Strategic growth planning ideas for regional expansion

Morrissey Goodale discusses ways that architectural engineering firms can expand within their regions

By Morrissey Goodale February 5, 2024
Image courtesy: CFE Media and Technology

After 30 years of consulting to the AE industry, every single strategic planning client I’ve worked with has included some level of geographic expansion in their strategic plan. Why? Because achieving this kind of growth can lead to significant competitive advantages. First, expansion into new regions allows firms to tap into emerging markets, diversify their client base, and access new opportunities for growth and revenue generation. Second, geographic expansion enables firms to better serve existing clients with operations in different locations, enhancing client satisfaction and loyalty. Third, expanding into new regions can provide access to specialized talent pools, allowing firms to strengthen their capabilities and expertise in specific sectors or disciplines. Moreover, geographic expansion enhances a firm’s resilience against market fluctuations and economic downturns by spreading risk across multiple regions.

But it’s not easy—to say the least. Failure is only a stone’s throw away, whether it’s caused by a) inadequate market research and understanding of the new region’s dynamics, including regulatory requirements, cultural differences, and competitive landscape; b) insufficient adaptation of business strategies to suit local market needs, such as pricing structures, service offerings, and client expectations; c) poor execution of expansion plans, including ineffective leadership, lack of local talent acquisition, and underestimation of logistical challenges; and/or d) unsuccessful integration of technology and communication systems across geographically dispersed offices, which hinders collaboration and project delivery, and ultimately dooms the firm’s expansion efforts.

If your firm is contemplating expansion into a new region, thorough consideration is essential. With that in mind, presented below are examples of strategic growth plan elements tailored to three distinct scenarios:

Scenario 1: “Newest Kid on the Block”—No existing presence in the new region

In this scenario, an AE firm is looking to establish a foothold in a region or regions where they currently have no presence. Here are some thoughts on how to frame the approach:

  • Market research and analysis: Begin by conducting comprehensive market research to understand the dynamics, needs, and competition in the new region. Identify key sectors, potential clients, regulatory requirements, and market trends.

  • Hire a local leader/Talent Acquisition: Hire a local leader with knowledge of the regional market, industry connections, and cultural insights. This individual will spearhead business development efforts, forge strategic partnerships, and lead the recruitment of local talent.

  • Strategic acquisitions: Explore opportunities for strategic acquisitions of local firms in the region to accelerate growth and provide access to existing client bases and projects.

  • Strategic partnerships and networking: With the guidance of your firm’s new local leadership, establish strategic partnerships with local firms, industry associations, and government agencies to gain insights and build relationships. Attend networking events, conferences, and trade shows to expand your professional network.

  • Tailored marketing and branding: Develop a localized marketing strategy that highlights your firm’s unique value proposition and expertise. Invest in targeted direct and digital marketing as well as public relations efforts to increase brand visibility and awareness.

  • Project acquisition and execution: Focus initially on securing small to mid-sized projects to establish credibility and reputation in the new market. Deliver high-quality services, exceed client expectations, and leverage satisfied clients for referrals and testimonials.

  • Continuous evaluation and adaptation: Regularly review and evaluate the progress of your growth plan. Analyze key performance indicators, client feedback, and market trends to adapt strategies and tactics accordingly.

Scenario 2: “The Little Engine That Would if It Could”—Small production outpost in the new region

In this scenario, a firm already has a small contingency of production folks and a competent project manager in the region. The team serves as a reliable production outpost but does not generate any revenue on its own. In this case, consider the following planning components:

  • Recruitment/talent acquisition: Recruit, hire, and onboard a leader/rainmaker with a proven track record in business development and client acquisition. This individual will be instrumental in converting the outpost into a self-sufficient, revenue-generating office/region.

  • Capacity building and resource allocation: Assess the current capabilities and capacity of the production outpost. Invest in infrastructure, technology, and training to enhance efficiency and productivity.

  • Client relationship management: Strengthen relationships with existing clients in the new region and identify opportunities for upselling and cross-selling services. Develop a client-centric approach focused on understanding their evolving needs and delivering tailored solutions.

  • Team development and empowerment: Provide ongoing training and professional development opportunities to empower the team. The leader/rainmaker will play a key role in mentoring and guiding the team to achieve their full potential.

  • Diversification of services: Expand the range of services offered by the outpost to meet the diverse needs of clients in the new region, whether by cross-selling existing services or establishing new ones. The leader/rainmaker can identify new market opportunities and develop strategies to capitalize on them.

  • Market expansion and brand building: Increase brand awareness and visibility through targeted marketing campaigns and participation in industry events. The leader/rainmaker will drive business development efforts and establish the outpost as a reputable player in the local market.

  • Performance measurement and optimization: Implement performance metrics to track the new region’s efficiency, project delivery timelines, and client satisfaction. The leader/rainmaker will continuously optimize operations and strategies to maximize profitability and revenue generation.

Scenario 3: “You and What Army?”—Key leader without significant production support

In this third case, you’ve got a legit local leader on the ground but not much else—so, here’s what to think about:

  • Strategic leadership and relationship building: Leverage the expertise and network of the key leader to establish strong relationships with key stakeholders, including clients, regulators, and industry partners. Position the leader as a thought leader in the region through speaking engagements, publications, and participation in industry forums.

  • Client acquisition and retention: Leverage the reputation and connections of the key leader to identify and secure high-value projects in the new region. Focus on delivering exceptional client experiences to build long-term relationships and foster repeat business.

  • Resource mobilization and collaboration: Collaborate with other offices or external partners to access resources, expertise, and support for project execution. Develop strategic alliances or joint ventures with local firms to complement your firm’s capabilities until you build up your own staff (see the next bullet).

  • Talent acquisition: In stages, hire the necessary talent locally (and/or nationally, depending on your remote work philosophies) to produce work and deliver projects, reducing reliance on branch office assistance over time.

  • Market positioning and differentiation: Position your firm as a trusted advisor and preferred partner for clients in the new region. Highlight the unique value proposition and competitive advantages offered by the firm, leveraging the expertise and reputation of the key leader.

  • Knowledge transfer and capacity building: Facilitate knowledge transfer from the key leader to local staff through mentorships, training programs, and cross-office collaborations. Invest in developing local talent to ensure continuity and sustainability of operations.

  • Continuous improvement and adaptation: Foster a culture of continuous improvement and innovation within the team. Encourage feedback, creativity, and experimentation to adapt to evolving client needs and market dynamics.

Expanding your business into new regions requires a comprehensive and strategic approach tailored to the specific circumstances of your firm’s particular scenario. By focusing on market research, relationship building, talent acquisition and development, and continuous improvement, your firm can successfully bring what it does best to many new places.

Morrissey Goodale is a CFE Media and Technology content partner.

Original content can be found at Morrissey Goodale.