Roll-out Growth 101, with Sonia Powar

Sonia Powar is one of BOOST&Co’s partners and, having been involved in numerous roll-out strategies and implementations across sectors, our resident roll-out expert. Sonia answers our top questions on roll-out finance and growth strategies, and how to maximise your roll-out implementation.

♦ What are the hot sectors for roll-out strategies and investment?

Co-working and shared office spaces are definitely a sector to watch at the moment, while new and varied restaurant chains trying to offer something different are perennially popular – particularly in London with its rapid and extensive potential for expansion.

At the moment, consumer spending in the UK is experiencing slow growth, and businesses are experiencing pressure in securing that spend. What we’ve seen is that there has been a shift away from spending on material goods, with experiences perceived as being more valuable and therefore garnering more spend. Thus, we believe that the roll-out of businesses tapping into this market are better protected.

♦ What is the most exciting roll-out that you have been involved in?

A premium lunchtime sandwich/soup shop in London when this space was all still new. It has now become a familiar name to us all! The business was growing rapidly and needed to open a number of outlets really quickly. The time frames involved meant that the business couldn’t wait for every new site to mature before opening the next one and thus use them as a precise learning tool. The management team had to be very clear on the criteria they were using to select locations, such as:

  • Population demographics and how they matched the desired customer profile
  • Expected foot fall, and whether this intersected with any competitors
  • The geographic footprint and impact both positive and negative of nearby competitors.

Companies rolling-out new locations need to know what else exists in the geography and whether these businesses will contribute in drawing the right customers to their site. In this sort of situation, the speed and accuracy of selecting the right location is critical. The management team needs to be able to identify early on if the location is working and, if not, make the necessary adjustments, which sometimes means closing it down.

♦ What is the most important thing a management team can do to ensure roll-out success?

When a company needs to implement a roll-out strategy and invest heavily in doing so, the nerve and vision of the founder/s must be strong enough to overcome the challenges that are sure to come up. While the management team needs to believe that its offering is desirable and of value, they also need to be able to continually refine their concept. This then needs to be broken down into very specific criteria for making decisions. If you don’t have a clear idea of what you offer, there is a danger that the criteria you use to make decisions will not be robust and aligned to your strategy. It’s all about creating a blueprint. There must be a strong blueprint of what success looks like, where you’re heading, and the actions to take when it’s not quite working to plan.

When you’re rolling out new sites, you’re also building a brand, so consistency is very important. You need to be able to offer the same experience and message to customers, regardless of the site. Consistency and differentiation are important factors, because you are relying on every member of staff within the organisation to implement your brand.

♦ What are the factors that make for a successful roll-out?

So much is dictated by the ability of the management team to operationally carry out a roll-out strategy. If the team cannot maintain a focus on the minutia of the business and roll-out plan, the exercise is likely to be far less successful. You can have a comparable offering, but be more successful if your business is well run and engages with the customer in the right way.

Another factor is the ability to find help. If you don’t have a specific skill, you need to be able to find it. Trial and error, enthusiasm, passion, and drive will take you far; but you need to be open to tapping into the experience that exists in other individuals to save yourself making some of the more obvious mistakes.

♦ What is the one thing that is sure to scupper a site roll-out?

Having a great product is an obvious statement, and can therefore be taken for granted. In addition to that, the inability to take action if things aren’t working can lead to failure. The management team needs to be able to, first of all, quickly identify if things are going wrong, and then be able to take decisive action. Management can’t wait and hope that issues will sort themselves out. If you’ve chosen a poor site that isn’t XX, you need to be able to make the tough decision to shut it down. This requires management that can take action to accept and correct mistakes before they taint the entire portfolio.

♦ Why is venture debt so well suited to roll-out growth, and better than other forms of financing?

Venture debt exists to support companies with a proven business model and helps them scale rapidly, without diluting shareholders’ equity to the same extent as equity investment. Roll-outs are a good fit for venture debt, in that they expand a proven model. Venture debt is particularly effective in businesses that are less capital intensive, as the roll-out can then happen very quickly.

When looking for companies to invest in, venture debt investors look to the future of a business, and don’t focus solely on its current and historic situation. This means that we can buy into the vision that the business is trying to create. The value sits with the shareholders that deliver the plan, while we share their journey.

♦ What is the most important thing you look for in a roll-out investment?

It’s difficult to specify one single thing. I’ve seen many roll-outs, and sometimes been surprised by the ones that are successful, and the ones that aren’t. If you have a bigger vision than what’s out there at the moment, you need a strong blueprint to convince investors that the numbers work. But ultimately, it’s that vision that can carry the business through. I remember looking at a yoga clothing business, and at the time being unsure of whether it would be successful. Today, the athleisure clothes market is huge. That’s just a matter of someone having a vision early enough and seeing it through.