Scaling Strategically: When To Expand With Branches

If growth is your goal, there comes a time when you have to consider if you’d like to expand with branch locations. This form of growth can be an exciting time for your team, but it also should be executed with care.

This process takes time, and rushing can be detrimental to your overall brand and business.

Why Grow Via Branches?

Brian DuMont, CEO of Yardnique, based in Morrisville, North Carolina, says for them, it was customers asking if they served certain locations that drove their growth with new branches. Yardnique currently has 38 branch locations in the Southeast.

Allen Sweeney, president and CEO of APHIX, based in Frankfort, Kentucky, says the branch model is scalable and sustainable for their business. They have six branches. While APHIX prefers to acquire businesses in their desired new markets, Sweeney stresses you can’t outrun organic decline with acquisition growth.

“We believe that is a poor model and that your business must be healthy organically before you go and consider acquisitions,” Sweeney says.

Mark Hopkins, COO of LandCare, based in Frederick, Maryland, says they will occasionally make strategic acquisitions that are the right fit, but they choose to grow organically because it allows them to them to preserve their culture, values, and operational consistency while scaling up. LandCare has 71 branches across the country.

“Organic growth gives us the opportunity to be intentional with how we grow — opening new branches, developing leaders, and staying closely connected to the communities we serve,” Hopkins says. “Ultimately, it’s about creating meaningful opportunities for our people and delivering the high-quality, personalized service our clients expect.

Prerequisites for Opening a New Branch

So, how do you know when it’s time? Like a lot of other aspects of the business, there’s no one set formula or threshold for being ready to branch out.

For APHIX, they prefer to have a pipeline of at least $2 million in maintenance contracts before launching a new location.

DuMont says they need a minimum of $750,000 in diversified revenue first. They experienced one failure in the past where they launched a branch by relying on one large account that was north of $1 million. When they lost that account, they had to close the branch.

“We just didn’t have the time or resources to actually go out and grow the business,” DuMont says. “So we focused on making sure that client was taken care of. Well, they also went through a transition to turn over from a board of directors to an HOA. A lot of times they just want change. That was a really disheartening experience because we invested a lot of time and money and people and equipment, and we didn’t scale quick enough.”

LandCare takes a holistic approach.

“It’s not just based on reaching a certain revenue threshold,” Hopkins says. “We evaluate overall business volume, operational logistics and how effectively we can service the market from our existing network.”

Hopkins says they also consider talent availability and transportation complexity. Selecting a geographic area for a new branch goes beyond distance alone.

“We look closely at the logistical realities of each market,” Hopkins says. “For example, in a place like Oklahoma, we can cover a wider geographic area without compromising service. But in more complex or congested markets, even relatively short distances can create service challenges that justify a new branch. Ultimately, the decision is based on a combination of client potential, operational efficiency, and the unique dynamics of the market.”

APHIX’s branches are anywhere from 45 minutes to 2 and a half hours away from each other.

“We believe there’s value in strategic geographic growth and multiple factors play into that,” Sweeney says.

DuMont says they pay more attention to crew drivetime instead of mileage between locations.

“Our rule of thumb is probably around 45 minutes is our threshold,” DuMont says. “That could mean five miles in some markets. That could mean 40 miles in some markets. For us, it’s really not about mileage. It’s about how much time is wasted by our teams not being able to operate in the field.”

Logistics of Launching a New Branch

After determining that you do have the business to support a new branch, then comes the challenge of finding the right facility and a team to staff it.

“Real estate can be a real challenge — it’s not always easy to find a location that fits our budget while also meeting our logistical needs,” Hopkins says. “The facility must support our operations efficiently and be well-positioned to serve the market. Balancing cost, functionality, and location is often one of the biggest early obstacles when opening a new branch.”

DuMont says sometimes a new branch is more of a laydown yard for a period of time as they try to run lean and mean. He says they like to try to move promising employees to new markets when they can.

“Trying to make sure that we’re able to staff and do what we say we’re going to do, that’s a huge hurdle for us,” DuMont says. “We can move a branch manager from Raleigh, North Carolina, but a lot of times these people do have to wear a lot of hats, unfortunately. They’ve got levels of employees that they’re accustomed to, and it’s like, ‘Oh, congratulations, you just got promoted, but now you might have to be out on the crew on Thursday.’”

Sweeney says they prefer to hire in their local markets, with executive leadership ensuring they maintain their culture and proper training.

LandCare takes a 50/50 approach. Typically, they will relocate some experienced team members to serve on the leadership team as well as hire locally. Hopkins says crew members are recruited from the area.

“It comes down to what makes the most sense for the market and ensures we have the right people in place to hit the ground running,” Hopkins says.

When seeking out your future branch manager, some of the key qualities to search for include an entrepreneurial-mindset and a strong drive for success. DuMont says he looks for individuals who are well-rounded and thinks about the team first.

“Really good branch managers connect with their team,” DuMont says. “Their team would go through a wall for them, and in turn, they know when to hold their team accountable and when to step in and really make sure that they’re there for their team as well.”

Hopkins says servant leadership is an essential quality for LandCare branch managers. They should prioritize the team and help others grow.

“A proven track record of previous success is also key; we would never hire or promote someone without demonstrating a history of effective leadership and tangible results,” Hopkins says.  

Hopkins says a common mistake is trying to is growing too quickly before having the talent in place to support that expansion.

“Without the right people, scaling can lead to operational challenges and quality issues,” Hopkins says.

Advice for Others

When growing via branches, conduct strategic planning first so you have the right resources in place to support your team. Sweeney recommends ensuring your existing business is healthy before distracting yourself with new market opportunities.

“It can be both fun and rewarding, but doing this too soon could be detrimental to a business that is not ready for that phase of growth,” Sweeney says.

DuMont says if you are starting a branch from scratch, you have to be willing to lose money in the first year. He says launching a branch requires a tremendous outlay of capital expenditure (CapEx) and investment in their people.

“Make sure your team is as committed as you are, because when you do this, you can have the customers, and you’re willing to spend the money, but does your team want the added stress?” DuMont says. “Is the team willing to really step up?