While serving as H.R. Director at the automotive Service Chain back in the late 1980’s we had just grown our company rapidly  from 12 to 25 stores and the owner wanted to buy out a large competitor out west with 244 stores for around $70 million dollars. 

Courtesy of Icsc.edu

I got the privilege of going on a three day trip to Texas with the owner to view all the locations there. We rode around in limousines for three days we would drive up and roll down the window and videotape the location and then making notes about what we thought of that location as to whether it was A being best, B being not the best, and C being not a good location. 

 This acquisition process went on for a long time and one night while in Knoxville, Tennessee after dinner over a drink I expressed to the owner that I was not totally confident in the purchase. When he asked why I explained that we could at any given time go and restore 2 or 3 of our stores to good health simultaneously.

However I didn’t believe that we had the management depth to be able to restore 244 stores all at the same time. The competitor was in bankruptcy at the time and the average sales per store were $19k a month our average was over $44 k. I knew we didn’t have enough experienced managers to get personally involved with all those stores which is what it took to turn one around. The owner responded that he would never forgive himself if he didn’t try. I didn’t bring it up again.

A short time later I left the company rather than move my family to Los Angeles. The owner went ahead with the purchase and several years later it was back in bankruptcy. I have regretted not going ever since even though I am sure the outcome would have been the same, I wished that I had been there to help with the struggle.

If you are an owner first and foremost you have my utter respect for what you have accomplished so far, but be very honest with yourself when planning an expansion because even if you never forgive yourself you could end up totally broke and take years to overcome the devastation emotionally, and financially.

If you don’t have enough talented management that has proven, and I mean proven that they know how to fix a broken business to oversee the expansion don’t do it!! If you are adding multiple locations you need one of these talented experienced managers for every 5 or 6 locations in my opinion. That would allow them to spend a week in each location at least every two months and still have time to do their other duties.

Management depth to restate; is the amount of successful experience your staff has, and their personal ability and knowledge to analyze and diagnose declining sales. You either have it or you don’t and if you are emotional about an expansion plan you’re putting yourself and everyone else at risk.