Brian Lewis opened his first outlet selling second-hand goods in 1994, offering televisions, trombones and a lot more besides to the residents of Bolton. Now, there are 80 Cash Generator stores across the UK and annual turnover exceeded £50 million last year.
Don’t be afraid to change your business plans
Apparently, it’s a common mistake to plan for the initiation of a new business but not for its expansion. My initial business plan underestimated how much investment it was going to take to expand beyond my first store selling a range of pre-owned products. A substantial sum of my own money was used to get the first retail outlet off the ground and it soon became clear how much more capital would be needed to open a second and a third. By the time I’d opened my fourth store, I’d invested £600,000 and the lenders I approached weren’t interested in the company based on the model I was operating.
I went back to the drawing board and reworked my business strategy, choosing to integrate long-term plans for expansion through franchising. This meant I could attract business partners that would be dedicated to helping grow the company and had an interest in its success. The first Cash Generator franchisee came on board in 1997 and now we have 66 franchise outlets in the UK.
In retail it’s all about location, location, location
For those first four company-owned stores, I chose four contrasting locations. The thinking behind this approach was that I’d learn how the business functioned in a variety of retail environments.
Two of the stores fared better than the others and the experiment provided valuable insight into the business’ geographical sensitivity, but in hindsight I allowed the two less successful stores to continue trading for too long. I should have pulled the plug earlier once I knew they were failing, but the temptation was to hold out in the hope sales would improve. The reality is that a retail business is unlikely to survive if there’s a lack of footfall, regardless of what bolstering measures you employ.
A radical makeover can work wonders
I spent a year planning the very first store before it opened, perfecting every detail from the layout right down to the staff uniforms. During the first year of trading, we changed at least 90 per cent of those elements.
We altered the store layout, the product ranges we stocked and even the company name, as it wasn’t clear in customers’ minds what service we were offering under our original trading name. It’s amazing to look back now and realise how much has changed since the early days. At the time, it meant the business was in a state of transformation that could have resulted in instability, but now I’m glad we made the radical alterations early on because it helped improve performance, ensuring we returned a profit in our first year and in every year since.
Marketing and brand awareness matters
I wish I’d promoted the business more at the start, now that I fully appreciate the importance of brand awareness. Marketing can be a contentious, sometimes emotional, subject for small businesses – when money is tight, marketing is often one of the first areas to suffer. Now we have a much more aggressive marketing strategy than before and it’s paying off, improving both product sales and franchisee recruitment.
Patience is a necessity, not just a virtue
The time it takes from when a potential franchisee first shows an interest in the company to when they join the network has turned out to be much longer than expected. It can take somewhere between six months to three years after that initial contact for franchisees to be up and running in their own Cash Generator store.
Slow progress can be frustrating at times, but we learnt to be patient and came to realise that, in the long run, steady growth brings greater stability to a company than unsupported, rapid expansion.