Rodney Anderson has had a thing for Mexican food for as long as he can remember, but it was when he was 16 that his love affair with the cuisine really took off. That was when he and his friends started driving, which meant they could all pile into a car and drive to Chicago’s Mexican neighborhoods to eat at authentic Mexican restaurants.
“These burritos were massive and loaded full of real ingredients,” he said. “I was all about the steak.”
His visits continued all the way through college and graduate school, deepening his education in what Mexican cooking should taste like. It was while he was getting his MBA that he realized there was a business opportunity in providing Mexican meals that were consistently a cut above the rest. In 1992, with a financial contribution from his father and money from the sale of a few of his stocks, he started Pancheros Mexican Grill – a restaurant that now has 70 locations across the country.
Going from one location – he opened his first Chicago-style Mexican restaurant in Iowa City, near a college that housed a lot of hungry students – to 70 wasn’t easy. In fact, Anderson nearly went bankrupt when he decided in 1998 to shift from selling to college-aged kids to selling to families – which turned out to require significant and disruptive changes. Over time, though, he’s learned what it takes to go from a great idea to a successful venture.
Lots of things have to happen for a business to go from small to big, but – with some hard work, good customer service and a great idea – it can be done. According to David Zimmel, a Calgary-based business advisor, “The people who do the best are the ones who don’t mind working hard and have some sort of edge in the way they do things.”
Of course, there’s a little more to it than that. Here are five things business owners must do if they want to scale up successfully.
Get The Simple Stuff Right
Entrepreneurs are an easily distracted bunch and they have a lot to worry about. Whatever’s going on, never forget the things that make up the heart of your business. Whether your business is big or small, success can only come if you focus the bulk of your attention on what matters most to customers.
For Anderson, that’s running a clean restaurant and delivering a delicious product. He makes sure to avoid getting stuck on the little things.
“If two-thirds of a business is about rolling a good burrito, then you do that before anything else,” he explained. “Execute on your key point.”
Borrow From The Bank
Money matters when it comes to growing a business – and it’s an ongoing concern at every stage of operation. Many people start their companies with lines of credit or personal loans, said Zimmel, often borrowing money from a financial institution.
These essential cash infusions can then be paid back over a prescribed period of time. It’s in these initial loans that the all-important relationship between banker and business owner is formed, Zimmel noted. That relationship is crucial, since companies are always going to need money for operational and capital needs. While outside investors can provide cash injections too, business owners typically have to give up a stake in their company to access those funds.
“Most of the time, the bank covers 80 percent of what you need and 20 percent can come from private equity,” he said. “You want your banker to be your friend.”
An unsecured, fixed-rate, fixed-term personal loan, with no origination fee, can in particular be a great source of liquidity for a business owner in growth mode. Not all personal loans come without origination fees or prepayment penalties, but those from Discover Personal Loans do.
Build A Strong External Team
Founders of businesses are good idea people. They’re often less adept at running a company. While that may be fine at first – a great idea and an owner’s passion can be enough to get a business going – you’ll need to build a strong team around you if you want to get big, Zimmel advised.
While that will involve hiring dedicated staff, it also means working with top-notch accountants, lawyers, financial professionals, insurance advisors and others who can help you figure out how to get your company from one level to the next.
“Business owners should write down their weaknesses and then see where they need help,” he suggested. “Maybe they don’t understand financials, or they have to manage liability, or need help sending out invoices. They need a group of trusted advisors. Otherwise the business isn’t going to grow.”
Don’t Stop Innovating
Businesses go bust when entrepreneurs quit innovating. You have to keep challenging yourself and reviewing your business plan – and you can’t be afraid to make a change if it’ll help you grow.
For Anderson, that meant shifting his business from college campuses to family-style restaurants. He didn’t think he could grow as quickly by serving students, but the transition was still difficult. He had to test new menu items and remove certain dishes – and his original core clientele wasn’t happy about the changes.
While he was able to finance the shift with money from the business, revenues did fall during the transition phase.
“It was scary,” he admitted. “But it was the kind of thing where we could have sat here and stagnated. Life would still have been pretty good, but we didn’t want to do that. We wanted to be good at what we were doing.”
Anderson’s 16-year-old self could never have imagined just how big his business would become – and while he’s been a success by every measure, he wants to keep getting bigger. He hopes to franchise at least 30 more restaurants over the next two years and then continue expanding from there.
“If we can get to 100 we can start growing a lot faster,” he said. “We’ve created a strong model that works.”
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