Chain Reaction Open a store . . . open a store . . .and so on . . . and so on . . . and so on . . .

Fortunately for most people, a big family usually doesn'tmaterialize overnight the way it did not so long ago for theMcCaugheys of Iowa who one day had just one child--and the next hadseven more. Big families generally develop over a period of years,with each new addition joining the bunch after the older ones arewell on their feet and somewhat self-sufficient.

While it's never easy to juggle the needs of severalchildren all at once, most parents eventually figure out how tomanage. Some even find advantages to having a larger brood:Siblings can be each other's playmates, role models and evenbaby-sitters, lightening their parents' load.

For the BIZ Experiences hoping to expand one or two locations intoa chain, there may be no better model to study than that of thelarge family. Indeed, BIZ Experiencess who have successfully gonethrough the process, as well as expert observers, all agree thatgrowing a company into a chain is strikingly similar to raising alarge family.

The key similarity between the two is this: "The more ofthem you have-- children or stores--the less attention you have foreach one, so you have to empower them more and trust themmore," says Earnest Edward Lacey, regional director of theTennessee Small Business Development Center at the University ofMemphis. "They won't all turn out to have the samepersonality, but if you raise them right, they'll each do youproud in their own way."

Dennis Rodkin is a business writer in Chicago.

Are You Sure You Want to Do This?

Like the parents of six who think back to the years when it waspossible to lavish unlimited love and time on the first child,chain owners often cherish sepia-tinted memories of their start-updays. When they had just one location, they could easily have closerelationships with, and keep tabs on, every employee. Having morelocations means sacrificing some of that closeness.

But as no parents of six would voluntarily send away five oftheir kids just to recapture memories, neither would Jim Petr, 36,consider closing 16 of his 17 Milwaukee PC retail stores inWisconsin to go back to the good old days when he was personallyassembling custom-built computer systems for buyers in his singlestore.

"One of the biggest advantages to growing iscredibility," Petr says. "Once we started opening morestores, it seemed as if overnight, customers and suppliers startedlooking at us as an established player, not some little ma and pashop. The first thing people used to ask was, `Will you be inbusiness next year when my computer needs service?' Theydon't ask that anymore."

Although various forces may push an BIZ Experiences to grow achain, the major one cited by those who have built them is thatthere's strength in numbers. Petr says he realized a singlestore in Milwaukee would never last against the national computerchains. "Growth was the only way we could survive," hesays.

The growth of companies that become chains also boostsvisibility and purchasing power with vendors. "There arecompanies I wasn't important to 12 years ago that I'm animportant client for now," says Bryan Collier, 43, who, in 24years, has expanded Gardner-Collier Jewelry, a family-owned jewelrystore in Kirksville, Missouri, into a four-store chain. Thatleverage, of course, makes for the kind of quality and prices thatretail customers notice.

Links in the Chain

It's not just vendors and customers who feel morecomfortable--employees often view expansion as beneficial, too. Insome cases, growth enhances your ability to hold on to good peopleby providing additional opportunities for them. When employees seethere's a range of jobs within your company they can grow into,they might take a longer-term view of their tenure with you.

Staffing is, in fact, the central issue for the head of agrowing chain. Business owners and experts are unanimous in theirbelief that stocking expansion locations with the right people isfundamental to a budding chain's success.

"In the computer business, I've seen a lot of peoplewho have one store and haven't been able to expand because theyhaven't hired the right people," Petr says. "If youhire people who work hard and give them an environment in whichthey can succeed, you'll grow."

Nevertheless, for the BIZ Experiences who has built a successfuloperation by single-handedly juggling the roles of chiefsalesperson, accountant, personnel manager and who knows what else,staffing--and the delegating that comes with it--can be a very highhurdle.

"Suddenly you have no choice but to delegateauthority," says Donald Hoy, director of Executive Educationat Milwaukee's Marquette University. "If you're[opening multiple] sites that might be pretty spread out, you haveto face the fact that one person can't be everywhere atonce."

The downside of having many more people among whom to divide thework is that you may start to feel like a kindergarten teacher, Hoysays. "You have 30 kids all demanding the same level ofattention," he explains, "and especially if the chain isexpanding rapidly, management isn't going to be in a positionto provide all [of it immediately]."

Collier says that with stores, as with kids, "You tend toget stuck focusing on the ones with problems and not having thetime to look in on the ones that are doing okay." Which inturn leaves the better-off locations with room to generate problemsof their own.

Solution: Put each location in the steady, capable hands of anemployee who will act like an owner. Give managers both theresponsibility to make their locations work and the power to makeit happen. Lacey suggests choosing people already working for youwho are ready to take on more responsibility instead of bringing innew people.

Promoting from within is a smart tactic because it moves up theemployees who have proved themselves to be both good at the workand supportive of the company's methods and objectives."[They're] the kind of [people] you're going to trustto do things the way you'd do them if you were there,"says Chuck Wolf, 56, who built a seven-store film andphoto-processing chain into a nationwide network of 770 locationsover the past 25 years. "You've seen them work, and youknow they're up on the goals you've laid out for yourstores."

For the small chain, however, Hoy warns that the most obviousstaff source for the new location might not be the best. If theoriginal location is bursting with motivated, effective employees,move some over to the new place, he says, but be selective. Movingtoo many people out of the original location can make it theweakest link in the chain--when it ought to be the strongest.

"It might be that store No. 1, because it's up andrunning, is easier to manage than store No. 11," Hoyacknowledges, "but if you hurt store No. 1, it will probablybe harder to recover there than at the new stores because [its]loyal clientele are going to think they've beenabandoned."

On top of that, employees of the old store might start to soundlike the older kids griping that the baby of the family gets allthe breaks. "They'll start to notice that they don'thave new carpet or shiny new equipment," Hoy says. "Theyworry about their place in the chain."

Collier feels a good way to combat that attitude is to remindemployees at the older location that they're the big brothersand sisters with important responsibilities now. "Peopleworking in our original store know that we make the merchandiseselection for the other stores, so a lot of the success of the restof the chain depends on them," he says.

It's also essential to keep in mind that a chain of storesneed not be a string of clones. Trying to duplicate the existingbusiness in a new location might render some subtle differencesinvisible. Collier found that out when one of his new storeswasn't living up to projections. He carefully examined whichitems at that store were selling and discovered he'd misjudgedthe local market. "Our higher-priced merchandise, which sellswell at other stores, was out of reach for the people who shoppedin the store," he says. After Collier did a little strategicreshuffling of its product line, the started performing asexpected.

Homes Away From Home

After staffing, finding the right locations is the next mostimportant aspect of expansion. Often, it's a matter ofpinpointing the things about the original location that made itwork and looking for other locales with similar features.

Wolf says once he'd opened a few dozen locations, he got towhere he could quickly find the right spot in a new city. He wantedhigh-traffic sites in affluent neighborhoods with large numbers offamilies. With such a streamlined vision, "I can learn aboutany [small] city in two days, or a big city in a week," hesays. Wolfe believes any good business idea ought to be easilytransplanted to similar settings in other cities.

At the same time, Hoy warns against assuming that all similarlocales are identical. Before expanding into an unfamiliar city, hesuggests forging a relationship with a knowledgeable local who canhelp you navigate the new waters, whether it's at city hall orin the local ad outlets. And whenever expansion takes you acrossstate lines, seek legal advice on how tax laws and otherregulations differ from those in your home state.

Finally, Lacey reminds BIZ Experiencess who are looking to buildchains that, as with raising children, each one is easier to handlethan the ones that came before, if only because you're moreexperienced. Petr agrees. Now that he's built an infrastructureto support 17 stores and the three more he's planning, he says,"I don't see any limit to the number of stores we couldhave."

Contact Sources

Gardner-Collier Jewelry, 111 W. Washington, Kirksville,MO 63501, (660) 665-3052

Milwaukee PC, 4160 S. 108th St., Greenfield, WI 53228,(414) 427-6965

Wolf Camera, (888) 644-9653, http://www.wolfcamera.com