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No matter if you're adding your tenth customer or your ten thousandth, being able to scale can make or break a brand.
As the founder of all-natural sports drink business Amara, increasing distribution and expanding to new regions is something I am constantly thinking about and asking for advice on.
At a beverage industry conference, I was talking to a fellow entrepreneur about growing, when he responded with something that caught me off guard. “Never burn bridges,” he said.
At first this statement seemed like a given -- that was until he added context. He explained how his beer business had expanded quickly into 12 states after having several regional beer distributors express interest in his brand.
Hiring enough personnel and additional sales employees to cover all the new regions would have greatly increased his labor costs, so he held off. Subsequently, his products did not turn fast enough on the shelves, the retailers discontinued them and so did the distributors.
Even though he now has grown his business and has enough cash flow to support the required employees, those distributors and retailers will no longer take meetings or return his calls. He lost his chance, those bridges had been burned.
Of all the lessons I have learned this is the most important: Do not grow unless you are prepared to handle it. At Amara's office in Berkeley, Calif., we receive calls and emails on a regular basis from distributors in different states wanting to buy drinks from us. In most of these cases we have decided to hold off on expansion, because we can't support them with sales and marketing teams on the ground.
Yes, you read that right -- a startup company turned down cash to make sure their brand gets the proper support. But in the beverage industry, like many other markets, we are for the most part a marketing organization. Because, we can't talk to every individual about Amara, we rely on branding, sampling and messaging. If we mess this up, it could be detrimental to our future's brand.
Remember that when you expand you must do it at a manageable speed, so you can support your product with marketing campaigns, boots on the ground and the proper support for your partners. If you are thinking of scaling your business, make sure you keep these points in mind:
Expand intelligently. From expanding to a new geographic region or rolling out new features to appeal to more customers, make sure you have resources in place. If you don't have the cash flow to support sales and marketing efforts, hold off until you do.
Think about your reputation. Your brand reputation matters to every person that touches your product. From your supply chain partners to your end customers, you need to provide support. If you don't, you could tarnish the relationship and your brand's image.
Do industry research. The distribution model for a software company and a beverage company are completely different. What works in one industry, won't work in another. Make sure you study what similar companies have done. Talk to advisors and experts and do research on the internet, before you decide to expand your product line.
Let us know in the comments below.