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Jessica covers Australia's technology start-up scene, writing on breaking news and trends in entrepreneurialism, media and marketing. She was previously named Australia's best New IT Journalist for 2011.

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New territories, new struggles

Published 04 April 2012 15:41, Updated 05 April 2012 04:17

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Bendelta’s founders were so concerned about controlling their company’s culture that, despite the management consultancy’s fast growth, it wasn’t until an employee was happy to move cities that it opened a second office, explains co-founder Anthony Mitchell.

That was in 2009, six years after the company was established in Sydney when an employee suggested he would like to move to Melbourne. “What you want is this seamless national business,” Mitchell says. “You don’t want it just to be these discrete offices – but there are limitations.”

This year it is set to open a Canberra office but Mitchell says a new employee, yet to be found, will have to run the new location. “That’s a very hard thing to do, bringing on somebody with no history with the firm,” he says. “If we can’t find the right person we won’t compromise.”

Expanding your company and opening new locations is almost inevitable for many fast-growing small and medium enterprises (SMEs). It’s an exciting step but one that also brings many challenges for company founders.

Keeping company culture intact is top of the list for many business owners but effective communication and pushing for the best performance are also tough when your employees are spread across state borders.

More than one-third (36 per cent) of the BRW Fast 100 companies in 2011 suggested that revenue growth this year would come from new domestic markets, so geographic expansion is no doubt on the cards for many.

Taking some tips from others will relieve some of the pain.

Communication is top of the list of concerns for company founders with multiple offices. The chief executive of LSA Recruitment Group, Andrew Northcott, says he struggled initially “to ensure that people outside of Brisbane [head office] are informed and feel part of the team”.

But it’s not just the warm and fuzzies. Communication of systems and processes is just as important. Early on, Northcott realised – because his people told him “loud and clear” – that processes were being developed in the Brisbane head office and not being shared with the regional offices.

“What we’ve realised … is everything we do here [in head office] impacts our regional offices and we really have to ensure we communicate that clearly,” he says.

Northcott says he is in daily contact by phone with most of his leaders in the company’s regional offices but “I can’t be available 100 per cent of the time”, he adds. LSA Recruitment has four city offices and a number of regional centres.

Having this scale makes it easier to manage across the country, as there are more resources in head office, Northcott says. “So the boss isn’t the only one to be taking all the calls,” he says.

This was a problem initially but as the company has grown, so have the help points in head office for regional issues. The group now has a general manager to deal with operational queries and a support liaison officer. Staff can still reach Northcott for “strategic level” discussions.

The company uses video conferencing on the free web-based tool Skype for monthly and quarterly strategy meetings. “We also have a very interactive intranet that is designed to capture the collective intelligence of the group, so that they don’t feel isolated and can share information and make comments as well as ideas and challenges,” Northcott says.

Technology helps many company founders get in touch with their isolated staff but not all communication has to be regimented, the chief executive of document creation software provider Intelledox, Phillip Williamson, says.

Whenever he has a free moment, such as while driving to a meeting, he will give the branches a call. With unlimited mobile phone plans, “you can just ring them whenever”, he says.

Williamson doesn’t need a definite task to call about; he just wants the offices to feel included. “In the head office you’ve got the excitement and the buzz and you communicate messages to your staff,” he says. “The poor guys out in the other offices don’t get that.

“They feel isolated and they do feel vulnerable. You really have to make an effort to communicate and make sure others are communicating as well.”

Williamson says it can be difficult to motivate his staff to focus outside of head office.

“It’s obviously easy in an office when you can walk over to a person and talk to them. When they’re in another city, it’s never that simple. That casualness of communication is much more difficult.”

As well as his off-the-cuff phone calls, Williamson ensures his two extra offices in Sydney and Melbourne are included in the weekly Friday afternoon wrap-up session, which he calls “pants-off Friday”. It’s a one-hour meeting where all staff can share their wins for the week. It’s held via video conference and there are presentations.

Although communication is the biggest challenge, Williamson’s best advice for company founders thinking of expansion is to ensure they understand their new market. “Having a product locally, you know your own market and you have your networks and contacts,” he says. “In another region, you don’t have those networks and market.”

He suggests recruiting staff “who already live and work” in new markets. Before recruitment, however, market research is imperative. “You need to understand who the dominant players are and why they’re dominant,” he says. “It could be because of those networks and contacts, or they’ve just managed to dominate on price or features. If someone’s a really dominant player, we probably won’t worry about going into that market.”

For the chairman of consultancy Innogence, Hernus Carelsen, opening a new office outside Sydney showed that everybody had to pitch in to make the new branch work. But initially the established offices weren’t helping. “You have people in charge of certain regions and they’re incentivised to produce profits in those regions,” Carelsen says. “When you start up a new region, you need the support of the other regions to get them up and running. The problem is the other regions were not incentivised.”

The Innogence team came up with an internal charging model, where the consultants could share profits, to motivate his established staff to pitch in.

Getting your new office to “critical mass” can be a challenge, he says. When a new branch opens, it’s like a “new start-up business”. Carelsen remembers with the company’s new Melbourne office that some of his consultants would look down on the smaller deals the new branch was bringing in. “They don’t understand what it is to be small any more,” he explains.

To get all staff to “respect the deals they were closing”, he and the management team “did some internal marketing” and also flew other members of the Sydney team to Melbourne to “help them with strategy, creating awareness of what was happening”.

Collaborative projects are a key plank in Bendelta’s approach to managing an SME across the country. Communication between management and staff is important but staff interaction also needs to be fostered.

“We do try to run projects that have people from different offices on them, so it’s not artificial [why] you’re actually talking to each other,” he says.

All of the bosses who spoke to BRW for this article travel to the branches on a regular basis. “There’s nothing like sitting across the table from someone and developing a strategy,” LSA Recruitment’s Northcott says.

But a number also emphasised the importance of bringing regional staff to head office and vice versa, when possible. Bendelta’s four Melbourne employees go to Sydney for monthly management meetings. Co-founder Mitchell admits this may be too expensive when a third office opens or when the Victorian office gets too big.

That may be a good thing, Innogence’s Carelsen says. “Travel and accommodation costs have got a financial toll but they’ve also a physical toll on the people,” he says. “That is still a challenge. We don’t have a solution for that.”

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