In a recent video, I described three different ways to branch out your cleaning company into a new geographic territory: large accounts, boot strapping, and acquisition. All three are viable options, each with their own strengths and weaknesses. In this article and the following two, I’m going to describe each method and then list the strengths and weaknesses of each. Depending upon your current situation, one method will likely be superior to the others. However, the goal of each is the same - start a new operation in a new geographic location.
Description: The Large Account Method
In this method of branching out, the goal is to create a new operation by securing a large contract in a new geographic location. By large account, I am referring to a customer that bills at least $15k/month and has an on-site manager built into the account. The idea behind this approach is that with one account, your company can have instant revenue combined with a capable manager who could potentially take on new growth.
Strengths of This Method
There are two obvious strengths of this method. The first is the minimal amount of capital investment needed to start a new branch location. If you are able to land a large account in a new city, the sales and startup costs are your only expenses. The second strength of this method is that you have a manager built into your new branch startup and he/she is being paid for by the new customer. Many large companies in the cleaning industry have grown this way, starting branch operations wherever they could find large customers.
Weaknesses of This Method
While this method of growth is preferred by many, there are some downsides. First, it could take a significant amount of time to find the sort of account that can house an on-site manager. Second, it can be very difficult to land a large account in an area that you don’t have a presence in. Customers are often reluctant to give an account to an unproven, out-of-town contractor. In our experience, this has been the chief obstacle of growth by this method. However, if you can develop a specialty dealing with a certain type of customer, you can often overcome this objection.
In the next week’s article, we will discuss branching out via bootstrapping.