Confessions of a Chain Retailer

They say that running multiple stores means more work for less money. That’s because this is generally true. So, in true confessions style, I’ll share some things I’ve learned and dealt with as we’ve grown from a single location to a company with five locations.

It’s scary. Are your systems good enough to handle more locations? Are you good enough? Obviously, you’ve had success up to this point, which is why you got this knuckleheaded idea of expanding. But once you do it and you’re in a new market and reality sets in (along with the onslaught of bills, which always seem to outpace the income), it’s easy to wonder if you’re up to the challenge.

You become more corporate and less local. Your little local business will now be considered a “chain,” and it’s tough to keep that local feel. There was a time when having customers view my business as a large chain was a benefit. That time seemed to pass immediately after I purchased my second store. To counter this, I didn’t rename the stores I acquired, and I tried to get each one to operate on the front lines as a local store. The back-office stuff is shared corporately, but in most cases, I want people to think of my store in their market as a local store.

Managing and building culture is challenging. You’ve created this great local business from your hard work, time and passion. You were there every day when the business needed you. You lived, breathed and bled for its success. And all of those things took time. But once you have two locations, you find out right away that it’s very difficult to be in two places at once. And the culture you built at your original location—which makes it operate like a well-oiled machine, where things happen so easily—is hard to implement at the new location. You forgot how long it took to build that culture in the first place.

We’ve been able to improve communications by using such tools as Google Apps for Business (Gmail, Calendar, Hangouts and so on). And with the video-sharing capabilities of Google Hangouts, where you can have multiple people on the same video conference, you can be in multiple places at the same time. Also, a good point-of-sale system can at least provide solid inventory control and accounting functions.

You have 99 problems, and cash flow is a big one. Often, the new locations don’t cash flow (or aren’t profitable) right away—causing a cash drain. This creates burdens across the entire company as you try to improve the situation at the new store. To weather the storm, you need to have some capital reserves and a proven plan to get back in the black.

You’re purchasing their assets and their mistakes. If you decide to expand by purchasing other stores (my preferred method), you’re buying their inventory mistakes, location mistakes, design mistakes, customer mistakes—the list goes on. A motivated seller in a cash-rich position might be able to give you a discount to help make up for these problems. But most sellers won’t, and you have to get them out of the business and get yourself in at a price you can justify. And even though you try to find these mistakes during your due diligence investigation, you inevitably face problems you could not have foreseen.

You’re completely dependent on your people. With one location, you knew how to do every job and could fill in at a moment’s notice, if needed. But with multiple locations, you quickly learn that this isn’t feasible. This exposes any inadequacies with your training and hiring procedures.

New competitors have tactics you haven’t seen. You’ve licked all the competition at your main location, and you think you’re pretty smart. Then you step into a new market and find there are some smart cookies. They’re not going to let you walk in and take their market share away willingly. Mind you, some of the strategies you’ve used in the past will work in this new market, but some won’t. The fun is finding out which is which.

You become a chain not because it’s easy but because it’s difficult. If it’s so difficult and scary, why do it? The reward of an increased income is certainly a big reason, but for me, half of it is because I enjoy the thrill of the risk, and the challenge. I’m not too keen on jumping out of airplanes or cliff diving, but opening new stores and expanding into new markets is exhilarating, even with the steady mix of failures and successes. I’ve learned so much from new friends that I’ve made that it’s hard to imagine my life without it.

​And at some point, I’ll be rewarded with fame and fortune for my accomplishments. Right?