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Maven Marketing with Brandon Welch
Each year, business owners spend one trillion dollars on advertising with very little to show for it. In fact, eight out of ten say they are not confident they are getting their money’s worth.
Without throwing money at advertising, how do you grow your business?
Maven Marketing with Brandon Welch is a workshop-style podcast answering real growth questions from today’s business leaders. Each episode will introduce you to the Maven Method, our straight-forward, proven approach for growing a business without wasting money on ineffective ads.
Trade the marketing lies for solid growth strategies so you can reach your big dream!
Join Brandon Welch and co-host, Caleb Agee, each week for Maven Monday and Frankly Friday!
Maven Marketing with Brandon Welch
Should You Open A New Location Or Grow The One You Have?
Free Marketing Audit: MavenMarketingAudit.com
Maven Method Training: MavenMethodTraining.com
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Host: Brandon Welch
Co-Host: Caleb Agee
Executive Producer: Carter Breaux
Audio/Video Producer: Nate the Camera Guy
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Welcome to the Maven Marketing Podcast. Today is Maven Monday. I'm your host, brandon Welch, and I'm joined by Caleb. When's the last time you wore a Speedo AG? Oh gosh.
Speaker 2:I do not like that question. It feels very personal.
Speaker 1:It was a shiny day. It was yeah, there he was. Shiny day. It was yeah, there he was.
Speaker 2:I, I, yeah, I. I'll say this was half my life ago. So Okay, I, I'd, I'd like to not be held. Think statute of limitations should be involved here. But um, somebody made a bet with me. You're allowed to reinvent yourself. That's right. I'm a new man now father. Now I'm a husband, yes, but back in the day, somebody bet me $100 to wear a Speedo to work at my boat detailing job.
Speaker 1:Which is altogether different than his advertising job. What would it take now A?
Speaker 2:lot more than $100.
Speaker 1:Yeah, just be rich or something.
Speaker 2:But yeah, that was a long time ago. Okay, Thank you for bringing that up.
Speaker 1:Well, you know what?
Speaker 2:We're all about small businesses here. Putting it on the internet for everyone to think about.
Speaker 1:That was a very entrepreneurial thing for you to do.
Speaker 2:Yeah, thank you yes.
Speaker 1:So, hey, this is the place where we answer your real-life marketing questions so you can grow your business, eliminate waste in advertising and achieve that big dream.
Speaker 1:And the big dream so often has to do with getting bigger, growing our business, adding locations maybe and what we're talking about is something that's just come up a lot of times in our 15 years of consulting, and very often, if you are an entrepreneur, if you are an ambitious entrepreneur and I know you are because you're listening to the Maven Marketing Podcast the idea comes up that you could either buy another location or expand into an adjacent market, and that sounds really exciting because it takes us back to builder mode. And I've been guilty of that. I've wanted to do that lots and lots of times, and sometimes I have. And then many, many dozens of clients have done this over the years and it turns out sometimes that's a great idea, this over the years, and it turns out sometimes that's a great idea, but sometimes that is way harder and more expensive and really just a worse idea than you could ever have thought it would be Yep.
Speaker 2:So today we're going to really dig into when it would make sense.
Speaker 1:Five steps.
Speaker 2:Yeah, we got five steps for you. We're going to assume that you have a successful business, it's running well, it's profitable, you've got some systems in place, you've got some things, you got some people that are running the current first location pretty well. And that's usually when you start to get itchy and look across state lines or look down the street and say, well, I wonder if we could do this again just down the road. And we're going to talk about when. That may or may not be a great idea.
Speaker 1:First one, first step, first thing to consider is are you already a big fish? A big fish in our world is somebody who has at least 10% market share and over the years, if market share isn't something that you are like measuring or just like taking a look at once in a while, you should, because it really indicates what phase of business you probably are in 5% market share than it is from 5% to 10%. And it's way, way different to go from 10% to 20% or anywhere above 10%, and this is going to sound weird, but it's actually fairly easy to go from 0% to 5%. There's 5% of your market and, by the way, it may take you a decade to get 5% if you're in a big market, if you're in I'm talking the Atlantas, the Dallases, the New York cities, and you may get bigger than you ever want to be, being less than 5% market share. But there's something that happens, just by way of averages, that there's 5% of people out there that just kind of sort of want to buy the way you sell and-.
Speaker 2:They're on the loose, they're not tied to anybody, any competitor.
Speaker 1:Necessarily there's going to be some natural alignment with you and them, that's with your friends and family, that's your churches, that's your community. That's just what you're going to probably be able to do with a moderate amount of marketing and a well-run business. And so if you're not at that 5% market share, the effort and the blood, sweat and tears it takes just to go do another location, in my opinion, is nowhere near worth it. I can't think of a scenario where it would be like, yep, you're better off to have another location if you're less than 5% market share.
Speaker 1:Now, if you have 10%, which is that's a bear, 10%, which is that's a bear, I mean, some of our clients who've been doing our method for six, seven, eight years are just now getting to that level. But we're talking like $20 million businesses, man. We're talking like really, really nice businesses. But at that point it is tough. You have to start creating new ways to sell, because those other 90% they probably know about you if you're a 10% market share.
Speaker 1:You're probably a name on the list and there's some amount of marketing and salesmanship that would get you above 10%. But there's a bigger reason is probably you're strategically just placed different in either pricing or speed, or maybe location or product delivery or brands yeah your style, yeah your style, just all of those things, the way you do it yeah.
Speaker 2:So, that may not speak to the other majority. That's remaining.
Speaker 1:Yeah.
Speaker 2:And just by. We're assuming you're in a market that has competition right.
Speaker 1:Yeah, Obviously we're talking to service companies mostly service and retail.
Speaker 2:Unless you're the first in town. That's just, that'd be unlikely. But what you're going to want to do is we have some you know we call it third grade math that you can do to help assess your market share.
Speaker 1:Yeah.
Speaker 2:That's a good thing to go over. And it's good to acknowledge who the other players are in your current town so that you can figure out where you are on this 5%, 10%, 20% ratio, you know.
Speaker 1:Yeah, one thing to do is just look at national data and so you can. Some sort of national industry report will have like the percentage of people that buy a year or how big your industry is in a year, and this is loose math. But you can go okay. If the entire nation population is 323 million and my population is 1 million, you just do your ratio there.
Speaker 2:You go okay if- If 1 million people are gonna buy a car this year, then you could reasonably say- Out of 323 million. Yeah. That's off, but if we're using you could find the percentage of the whole and then go to your town, go to your market size, say, cool, our town is 400,000 people. We just found that 2% of all people I made that number up 2% of all people are going to buy a car this year. Yes.
Speaker 2:What's 2% of 400,000? That's how many people are going to buy a car this year in my town. How many am I selling?
Speaker 1:How many am I selling, and then do your math from there so you can figure out your market share through that. Sometimes it's way more convenient than that. Sometimes your trade association will just tell you because you're in a market that's big enough for them to measure and care about, or a local chamber of commerce, or like Statista is a good one.
Speaker 2:Sometimes suppliers and other vendors like that have good market data for that.
Speaker 1:I love Tim Miles' method for assessing market share. Think of all the competitors, like all the competitors in your town. Just write them down and then look at how many trucks they have, and then how many trucks do you have, and that's probably pretty dang close.
Speaker 2:Yeah, or employees Employees? Yeah. Look at their About Us page. How many faces are on there?
Speaker 1:Yeah, and you could probably get really dang close to where you're at. But the point is not to calculate exact market share like the better the better, but it's just to know where am I at? Am I close to getting I've got a really big business? Because then and this is going to kind of lead to number two then you have. You understand your product, you understand the ways you grew. You probably had to already build in some extra complexity and some dynamic way that you deliver your business to different types of customers. You're probably equipped to go into a new market because you've seen a lot more and done a lot more. And I would ask there you're a big competitor for your competitors here. But the market you're considering going into, yeah, how competitive is it? Is there another one of you already in that market? Cause it's going to be really hard to knock them down Right.
Speaker 2:That's right.
Speaker 1:So number two is competitive landscape. You know, don't kid yourself. If there's a really highly reputable company in another market, if there is a, if there's a national category leader, a good thing you could look at is like their reviews, you can get an idea. Go to their About Us page, count their employees, like you can size people up pretty quickly and it's like are they big and suffering? So they're big and like not good, so you can easily knock them off. Awesome Green light.
Speaker 1:Bad reviews, something like that Yep Are they big and complacent is the word I was looking for. Or are they big and, like, really tough to beat?
Speaker 2:because you don't want to go boxing with a gorilla. It's not going to work.
Speaker 1:Again, it's not that you couldn't build a business that would work. Yeah, let's be clear about that. Yeah, there's always room for another one. Is it a better idea to grow your location versus theirs? Right, how hard is that? Anything else you would add to that?
Speaker 2:No, I think, just acknowledge also when you go into that new market, you have your friends and family here and you probably bootstrapped the start of this business with your own personal With some wind at your back.
Speaker 2:Yeah, your own personal relationships. You lived here, you know for however long before you started the business and then you lived here while you were starting the business. Well, that won't be true. Maybe, probably in this new location, unless you pick up and move to it to start it. Um, and so you won't have the benefit of just natural networking, referrals and all of that. You'll have a team over there, I assume, but they're not the business owner and that's a different game.
Speaker 1:One more thing on competition I would say is if you have a, if there's a competitor there, that's just a legacy. They're lazy and they're begging to be disrupted. Go take a peek at their employees, particularly the young ones that still have hunger and still have some propensity to want to change their situation. Maybe you can steal them, because if they know all the bad, where the bodies are buried at your biggest competitor I'm not trying to say that's a good thing to do anyway, but if they're begging to be disrupted, if they're misserving the market and there's somebody in there that wants to do it better, they just can't quite go out and do it on their own. And you're the guy that can come in with some, or gal that can come in with some money and some ops and a brand still there, number two or three or whatever, and go build something with that, yeah. So competitive could be a green light or a red light, right, yeah, or a yellow light.
Speaker 2:We're just taking a lay of the land. Yeah, number three is your bandwidth. Builder mode is not passive. Are you ready to go back?
Speaker 1:to a startup? Yeah, you're ready to change diapers again? Yeah.
Speaker 2:Brandon and I have a small sports team between the two of us in children with some subs on the bench probably, yeah, we do um, and I, my youngest, is just about to turn he would be the star of the team.
Speaker 1:He's no, oh sorry.
Speaker 2:You're the youngest okay, yeah, my youngest is a baby, baby girl and she, um, she, you know very much for that first year, no matter what anybody tells you. After the third one, you hardly notice them, right that kind of you. After the third one, you hardly notice them, right that kind of thing. Um, for year one, you do notice them because they're very much a baby. They need diapers, they don't eat solid foods, they and you have to go back to the beginning. The same is true of your business. It's going to need changing often. It's going to need fires put out. You're going to have to feed it often.
Speaker 1:It's going to eat a bunch of cash. You need fires put out.
Speaker 2:Yeah, you're going to have to feed it often. It's going to eat a bunch of cash. Yeah, it's going to cost more than any of your other, than your first born. Yeah, all of a sudden, and you need to get ready for that. Are you ready for the energy that it?
Speaker 1:takes, unless you have franchise level packaging, like systems, like rollout plans, which I don't think happens. I don't think most franchises get their foot and they really know how to duplicate until they're at dozens, dozens 50, probably 50 locations. There's always nuances that they say all the rules in a franchise are written in blood. They actually don't say that. They say that about rules in the FAA flight book, but I just applied it to franchise.
Speaker 2:I could have gotten away with it. How do you know someone's a pilot? I like it. I could have gotten away with it. How do you know?
Speaker 1:someone's a pilot. Yeah, don't worry, they'll tell you. They'll tell you I was flying the other day. Oh, you fly.
Speaker 1:Yeah, yeah, okay. So it takes one to know one. So there I did it again. So what you want to know is just that that bandwidth factor is always going to be there. It's just that that bandwidth factor is always going to be there. And man, I've got some friends that have had some really, really big, awesome companies, and I'm talking like they've got systems, they've got people. The entrepreneur sorry the entrepreneur, the founder is not really working in the business every day.
Speaker 1:So you'd be like oh well, I can duplicate this, because I've got systems. Yeah, of course it always changes with another market.
Speaker 2:Yeah, like oh well, I can duplicate this because I've got systems. Of course, it always changes with another market, yeah, and I would say there's somebody out here who's going to say no, not me, I will promise you.
Speaker 1:You are forgetting how hard it was at the beginning, you're probably forgetting how old you are too.
Speaker 2:You look at it with rose colored glasses and you're like I could do that again. It wasn't that hard Now that I look at it and I know so much more now. Well, the reality of some of that it wasn't your knowledge, it was you were building a business from scratch.
Speaker 1:That's right. So that's number three. It's the well. But here, since you mentioned, somebody is out there going. Yeah, yeah, yeah, yeah, yeah, they're going, oh yeah, yeah, but but not me Well. I'll offer you the ancient proverb Some men learn by reading, others learn by watching, and the rest of us have to pee on the electric fence for ourselves. So anyway, you've been warned, socrates yeah exactly Aristotle, I can't remember.
Speaker 1:Yeah, I don't know Johnny Cash, I think maybe. So okay. So we've gone through competitive landscape, we've gone through bandwidth. We have to have the right processes in place.
Speaker 2:You have to know how you do things, but the processes for an established business are different than the processes for a new business. When you have less people, you generalize. When you have more people, you specialize, but then, on the flip side, you have to have the right people. Who do you have in your current office? Right now? That's a rock star, because they're holding more things together than you realize, and unless you find a similar rock star in new location, you are going to forget and have a much harder uphill battle trying to train up somebody who's been there for 10 years or worked in the system for so long, absolutely.
Speaker 1:This is especially true with really family-feeling businesses, like you're kind of a big giant family, you've got really good culture You've got. This would be us Like there's just so much glue and like weird talent and like things that you've never even thought about how you do them. It's just that Ed does them, or whatever it's just that's what Ed does it's like. Well, how do you make an Ed? Show me that farm.
Speaker 2:Show me that farm Office reference number 783.
Speaker 1:So if you've got the Eds or honestly, for us it's been Megan Like Megan just did what Megan did for so long that when she took another opportunity it's like, wow, we've never really thought about how we did that, we just did it. And so I hate to say this, but talent is really not your friend. If you've been building your business on that, talent is a nice to have, it should be a cherry on top, but talent and the void of, or in the, in the void of skill is really going to make this hard for you.
Speaker 2:That's right.
Speaker 1:So do you have systems and processes? And then last thing is budget. Can you fuel the fire? Yeah, like I, I would want to have six to 12 months operational cash. Your baby, the one you have here, your flagship, is going to suffer. Yeah.
Speaker 1:I don't care if you're working one day a week in your flagship now and you go to build this other business, just by way of focus, just by way of company attention and resources and things you don't see, just by way of company attention and resources and things you don't see, not even because even if you could duplicate yourself, not just because you won't have the energy to act on them and keep that culture going. So it's going to suffer. I'm not saying you'll go backwards in revenue, necessarily, but you're going to have some people tired. You're going to have some people that are just didn't get as much of you.
Speaker 1:If you're the leader, um, and so that's okay, um, communicate well, and then, and then do you have the budget to get that other one off the ground? Because you're not gonna, you're not gonna have the luxury, probably of you bootstrapping it like in another market. It's not gonna be. You just going. Okay, well, I kind of eat what I kill today, yeah, which is maybe how it was if you started it yeah, probably when you started you're like well, like well, sold a job, now I can eat, yeah.
Speaker 2:Now we can take some money home.
Speaker 1:But you can't go out and work those jobs. No, you can't be the front face.
Speaker 2:Those people will expect a pay period paycheck. That's right, it's going to happen.
Speaker 1:And don't go cheap on that area You're going to have.
Speaker 2:Because you're working from afar.
Speaker 1:Yeah, and then you've got the operational costs, you've got the cost of goods sold, you've got the overhead.
Speaker 2:You've got the P&L shape, the real estate, the staff the insurance, taxes, all those things you know they're coming.
Speaker 1:Yes, you know that, so it's not like you have to learn those lessons again. However, the expense structure it's like can you afford to have this new business? Do you have six to 12 months operating cash in the bank to where, if it didn't make a single sale, where you're not freaking out and reacting to? Your first three months were bad or whatever, and I don't think anybody would be dumb enough to do that, just to go in without any cash.
Speaker 1:But, man, it's going to take more than you think and it's not going to happen as fast as you think it should. Yeah, so, um, and as it relates to marketing, remember way back to when you started your location. I bet you started it for many years without marketing. Marketing can be a tremendous tool for you to to get off the ground faster than you would have and, that's key, being faster than you would have. It's not going to make you like success overnight, it's just going to happen faster than it would have. So expect a slow ramp up and expect, if you want to be a million dollar business, you need to be spending, you know, a hundred, 150 grand your first year before you get that million dollars in revenue. It's always you put the seeds in the ground first and then you wait for it. So, um, and, by the way, that's a ratio of 10 to 15%, like 10, 10 to 15% of what you want your first year sales to be. That's what I would put in marketing for my second location.
Speaker 2:Yep, and I think a big, big piece of this is um, yes, your first business is doing really well today. Um, but what if it doesn't do well in two months? Yeah, how big is the gap, the delta, between where you are right now? Yes, you're profitable. Yes, you've got extra cashflow that you could use as seed money. We want to have cash on the side as well, but let's say, we burn up all that cash. You don't want the first one to suffer because of the second, and so you need to acknowledge some of that cash. That was't want the first one to suffer because of the second, and so you need to acknowledge some of that cash. That was your staying power for the first business.
Speaker 2:That's right, and so we do not want to lose the cash cow for the sake of some new venture off on the side. Yes, and that's really important to, you need to know what's I'm sure you do, but you need to acknowledge what's at stake here. Yeah, don't let your cash cow get milked. You want to move that? Money over. I said what's?
Speaker 1:at stake. Oh, there you go. I was already locked in, I was already locked in on, you don't want to milk it. Hey, we got three of there in like four seconds. What are we talking about? We're talking about should you add another location? Should you grow the one you have? So, location should you grow the one you have? So let's do a quick recap If you're less than 10% market share probably just grow in the market. You have Yep, very few exceptions to that rule.
Speaker 1:Just reinvest and grow, grow, grow. Yeah, build that momentum. Definitely. Look at the competitive landscape. Don't pretend like you can be as big a deal as you are in your current market and a new one, especially if there's a big bad competitor there.
Speaker 1:Make sure you have assessed your bandwidth and you can go have another child without losing all that you've built for now. Make sure you have that mentality for one. I think you can, I think everybody's capable of it. You just set yourself up for that. Don't pretend it's going to be too easy. Number four make sure you have the people and processes and the process for hiring the people. Therefore, um that, you need to make that happen. If you are operating off talent now, don't do it unless you got systems like like polish the machine you have. Yeah.
Speaker 1:Um, and then make sure you got the staying power, uh, for the marketing and for all of the things that are going to happen, good and bad, that you don't see happening Right, make sure you have the budget for it.
Speaker 2:And I'd add just a bonus number six, here is go talk to wise counsel. Oh yeah, there's somebody around you who you trust. I would actually go sample three to five different people.
Speaker 2:Now it's hard. You could get a lot of cooks in the kitchen, but there's somebody around you who has that you trust that you can go find. Ask them. They will, uh, give you a very clear answer. And the biggest thing they need to ask you back, and that you need to get pen and paper and write out yourself, is why? Why am I doing this in the end? What am I? What am I validating? What am I growing? Am I trying to grow my investment, my portfolio, my business? Is it a personal thing? Is it for my people? All of those are okay, but you need to know that deep down. Why are you doing it? And you need somebody who's going to go. No, that's not it. Why are you really doing this? And let them dig in.
Speaker 1:Otto von Bismarck said a smart man learns from his own mistakes, a wise man learns from the mistakes of others. And you want to learn from the mistakes of others? Find people who've done this, ask them what would you have done differently? And there's your thing. So hey, expansion is sexy, but it's not always good strategy. Don't grow without structure and save your customer better where you are, and the right opportunity will grow out of that strength. Sorry serve, is that? Save.
Speaker 2:Serve.
Speaker 1:Serve your customer better where you are. Do this on mission. Speaking of mission, this is our mission to show up for you every week to help you answer real-life marketing questions, because growing business is tough and we've seen it be tough so many times that we want to give you everything we have to offer so that it is less tough. It will still be tough, but we're helping you see around corners and this is like one of the best parts of my week to do this. We didn't talk about it, but there's a mastermind. If you want to go deeper, If you want to bring your actual business problems, hey, maybe you're going help me walk through this market share equation. Or hey, help me assess this market. Help me figure out what the competitive noise is. Join the mastermind. It's mavenmethodtrainingcom. Right now there's still an intro member rate and you get to do-.
Speaker 2:Today's the last day. Actually Today's the last day for that Intro member rate. So if you're watching this on Monday, on Maven Monday, you better get it.
Speaker 1:Yeah, go get in there and you can hang out with us and do like literally all the stuff that we are talking about. You can do it live. We can do it with your ads. We just did an awesome call this last week that was knee deep in everybody's actual advertising and making actual moves and saving them tens and tens and tens of thousands of dollars of mistakes, and they didn't even have to engage our team at the full rate to do that. So we'll be back here every Monday answering your real life marketing questions, because marketers who can't teach you why are just a fancy lie. Have a great week.