How growth can actually strangle your business

How growth can actually strangle your business

In a growth mentality, expanding your presence by increasing your number of sites seems logical. However, the experience of one business proves this theory is not always correct.

In fact, the wrong type of growth can actually become counterproductive.

“We had 16 stores at one stage,” recalls John Sammut, CEO of garden centre chain Flower Power.

“We had three stores in Melbourne, where we took over the Kmart Super Garden Centre brand down in Melbourne, which was a completely different model to what we had up here in Sydney. We also took over another Kmart store at Casula [in Sydney’s south-west]. Also, we had another smaller-type operation running at St Ives.”Smashed flower pot

However, as John explains, this growth through acquisitions did not prove to be as successful as hoped, forcing the business to re-evaluate its growth strategy and ultimately reduce its number of stores.

“We found that the smaller model didn't work for us. We were more of a destination shop which had a full range of products – which included homewares, giftware [and] of course plants, a huge range of plants, anything associated with plants. We also have a drive-through landscape centre where you can pick up bulk product and heavy items. That was the model that worked for us,” says John.

“So we decided about five years ago to close the smaller ones down and just focus on the larger sites.”

The result has been a positive one for the business, despite a reduction in the number of physical locations.

“We did find that once we did close the smaller sites down, they [had been] actually cannibalising some of our larger stores. The business went back to our larger stores, where we were getting more average sales from those customers. They had more to offer and it just worked so much better for us,” John explains.

“At the moment we have 10 large sites [in Sydney only], which run with the model that we have, and it works very successfully for us.”

Having identified the model that works best for its business, Flower Power is now working to cement that strategy before embarking on any future expansion.

John explains that this strategy involves refurbishing the company’s existing sites and expanding its service offering to a newly tested format. Once that is completed, the company may look to expand its geographic footprint to the north and south of the Sydney metropolitan area.

Hear more insights from John and the iconic Flower Power business on the My Business Podcast now!

How growth can actually strangle your business
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