Growth vs. Expansion

I had the distinct honor of being able to speak to a veritable plethora of creative business owners last week at Engage '09.  One of the recurring topics of discussion was what the next step was going to be.  Most wanted to grow geographically -- do the same thing they were currently doing, just somewhere else.  A few were doing things related to their core business, but only tangentially (i.e., a floral designer opening a retail flower shop).  Only one person I met with was working on expanding his core business (through vertical integration).

Growing the core business into other markets is an ok idea -- so long as you have saturated your current market and have a road-tested operating structure in place.  For instance, if you are a high end stationer serving Seattle, have reached a plateau in sales (but are stable) and find that your staff can handle most, if not all, of the business without you, then considering marketing your product to Portland could be the right move.  Too often though, the creative business has neither saturated its market nor has the operating structure in place to be able to enter a new market without risking its place in its existing market.

All things being equal, I am lukewarm on geographic growth.  The reason - it ignores the value of the creative business' brand equity in its market and, ironically, undervalues the business' core.  Take the same high-end stationer in Seattle.  If he/she really is the best high-end stationer in the market, think about how much time and energy went into building the business' reputation both at retail and to the trade.  How difficult do you think it would be trade off of that reputation to expand into another business line altogether?  Perhaps, graphic design, papery beyond life events (and life events beyond weddings), interior design fabrics (wallpaper, textiles, linens, etc.), and flooring (dance floors, tile, carpets).  The new business line would legitimize the core of the stationer's business and thereby support additional expansion. 

The mistake is to think that your creative business' reputation will immediately translate into another market.  Not to diminish the value of your art, but there ARE other artists already doing what you do in the markets you want to get into.  Your art may or may not be superior to theirs, but you WILL have to prove yourself all over again.  Which, of course, begs the question, why compete in the same arena again when so much opportunity (and new challenges) await you where you are THE big fish?

For me, it is the difference between growth and expansion.  Growth is doing the same thing bigger.  Expansion is using the current platform to develop other areas of business, which, in turn, grows the current platform.  Know your art transcends its medium.  The audience that already loves your work is far more apt to embrace (and value) a new expression than a new audience will the old.

Comments

[Bella Signature Design]

This so makes sense to me - great feedback to those wanting to expand horizontally. I think one reason some in smaller markets want to reach out to larger markets like LA or New York is because we don't often get the fun, high-end, over the top events like thse found in larger markets. Although I personally have no desire to expand geographically, I would love to have the level of events here in my local industry that are much more common in larger more metropolitan markets like L.A and NY. The truth is, however, that those events do exist here, there's just not as many (and they are spread out between many vendors), and if you don't get many, you haven't really saturated the market where you are. I love the idea of vertical expansion - not just growth, but adding actual vertical expansion. More to add to the list of goals!

[Bernadette Smith]

This is very timely for me, actually, thinking about geographic expansion. Given the nature of my business, it seems like a must-do (except I don't yet have a plan on how to do it). But perhaps this post argues otherwise - and I should just focus on expansion. Food for thought, as always. Thanks, Sean.

[Michelle Loretta]

Great post, Sean. I take to heart what you are saying because I am a Seattle stationer and had considered expanding to Portland a few years ago. How ironic. (I'm glad I placed that on hold - and more so now that I read this post.)

I wanted to comment on Daniela's comment (Bella Signature Design). I am from LA and launched my business there. While it is true that there are bigger profile and more expensive weddings there (and NY) there are a LOT of business competing for those customers. It is not the same market as Seattle at all. And, it is like being a celebrity. Not everyone gets to be a celebrity planner and work with celebrities... it is American Idol to the max... where only 1% get those dream weddings.

What I do know is that here in Seattle... it is EASY to get noticed. It is EASY to do business. And, people are very generous in their support of small business. I think there is a greater opportunity to become a trend-setter here... than it is to follow along with everyone else in LA and NY chasing for those big bites. (I love LA, my hometown, don't get my wrong.)

Soooo... Why not define that here? Why not define and educate the Seattle industry as to what a WEDDING DESIGNER does. There is a real opportunity to become THE Wedding Designer of Seattle... there isn't anything like that here... you are right... so go get it! ;)

[Christine]

"I think one reason some in smaller markets want to reach out to larger markets like LA or New York is because we don't often get the fun, high-end, over the top events like thse found in larger markets. Although I personally have no desire to expand geographically, I would love to have the level of events here in my local industry that are much more common in larger more metropolitan markets like L.A and NY."

But why? The why is the most important part.

When I started, I thought I wanted to photograph high end weddings. That is what the "big shots" do in the industry, right? And I want to be one of them, right? Oh yes, I wanted high end weddings -- I was so sure of it!

Until I photographed a high end wedding. And I was miserable. Blech. I felt so ... not normal. And not happy. It just wasn't fun for me.

I've since realized I have a very niche market I prefer to work with. Once I stopped being so star-struck, I was able to see exactly who I wanted to work with and why -- and it isn't in LA or NY. It is right where I am.

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Interesting how Sunday I was telling myself I should do this very same thing! The being creative everyday in April thing. See it's still a wee bit cold to go outside, spring isn't quiet here in beauty yet but it is in spirit.