When growth-driven home improvement companies max out their markets, one option to boost sales is to open a branch. A branch offers the opportunity to generate a new revenue stream while sharing home office costs, such as marketing and admin. On the other hand, if not properly managed, a branch can drain talent and resources. Here's what owners who’ve done it recommend you do if you're interested in expanding your operation.
• Focus on sales and production. If you have strong marketing and admin systems in place, concentrate on selling and installation. “It’s sales, sales, sales, and making sure that those jobs are installed on time and customers are happy,” says Shane Schuckman, owner of Renewal by Andersen of Las Vegas and Phoenix. Schuckman, who opened up Renewal’s Phoenix branch in 2006, says that the office had revenue coming in right away and is now a $13 million location.
• Find people that you can rely on. Meaning hire from within. Brian Elias, president of 1-800-Hansons, in Troy, Mich., built his eight-branch business by expanding contiguously south and west of the Detroit area. Elias says that he learned a lesson when he hired from outside his immediate staff and several of those hires didn’t work out. The company recently launched a three-month training program for potential branch managers. Candidates are required to have worked for Hansons for a year to apply. “If they don’t believe in the culture, they can’t teach the culture,” Elias says.
• Maximize shared costs. What parts and pieces of your current location can be leveraged? For instance, if you’re spending 12% or 15% of revenue on lead generation, you can probably generate leads for both locations without an additional marketing investment. Bob Quillen simply added another caller to the phone room when he opened a second branch of Bryan, Ohio-based Quillen Brothers Windows, in Fort Wayne, Ind., 60 miles away. He functions as its general manager, with his sales manager supervising the three Fort Wayne salespeople from Ohio. “If you can run it for pennies on the dollar and add $2 million in revenue, why not?”
• Set specific goals and expectations. Window Nation, a Washington, D.C.-area window company committed to opening a new location every 18 months, has added five since 2006. The one that disappointed, says its president, Harley Magden, was Charlotte, N.C. “We had not carved out specific goals and expectations,” he says. Those are now set well before the company starts the 120-day process of preparing to open. At its most recent branch in Philadelphia, the company hit its goals in two months.
• Don’t reinvent systems. Replicate what made the home office successful. Document your sales system, lead handling—all of it. “Have a procedural manual for the branch,” suggests industry consultant Vaughn McCourt, who as general manager of one of the industry’s largest companies opened several branch locations. “This is how leads are received and distributed. This is what you do with a contract. And have your branch computer system wired into the main office.
• Monitor metrics that matter. Tracking demo and close rates daily is a given. In addition, Elias looks at average sales. “If they’re dropping you need to understand why.” Quillen advises tracking marketing costs particularly. “Make sure that your general overhead is skinny and manageable,” he says. At Window Nation, customer service, as measured by GuildQuality, is key. The company has removed branch managers whose service ratings consistently faltered.