Denise Barnes was a guest on the show in November, and she was such fun and a real inspiration and I’m so pleased she agreed to write an article for us. I asked Denise to write about business growth, and here’s what she sent in….
Let me first give some background of my business. I set up from scratch an estate agency in the village where I lived. There was only one other estate agent and I’d just resigned from being its manager! I’d grown a struggling corporate office to a highly profitable one in the space of two years. What marvelous training! So I figured I could do equally well on my own.
It was 1988 and the housing market was booming. People were actually queuing up in the morning before I could put my key in the door, occasionally even fighting over a house – ‘I viewed it first’ – as though they were in the January sales.
Not too difficult to expand in those sorts of circumstances, I hear you say. Except a few months later, at the beginning of 1989, the whole housing market collapsed, along with retailers, financial institutions – in fact, it affected almost everyone. We were at the beginning of a recession, which was to last four years.
But towards the end of year four there was a glimmer of light and I felt now would be the time to open a second office. I found the ideal premises in a country village a few miles away. On opening day people said, ‘You’re either mad or you know something we don’t.’
But during a recession or any quiet period, it’s an ideal time to expand. Rents are lower, labour is cheaper for any work needing to be done on the building, graphic artists and printers and many other companies are all vying for work at knock-down prices – it can be the perfect time to grow your business, if you have the nerve.
The main thing is not to fall into the borrowing trap. Yes, if you own your own business, sometimes the only way to flourish is to borrow. But spend wisely. Pay back the loan as soon as you can. Then when it comes to the next thing you want to introduce or develop, your bank manager will already know how you operate and hopefully support you.
During the 17 years I had my business I increased from one to eight offices by the time I came to sell. With each expansion I asked these questions: Was the office in the right position for my clients? Were there plenty of chimney pots for us to survive? What was the competition? Were the premises in good condition? Were there any onerous restrictions on the lease? How were the lenders doing? (If people were having difficulty getting mortgages they wouldn’t be buying houses.) Did I know anyone I could put in or promote as Manager?
You must ask yourself all the relevant questions for your own business.
And you must PLAN. If you have a good idea on how to expand, book in some time with your accountant and get him or her to prepare a business plan, taking into account the additional expenses such as increased rent, extra staff, more phone lines etc. Discuss the plan with your bank manager. If they’re comfortable with your figures you’ll likely get help if things are initially slower than anticipated. And if things go badly wrong, do come clean – they may well have a solution.
Take professional advice. I once told my accountant I wanted to sell French property. I’d only been trading nine months and already I was looking for exciting opportunities. He warned me against it…I’d lose money…the English would not be buying French property for much longer…prices would go up…I should concentrate on building up my new business, etc. But I was stubborn – and he was 100% right. My foray quickly fizzled out and not only did I lose money, I wasted time going to France to view the properties. And when I was away I worried about the danger of taking my eye off the ball.
So not every expansion is lucrative. Not everything works. But sometimes you just have to give it a go. If you’re determined, then have the courage of your convictions. Convictions that should lead you into a good, profitable and interesting business which will take you right up to retirement, when you can sell and sit on the beach all day painting your toe nails!
Note: Some of the ways I grew my business are mentioned in my book: Seller Beware: How Not To Sell Your Business.