When I first started at Little Caesars, we had 1,300 stores. 

Fast forward five years and that number ballooned to over 5,000 locations – or roughly adding 1 ½ stores a day!  While growth at that level was amazing to be a part of – both for the scale of the company and the personal growth going from a manager trainee to National Marketing Director in that period – it didn’t come without challenges.  In fact, after hitting 5,000 locations, we quickly closed over 1,000 underperforming stores.

So, what did we learn?  That growth for the sake of growth may not be the best path.  Rather than focus on opening “A” locations, we opened some “B” and “C” sites along the way that helped boost the overall store counts but negatively impacted financial results.  After Little Caesars “rightsized”, they began a steady growth strategy once again but focused on premium real estate.  They chose quality over quantity.

Deciding whether to grow your business is a major strategic choice — and sometimes not growing (yet) is the smarter move.  There are many key factors to consider before embarking on a strategic growth plan:

Market, Customer and Product Considerations:  First and foremost, a company needs to determine whether there is sufficient demand for their products or services to warrant expansion.  If not, then they may wish to refine their current offer or create new products and services in advance of expanding its footprint. Next, do they have a loyal customer base that will expand to another location and create growth?  And what about the competition – if the competition is fierce, the strategic decision to grow may have some strong headwinds.

Financial Readiness:  The decision to expand and grow becomes easier if the company has a steady stream of cash falling to the bottom line.   Having strong, reliable, positive cash flow to sustain expansion costs allows the company not only to self-fund a good portion of their growth plans but also put them in a solid position to secure funding if needed.  Lastly, it would be imperative to accurately estimate growth expenses (staff, inventory, marketing, systems) and how, hopefully, some of these are offset by the synergistic pickups from expansion.

Operational Capacity:  It is easy to get caught up in the excitement of growing the brand through new products or locations, but once you start adding to the infrastructure, reality can begin to sink in.  With every new store that you add, for instance, it adds stress to current systems, equipment, and facilities to handle more volume.  Not only will the physical elements be stressed, but also the human resources at the company – is your team ready for the growth?  We were growing so fast at Little Caesars, that I challenged my thirty-five marketing managers with “if you don’t re-invent yourself and how you work every six months, this growth train is going to run right over you.”  Now is the time to check if your operations are efficient, documented, and scalable.

Leadership and Management:  One of the exercises I complete in advance of crafting a strategic growth plan for my clients is a Semantic Differential with the senior leaders.  The Semantic Differential asks the following question: “How would you describe the personality attributes of the brand in terms of how it is perceived today versus how it should be perceived in the future?”  It then measures if the leadership team is aligned and committed to the long-term goals of growth as well as judging whether they have the capacity to manage a larger operation.  Invariably, most leave the exercise with a sense of humbleness and humility. In the end, though, the steering attributes have been established and the march toward their execution may begin.

Strategic Fit:  Lastly, the company needs to sit back and ask itself whether their strategic growth plans fit with their long-term broader mission and values.   From a synergy standpoint, every new growth initiative should not only provide accreditive growth opportunities but also strengthen the core business through synergistic enhancements.  Finally, all new growth expansion cannot come at the risk of losing your company culture and brand integrity. 

The days of growth for the sake of growing are behind us.  Strategically picking your spots to growth not only can help today’s financials but also help contribute to keep your company vibrant and viable for the years to come.

Want more ideas?  For more information on Gray Cat Learning Series, visit: https://www.graycatenterprises.com/gray-cat-learning-series