My business is digital, I do not need to have a local team in any city. Wrong!

If your business is  online, the question you are probably asking is; why do I need to scale to other cities? We are on the internet; we are in every town in the world.

Well, that’s not entirely accurate. For most businesses – online or not – the presence of a local team with domain expertise goes a long way in increasing sales and getting exposure to a new audience.

How do you figure out when and how to expand out of your original location? Here are some pointers.

1. Find out if it is a big enough market

Before you launch in a market, look into the size of the market. Is it big enough to support the amount of resources that you will be investing into it? Does it promise a good return on investment? Who are your customers in this city and how many are they?

Beyond the size of the market, you also need to find and analyse indices that determine the ease of doing business in this new location. Also, decide what the marketing channel for your audience in this city will be. What kinds of marketing messages are they responsive to? You need to be doing a series of investigation to be sure the market will be worth your time.

2. Find out if the city wants you

The major question is: are you receiving service requests from that part of the country?

This is part of the marketing research, but it deserves a subhead of its own.

When customers have started asking for your product and are asking when you are coming to town, that’s a good-sized validation for your expansion.

Of course, regardless of demand, you need to compare the demand and its growth trajectory with how much you will invest in the market.

3. Get a good first hire

When you decide to move, the next bit of work is to find your first hire. This is an important job. If your product is one that relies on local adoption to survive, then it’s doubly so. For this position, you need to hire a solid person. At the minimum, they need to have a vast local knowledge and an understanding of the business and product. They should also possess operational skills; be able to work independently or with a distributed team, with little supervision.

The job of the first hire (we can call them City Managers) is to find and validate talent, and also drive the process in this new place based on local knowledge and your quality standards.

4. Create a minimum acceptable quality standard and replicate it in all your locations

Quality standards are the markings that set your business apart from the competition. You should set up this minimum acceptable quality in all your locations. It’s these quality benchmarks that will determine your activities in these new locations. Although parts of your process may be tweaked to fit local realities, the quality should never be compromised.

5. Focus on both ends of your marketplace

Beside people asking for your service – demand – how easy is it to access to raw materials to make your product in the new location? If yours is a service that relies on vendors (like Homejoy’s), is there a sizeable pipeline of cleaners willing to work with you?

6. Get your process right

You need to execute this before everything else. You are familiar with that startup mantra; “move fast and break things”. At the basic level, this is true. But as you begin to replicate your processes, you need to be sure the process is optimised (nevermind that you are committed to the agile startup model).  You need to focus on doing it well, before doing it fast.

7. Track data and optimise your process

As you effect your expansion, you have to track learnings from your processes and identify peculiar emergent activities (or branch outs) introduced by local realities. Track these data, analyse them and use the result to optimise your processes. Always seek to improve your process. There is always something to improve

Featured image via Vennli

Growth is the only essential thing you need to be a startup. Startups are created to grow fast. Everything else that happens within a startup is a derivative of growth.

Everything – ideation, product validation, product management, team building, fundraising – follows from growth. Without growth, early stage startup is just a small business losing money.

That is why founders are encouraged to focus on one metric – the one that matters. This is because, as a startup, your limited resources are a deterrent to wasting your time trying different things.

Depending on your type of business, growth will mean different things to different startups. And your one metric that matter changes over time. Getting rid of distractions enables you to focus your already limited resources – people, time, and money – on the one thing that moves the needle.

What is the one thing that signifies that your business is growing at a particular point in time?

In the beginning, growth for a lot of startups has more to do with user acquisition and engagement than revenue. The advantage of defining your growth metric is it tells you the most important thing about your startup and how should drive it.

You need to consider the followings when choosing your growth parameter.

1. Your business model

The way you monetize your product is an indication of the value that will be created by your business. It’s not always about the money, but revenue metrics provides a standard benchmark for growth metrics.

2. How you acquire your customers

The rate at which your products gets into the hands of users is a substantial measure of how scalable and successful your product can be. Inherent in the DNA of startups is the ability to build products that have the potential of being ubiquitous and viral within a short time frame.

That is why most startups are tech-enabled companies because technology enables innovation not just in the way products are made, but how they are distributed. You can measure your growth based on metrics such as unique web visits, page views, app downloads, partner signups, user signups, conversion rate, churn rate, etc.

3. The stage of your business

The stage of your company will determine what to focus on. Early stage business should be obsessed about metrics that validates their product-market fit more than mid or late stage companies.

In the beginning, your growth metric is based on time-based milestones you need to reach such as partnerships, signup at a particular time, user signup rate, number of feature releases, etc. It is important that you wrap this with specific numbers as much as possible to measure progress.

4. How you measure growth

Answering this question will help you make right decisions. Let’s assume you decide to measure your growth by the number of subscribers to your email list. First, you’ll have to optimise your product, website, app, content and every potential user interactions to grow this list.

You then measure the results of all your actions on a regular basis against this metric. You hold yourself and your team accountable with data and see whether you are making progress or not. You deep dive into all your acquisition channels to identify where you are getting the most number of subscribers. You look at the numbers every day and experiment with various tactics and tools to see how you can grow the subscription rate.

As you focus on a particular growth metric and optimise your products accordingly, magic happens. You identify particular big hairy destinations to drive your startup towards and you can measure the how and the rate at which you are getting there. And as you grow, your goal may change, and you redefine your growth metric.

You build, you measure, you learn.  And you continue the cycle until you reach your true north.

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