Sullivan says. “You’re chasing sales and chasing revenue, but you need to understand time is not free.”

But it can be about more than combatting drive time and rising fuel costs. Paulita LaPlante, chief strategy officer and partner of Prescription Landscape says your employees and their progression will also let you know when it’s time to expand.

“It’s a great career involvement path as well if you have a great team of people who are able to take on more jobs and you’re bursting at the seams, or if you have someone who’s ready to take on operations manager or branch manager roles,” she says of opening branches.

Another consideration for branching out may just be through acquisitions. That’s what Turf Masters Brands is doing, according to CEO Jon Clift.

“We’re trying to service customers within a 45-minute to hour radius of a facility,” Clift says. “If we don’t have a footprint in that market, then we will look for an acquisition to start. We’re looking to do kind of a hub-and-spoke method.”

Currently, Turf Masters is up to 15 brands across 11 states.

All the panelists agree that the potential revenue brought in by the expansion can help determine whether a new branch is necessary or if another option (like a satellite facility) will suffice.

LaPlante says in her St. Paul, Minnesota, market, $2-3 million in revenue is the magic number for a branch — anything less would only justify a satellite.

Clift puts the optimal number a little higher at between $5-7 million.

“We’ll often set those up just to give us further operational reach,” he says.

Up and running

So, after it’s determined a branch makes financial sense, the questions turn to, what are the things to look out for in purchasing a physical space? And what do you look for in the person who is going to lead that location?

Clift says having a real estate broker and clearly communicating what you are looking for with them can help expedite things.

Sullivan shares that sometimes building the branch from the ground up can be more of a “what not to do.”

“We thought it’d be a great purchase and a great buy, but the time it takes to build everything from the ground up is tremendous. If you have the option to get a preexisting facility, that can speed up the process,” he says.

“Know the municipality that you’re working with,” Munie adds.

LaPlante echoes that point and says it’s smart to research routing efficiencies ahead of time, especially for snow and ice work where there are certain restrictions about where snow can be piled.

Sullivan suggests the branch’s location be near the company’s top client to be served by that branch.

“Get as close to that anchor account as possible,” Sullivan says. “And find ways to bring money back and justify that branch.”

When it comes to who is going to lead this new branch, the panelists had some key traits to keep an eye out for.

“They need to be computer literate in a big way,” LaPlante says. “That’s something that keeps communication going and you need to embrace that.

“Core values have to be there, too,” she adds. “Does this person embody your core values? That’s a really simple question but it’s essential.”

Sullivan says he tends to find his branch managers already in the company rather than hiring someone from outside the industry.

“The branch manager position is very unique and can really make or break the success of the branch,” he says. “They are the face of it now. They have to embody everything that built the company… most of the time, these people are brought up through the company.”

Munie says it’s the soft skills and core values that make someone ready to be branch manager. The business expertise and financial know-how can be taught at a later date.

“There is a big difference between a manager and a leader,” Munie says. “I always say leadership is a rope. You can’t push a rope — you pull to the vision that you set forth. And if they don’t have that inherent skill or aren’t going to learn it, they can’t do it.

“If you do three or four things very well, the financials will catch up,” he adds. “I can’t catch you up on the soft skills or cultural alignment.”

But once someone is in place as branch manager, it’s equally important to provide them with collaborative experiences for personal growth.

“In my 28 years, not once have I been ready for any position I was put in,” Clift says. “What I think works best is some kind of mentor relationship to invest in that person.”

Sullivan says his branch managers meet routinely to learn from one another.

“One thing that has been successful for us is we have a branch manager peer group that meets every single week,” Sullivan says. “They get together and they get to unload and to vent. I’m in a peer group myself and I know how important that is. With that, there are some really good conversations that come up from that.”

The author is an associate editor with Lawn & Landscape.