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BY RUSS ALLRED Contributing columnist
If your business is older than 10 years and you're not satisfied with its rate of growth, perhaps you should take it apart.
If you have ever thumbed through an issue of Popular Mechanics, you have seen an "exploded" machine. "Exploding" is a graphic depiction of the components that comprise a machine, shown separately on the same page. It allows the viewer to see how the machine is made and visualize how it works.
Businesses that have survived 10 years have typically evolved. The owner has changed the model that started the business by adding multiple profit centers, just to stay open. An example is a book store that also sells wedding invitations or stationery products, or a copier repair business that also fixes computers.
The first step in exploding your business is recognizing the various markets that you serve and the product or service mix that attracts them. This can be confusing to small businesses because they usually serve a specific geographic area and don't define their markets by demographics or emotional components that cause them to buy as a group, called psychographics.
A successful run of 10 years in a town usually taps most of the local market. To significantly expand sales you must grow outside of town. Because there are so many competitors in a broader area, you must focus on the markets that make the most money.
The first local turnaround project that Allred & Associates did was a rebar fabricator. The founders had pioneered the use of pre-construction. They designed their own sheer line and even created computer estimating programs, but their business was declining. Had they deconstructed their business earlier, they could have sold their inventions to other fabricators, thus opening a global market rather than struggling to bid individual construction jobs. Our own experience pushed us into publishing our consulting process to reach a national market.
Here are some questions that should guide your growth efforts as you deconstruct your business. What function currently makes us the most money? What best describes the people who pay for that function? Where else do groups like this exist? Where do we excel or what have we innovated? Is there a market for that?
Identify the best market for expansion and concentrate your investment of time and money into that effort. Other clients have quintupled their business by following this course. Explode your business and your business could explode.
-- Russ Allred, MBA, is a business consultant and author with Sunbelt Business Brokers & Advisors. These are his opinions, not necessarily those of The Californian.