Watching your company grow in leaps and bounds can often be quite daunting and tough on even the best management team. Profiling the successes of growing franchises Boost Juice and Big Dad’s Pies, we look at ways to keep your business on track, from concept, through to start-up and execution.
The extensive experience of DC Strategy provides an insight into a few straightforward ideas with specific reference to the serious growth journey of Boost Juice and Big Dad’s Pies.
Boost Juice (Boost) was founded by Janine Allis, who opened the first store in Adelaide in 2000. Boost was focused on scaling a global smoothie business with a great culture and market-leading brand. Eight years later, the Boost group is a recognised and respected retailer and distributor with more than 200 stores in operation across Australia and in 11 other countries.
Big Dad’s Pies (Big Dad’s) is a family-owned and operated food manufacturer and retail business founded by Stephen Donnelly in Ipswich, Queensland in 2002. It has a world class manufacturing facility, a network of more than 40 stores in Queensland and is on track to build a national and international distribution network.
Understand the phases of growth
There is no silver bullet or six steps to managing serious growth. It is complex, specific to the people involved and in reality covers a period of time measured in years, not months. The best place to start is considering the actual phases a business passes through to actually understand how to manage serious growth.
Building a business
In the experience of DC Strategy, the key phases that businesses progress through are concept, start-up, growth, maturity and international, exit or diversification. Each of these phases has been the focal point of plenty of documentation and commentary over the years and yet with the advantage of the lessons of history, there are still more examples of successful small businesses that scale to become poor medium-size businesses, than those who scale the business successfully.
Businesses do not last forever and size does not afford complacency. How does Pan Am go from number one airline in the world to bankrupt two years later? Why did Ford never regain number one spot in the automotive industry? Why has McDonald’s never been surpassed in food retail? This is the challenge of managing serious growth.
A concept requires structure, skills, resources and, above all, commitment to bringing an idea to life. All businesses have been in this phase at some point; it is exciting, challenging and the key issue any founder needs to address is whether the intended plan on balance has a significant chance of success. If not, there will be other alternatives and discipline is as important as altering a strategy early is better than labouring under a misapprehension for years.
The start-up phase transitions the business from idea to reality and it is the time to get the fundamentals right. The primary foundations of any business are:
1.Develop the value proposition
2. Identify the target market and consumer base
3. Identify a sustainable and profitable business model.
Boost started with a single store in Adelaide, Big Dad’s a single store in Ipswich and both of these businesses tackled the issues of brand, business model, pricing, marketing, people and cash flow. Both businesses had to make tough decisions about the breadth of product and service offering, amongst other issues, in order to scale the business. Why did Boost not have other food? Why did Big Dad’s have more than just pies despite the name?
Growth is a popular topic and a reasonable aspiration of almost all businesses. Statistics suggest it is also the stage that is the potential undoing of an otherwise successful business. The real complexity that exists is priority management, people focus and executing on the simple things well. Boost would have gone nowhere without the formation of an appropriately skilled team, board and commitment to its brand and culture. Big Dad’s stayed 100 percent focused on delivering the highest quality of product to the customer above all else.
Maturity is a difficult stage given the propensity to assume past success brings future success. The mature business is a time for consideration of the redevelopment of the core business model, the asset value in the group, re-branding, or refreshing the consumer value proposition. Constant innovation in the mature phase of a business is exemplified by a number of businesses: McDonald’s and Boost used the introduction of new menu and food lines; Forty Winks used a re-brand and product diversification; Adidas repositioned its product and brand; Michael Hill Jeweller moved away from price to value and quality position. Whatever the challenge, the existence of complacency or the thought that size is a defence to change has been, and will continue to be, the undoing of many successful businesses.
International, exit, diversification
This stage of the business lifecycle is the least documented and understood. Exit or succession planning is something that should be at the forefront of the planning at the outset of the business. Years of emotional attachment however can blur the perspective of the actual business needs. What is the strategy?
The maturity of many sectors in Australia is driving an increase in the prevalence of a diversification strategy. Operating a multi-brand group either within one sector or across multiple sectors, offers the opportunity to leverage the core competency and resource base of the group. Luxottica Group (OPSM, Laubman & Pank, Sunglass Hut, Watch Station, Budget Eyewear, Bright Eyes Sunglasses), Flight Centre (Escape Travel, Flight Centre, Student Flights), and Boost Juice (Boost Juice, Salsa) demonstrate the growth potential. It is however an area that is littered with groups that have aggregated businesses on ill-conceived grounds.
This is often driven by insincere advisors, private equity or financers that are more focused on growth by number or self interest than the concept of understanding how to manage multiple businesses. Managing a multi-brand strategy confronts similar issues associated with any growth–infrastructure, resource, focus to name a few–but there are critical structural changes that are often overlooked.
Boost is a mature business in Australia yet the domestic focus is continuing growth in existing stores using a range of strategies and the wholesale distribution of bottled product. Boost has also diversified to run multiple brands domestically whilst maintaining its commitment overseas to operate in more than 20 countries as a leading international food retail brand.
Managing Serious Growth
In considering the phases of growth above it is important any management team recognises the current phase of the business as the challenges of managing serious growth differ significantly. Above all, the challenges, lessons and ideas to share on managing serious growth, the three that stand out are priorities, people, and execution. It may seem like an oversimplification but I cannot possibly write the thesis of examples where these three issues alone account for 80 percent of the reasons a business is failing to achieve the opportunity it possesses.
In any business that is experiencing serious growth the key issue is the complexity and number of issues that arise on a daily basis. No business has the resources to execute on everything well and as the business landscape throws curve balls and variety there are limits to business planning. How then do the best businesses manage the growth? Priority management. I liken this discussion to that age old analogy of managing the process of spinning multiple plates on multiple poles.
Think about these facts…
? Given a finite set of resources, the success of any decision is often predetermined by the ability to make it a priority that will consequently draw sufficient resource to achieve the intended outcome
? We all spend insufficient time working on the business rather than in the business
? Priorities differ from daily to monthly and perhaps yearly
? Priority management can counterbalance a lack of people, dollars or time
In small business, the inability to prioritise irrespective of the quality or number of people, access to capital or time available, is a massive issue. This is often hampered by the lack of a board of management or similar structure that provides an opportunity for considered decision-making. No matter the perceived quality or strength of the founder or senior management, the requirement for a functional decision-making body in the business at a board level, is a critical piece of the puzzle of how to prioritise.
You must surround yourself with people that are better than yourself. It’s about having the right people in the business. We are only as good as our team and people. These are all great sentiments, but does the business really possess the type of talent it needs for the current challenges? This is a very difficult area and not due to high employment or the inability to find ‘good’ people. It’s about finding the right people for the phase of growth the business is currently in. My experience in building national and international businesses has reinforced this as the most important aspect of managing serious growth. The price of incompetence or a lack of the required skills is too high.
Be prepared to move people out of the business if they are not suited rather than finding them a home. Play to people’s strengths and be prepared to realise it is not always about years in business or age.
Big Dad’s has gone through a process of progressing beyond the early management structure to build a team that is more suited to growing a business in a fast growth phase. Without this decision, the business would risk stagnation and fail to address the priorities that have been clearly identified at the board and management level. The formation of a board structure has provided the business with the necessary structure to prioritise and set direction for the business in a very strong phase of expansion.
The combination of priority management and the right type of people in the business goes a long way towards ensuring any strategy or idea is executed. In reality, during times of serious growth the priority and people provide a solid foundation for execution. How many ideas do you hear in a day where you simply know the moment you walk out of the meeting, nothing will happen?
One of the core challenges of managing serious growth is the prioritisation of the idea at the outset. The massive challenge that we all struggle with is to execute a single idea well across the appropriate areas of the business. How much resource and training went into Boost to ensure every member of staff asks your name at the time of order? How much time did McDonald’s spend on asking customers if they would like to upsize their meal? It is a very difficult process to execute well and particularly when you consider the decisions of today are often not what the business needs tomorrow.
Few will remember, but Boost did have a multi-brand strategy very early in the serious growth of the Australian business with Tossers Salad Bar, which was eventually closed. This has not stopped Boost from deploying the multi-brand strategy later, but at a more appropriate time in its growth cycle.
Manage serious growth in your business by assessing the key areas of priority management, people and execution. It will go a long way towards driving a higher level of performance, particularly if you consider the phase the business is in.
–Adrian McFedries is managing director of DC Strategy (www.dcstrategy.com). The region’s leading specialist consulting and legal firm. Its specialist strategy, legal, franchising and international teams have developed the networks and brands of many of the region’s most successful businesses.