INDUSTRYvoices
Nine Key Factors For Opening A New Branch The decision to open a new branch can seem daunting, but it doesn’t have to be. Here are nine factors to consider. BY JEFF WINSPER f you are exploring expansion, here are nine key factors to consider when developing your plan to grow the business and attract the professional landscaper.
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1. Full-line distributors may “open up” a new dealer near you anyway. Growth minded distributors are on the hunt to also get new points of trade to carry their product line, and by doing so, it would not be unusual they are recruiting dealers to swap out or add competing products in your local territory. Exclusivity of suppliers in geographies rarely exists, so if you have a healthy wholesale and parts revenue with one manufacturer, you need to know if new, or repeat business, will be affected if your nearest local dealer decides to carry the same product line. 2. Better financing terms with your distributor. Volume speaks loudly, and the more you sell, the better the financing terms. This aids in increasing margins, and you can use one of your stores as the central “ship-to,” and act as your own supplier across the rest of your branches. This centralized model increases efficiencies on inventory management to drive greater margins. 3. Convenience for customers is key. Generally speaking, a landscaper’s coverage area can vary greatly, but one thing is constant: travel. Crews are constantly on the road and if the product breaks, so 26
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does their daily revenue. Having a network of preferred branches in their area with solid same day service can get them back out and finishing the job. 4. Know what area to consider when opening a new branch. Multi-branch dealers obviously had to start somewhere, and it’s easy to see how their expansion grew—usually from the center out. There is an old adage that demand already exists in a market, but it can only be fulfilled when there is a point of trade. This is the opposite of those who believe if we open up a new store, we have to create the demand. Maybe the truth lies somewhere in between, but advanced data arms you with more evidence than guessing. 5. Product to service ratios. Servicing products either ad hoc (break-fix) or planned (off season tune ups) is important to keeping the lights on, and drives incremental margins as a profit center. But, to service more, you need to sell more. Without a new location selling the merchandise, the pipeline of future service at one location can only grow as fast as your last product sale lifecycle. Having a new branch creates tremendous opportunity to keep the tech bench busy, adding opportunities to cross sell new products with increased foot traffic. 6. Don’t worry so much about the Big Box Stores. Yes, they are the giants for volume of lawn and garden equipment, but your customer is not their customer. There is a reason why someone drives by one of the big boxes and heads into your store. Focusing on your strength, which usually is product knowledge and service expertise, is the difference. 7. Maybe you already maxed out your current market penetration. Here again is where analytics can help you
get greater visibility into your current market. If there is plenty of room to grow, then double down and drive more traffic. However, if the market is saturated, then it is time to consider expansion. See #4 to determine where it makes sense to reinvest in the business. 8. Landscapers can move around a lot. Crew leaders and foreman can switch jobs, but that doesn’t mean you lose a landscaping account. It just means you can maintain, and even expand, your business because you have a relationship with them—the important buyer or influencer who has been into your dealership before. 9. You know the buyer’s info. Big Box? Not so much: Your POS systems and supporting analytics are powerful to leverage. Lawn and landscape dealers have the advantage of knowing the customer’s information, whereas big box has anonymous not attributed data. This is why they try so desperately to add loyalty promotions. But with your transactional data, it is possible to predict the next likely purchase, which accessories and products should be merchandised together to increase bundles and revenue, and furthermore, when to drive service revenue off season to spread out the technician workload to offset the variable labor concerns facPET ing most dealers. Jeff Winsper is the president of Black Ink Technologies, which helps the power equipment industry sell more, faster and smarter. The SaaS platform provides more visibility across the entire supply chain. Even if you have decent tools internally such as business intelligence, CRM systems, geo-mapping, or statistical modeling, Black Ink takes it to the next level because the models and data are specific to the manufacturing and power equipment marketplace. This helps improve customer acquisition and customer relationship management—and that helps the OEM, their distributors and dealers grow. Contact e-mail: jwinsper@blackinkroi.com.
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