When HVAC, plumbing, and electrical business owners get their minds set on growing, they frequently shift their focus to communities and counties where they currently don’t do business. “We’ve tapped everything we can here at home, so the only way to achieve substantial growth is by expanding our footprint,” is a common explanation.
If there’s one thing that we’ve learned across our decades of helping companies like yours grow, it’s that expanding geographically before taking ownership of your own backyard is one of the biggest mistakes you can make.
More Problems & Less Profitability
When companies stretch their market area before becoming a dominant force at home, they usually spread their resources far too thinly – especially their people. That hurts morale, reducing employee retention (especially during one of the toughest labor markets we’ve seen) and diminishing the quality of service customers receive. Too often, expansions generate a lot of stress for owners and far less profit than they expected.
You Need To Know Your Codes
Zip codes, that is. When the Cornerstone team starts working with a business like yours, one of the first things we do is analyze your existing business by zip code. What we nearly always find is that more than half of a company’s business originates from just a handful of zip codes. And, as you move into zip codes that are farther away, the share of business each generates shrinks significantly.
What do we say when a business owner points to another zip code that’s 20 or 30 miles away and is full of older, higher-value homes? Our first response is to ask how they expect to generate revenue in a place where nobody knows who they are, has never seen one of their trucks parked in front of a neighbor’s house, and is well-served by competitors who are much better-known there. If you lack a strong brand presence in a particular area, you’re going to have to spend a lot more money to generate sufficient business to simply survive there – much less thrive.
You can promote your business far more cost-effectively in your local zip codes – what we refer to as your backyard. That’s because you’re a known entity locally, as people see your trucks on their daily commutes and in neighborhood driveways.
Focusing Locally Is Inherently More Profitable
When you concentrate on serving the zip codes where you already have a substantial presence, you can take advantage of a long list of advantages. What can you do to make the most of your own backyard? There are several strategies worth considering, including:
Get leaner and more profitable. Before trying to scale your business, focus on making your existing operations as lean and profitable as possible through strategies like:
- Optimized routing: Are your technicians’ routes as efficient as they can be? Wasted drive time is wasted money.
- Pinpoint your CAC: Do you know your real Customer Acquisition Cost for your current market? Is that number sustainable and have you developed a proven, repeatable way to acquire customers profitably? If not, expanding will simply multiply an inefficient process.
- Expand service agreements: Are you maximizing recurring revenue from existing customers through service agreements like maintenance plans? Your repeat customers are the most profitable, but most won’t call again without some reminders.
- Control inventory: Is your local inventory optimized? Overstocking or understocking can eat into profits.
Expanding an inefficient operation simply means you’ll be inefficient on a larger scale.
Reputation is everything. Your reputation is built on every service call, every customer interaction, and every online review.
- Flawless local reviews: Do you have a consistent stream of 5-star reviews across Google, Yelp, and other platforms for your current service area?
- Strong local word-of-mouth: Are local residents actively referring you to their friends and family?
- Brand recognition: Is your business name well-known and trusted within your current community?
If your local reputation isn’t impeccable, trying to build one from scratch in a new area will be an uphill battle. And if your local reputation is tarnished, the negativity will follow you, making new customer acquisition much harder and more expensive.
Build operational scalability. Growth puts immense pressure on your operations. You won’t grow successfully without systems and people that can handle increased demand without breaking.
- Efficient dispatching & scheduling: Can your current system handle a significant increase in calls and appointments without glitches?
- Skilled & sufficient workforce: Do you have enough highly trained technicians and support staff now to handle current demand without burnout? If you’re constantly scrambling to cover calls, you’re not ready to go after more of them.
- Training & onboarding: Do you have a standardized, effective training program for new hires so you can quickly bring new staff up to speed in new territories?
- Quality control: How do you ensure consistent service quality across all your technicians? Will those techniques work at a distance?
- Financial management: Are your accounting and financial reporting systems already structured to track performance across multiple locations?
Expanding without strong operational foundations is like building a house of cards. One strong gust of wind (or surge in demand) and the whole thing comes tumbling down.
Consider your own capacity. As the owner, your time and attention are finite. Expanding geographically demands significant focus, travel, and strategic oversight.
- Delegation: Have you successfully delegated day-to-day operations in your current business, freeing up your time for strategic growth initiatives?
- Strong management team: Do you have competent managers and team leaders who can run the local operations effectively without your constant involvement?
- Mental & physical readiness: Are you prepared for the added stress and workload that comes with managing a geographically dispersed business?
If you’re spending a good chunk of your time putting out fires in your current location, you probably don’t have the bandwidth to establish and nurture a new one.
How to Shore Up Your Local Business
Ensuring you can make the most of your local market should be your goal before you start eyeing new communities. The key to owning your backyard involves several practical steps:
- Audit your operations: Identify bottlenecks, inefficiencies, and areas where profitability can be improved.
- Optimize your customer journey: From initial contact to follow-up, ensure every touchpoint is seamless and positive.
- Invest in your team: Recruit, train, and retain top talent. Empower them and build a strong company culture.
- Automate & systematize: Implement CRM, dispatching software, and other tools to streamline processes. Document everything.
- Amplify your local marketing & reputation: Double down on SEO, local listings, and generating customer reviews.
- Analyze your financials: Know your current profitability, cash flow, and CAC.
We’ll Show You The Smart Way To Grow
When you focus on optimizing your local operations first, you build a stronger, more resilient, and more profitable foundation for growth. That way, you’ll enter new markets from a position of strength and confidence, knowing you’re ready to replicate your proven success. We’ve helped businesses like yours grow through smart strategies and proven approaches like these, and we’d love to add your business to our roster of happy clients. Learn more by emailing kerryf@cornerstonead.com, calling 317-804-5640 x108, or booking a free marketing strategy session with us here.