Why good businesses leave home

When someone or something leaves us for what they feel is a better deal, it hurts. This can translate to any sort of relationship: with our friends and family, with romantic partners, and even with the businesses we frequent.

The reasons in each case are varied, but are often similar. Put simply, when the things we like leave us, it’s often because of some financial or career consideration. Friends and family might leave for college, romantic partners might leave for a career opportunity, and businesses leave because a) they’re not getting enough business in their current location, or b) they can find even more business elsewhere.

This being a business blog, I’m going to focus on the business aspect. If you want to talk about the personal aspect, I suggest Karen Foley’s blog. She’s a champ at exploring that sort of thing.

For-profit businesses start for one reason: to make a profit. Founders may tell you that they started their business because they have a passion for it. This is often very true. But for every brewer turning out barrels of IPA from his or her brewery, there are ten more home brewers passionately making the stuff in their basement as a hobby. The difference between the brewery owner and the home brewer is that the brewery owner saw a market opportunity (read: an opportunity to make some money) and was motivated enough to take the risk. He started a brewery business in large part to make a profit from his passion.

There are countless studies and metrics that will explain, in detail, the different periods a business goes through from nascent idea to endgame. I’m not going to list them here. What I am going to point out is this: at some point, if a business survives and experiences some growth, there’s going to come a time when the growth stops and a decision has to be made.

And here is where I’ll pull out some business theory. In growth, a business has a couple of decisions to make. Generally, there are four strategies they might choose from:

  • Market Penetration: The business attracts new customers to its existing product, or encourages existing customers to purchase from them more often (i.e. offering coupons or frequent diner cards).
  • Market Development: The business takes its existing product into a new market (i.e. selling your product out-of-state; physically moving your business to a more viable market).
  • Product Development: The business develops a new product for its existing market.
  • Diversification: The business introduces a new product to an entirely new market.

There are many ways to define a market, including geographically, demographically, and psychographically, but what it boils down to is this: a market is a defined group of customers that do — or potentially will — buy your product.

The thing is, markets have barriers. Sometimes it’s weather — if you’re a business that relies on walk-up traffic, bad weather is a major barrier. Sometimes it’s population and demand — if your business idea is incredible but your market isn’t ready for it, that’s a major barrier. Sometimes it’s logistical — if your business suddenly needs higher internet speeds, and they don’t exist in your current location, that’s a barrier.

And sometimes there just aren’t any more customers to be had — all the coupons and new product offerings in the world won’t change the fact that you’ve saturated the market, and you’ve gone as far as you can in your current location. Everyone that’s going to buy from you, already is. Even a business that seems to be booming can experience this phenomenon. It’s like trying to force gallons of water (the business) through a straw (the market). You’re at capacity, but eventually you’re gonna need a bigger hose.

Businesses leave home to chase better opportunities. They do it to overcome barriers, to realize their dreams and financial projections, and to put food on their own tables. They don’t do it to spite communities, to thumb their noses at loyal customers, or on a whim. We like to think of our favorite businesses as our buddies, our community partners, and sometimes as our friends.

They’re not.

They can fill these roles at points, and they are mutually-beneficial roles to be certain. Essential, even, to a thriving market. This is good. At the end of the day, however, a business needs to survive. I’ve never in my life heard a for-profit business owner say they wanted to operate at a sustained loss because “it’s what the community needs.”

Businesses exist not as buddies first, but as their own entities that exist to grow and thrive. When they do that, and only then, they are superb community partners. When they don’t thrive, when they don’t chase opportunity, then they wither and fall. It’s at this point the business ceases to exist, which is a loss for customer and business alike.

Matthew Chabe

About Matthew Chabe

Matt Chabe is a principal at The Galleon Agency, an integrated marketing agency based in Bangor, Maine that helps businesses around the nation maximize growth. He is the chair of Bangor SCORE, a seven-year veteran of the U.S. Navy, and drives way too fast for his own good. Matt graduated from University of Maine with a BA in marketing and a minor in psychology.