Create A New Division or Subsidiary

When should a company create a new division or subsidiary? A company that has a strong understanding of its market can identify product or service gaps it believes it can fill. In response to these demands or opportunities, a business must determine if synergies exist between its core business and the proposed new products or services. If a business decides to offer complementary products or services, a new division or subsidiary can be an effective delivery channel.

Plan

• Corporations often form separate business divisions as a way to develop a competitive market advantage.
• A company may create multiple business divisions in order to market different products and services.
• Some companies form divisions based on the types of products or services, geographic location or demographic market sectors.
• Adding a division allows a company to expand without significantly modifying the company’s existing corporate structure.
• Plan on how you will structure the new division.
• Draft a separate mission statement specific to the business division to communicate the direction you want the division to take.
• Design a spreadsheet to report actual expenses during the financial planning process.
• Define the division’s purpose and goals.
• Be realistic when setting project management goals, such as deadlines for completion, implementation costs and budgets.

Team

• Your first hires will set the tone and all eyes will be on your selections.
• You are the boss. Your division is where the action is, and you’ll have your pick of the best and brightest.
• You can’t do it alone. And your team must be able to anticipate and act, freeing you from those tasks and emergencies that often consume days.
• Luckily, it is no secret what a new division needs – Internal connections and know-how; hunger; entrepreneurial instincts; patience; flexibility; and (most important) a track record of consistent success.
• Of course, not everyone will meet these standards. Be kind to those you reject. You’ll still have to work with them.

Support

• Sit down with other executives.
• Probe to determine their expectations, areas of mutual concern, and overall buy-in.
• Fact is, the other employees won’t take you seriously unless they’re certain that you are serious about the plan and they are absolutely required to prepare for it.
• Identify redundancies and where you’ll need to soften your directives to accommodate reality.
• Then, ask for their commitment.
• At the same time, don’t just target department heads.

• During the planning stages, businesses need to determine estimated start-up and operating costs.
• Solid financial projections including the amount of money needed over a specific period of time, will help you get support.
• To determine these figures, companies must address the expenses of securing venture capital, suppliers, facilities, equipment and knowledgeable associates.
• Businesses must also take a realistic look at how much working capital they need to maintain excellent credit while the venture is in the beginning stages.
• Look at respected veterans, influencers, and connectors across the organization.
• Their endorsement (and example) will go as far as any executive decree.

Involvement

• You need to be a natural part of the process, not a bureaucratic speed bump.
• While you’re at it, make your team regular participants in key meetings to build comfort, exchange ideas, and head off issues.
• Examine the other departments’ workflows.
• In particular, focus on service quality and response time: That’s what builds word of mouth.
• Align your processes, so you’re reducing steps, removing work, and adding value.

Listen

• Go a step further.
• Get out there and listen to competitors, employees and friends.
• Set up individual and group meetings. What are their ideas, and expectations?
• What opportunities for collaboration do they see?
• You might be surprised at the unexpected (and often valuable) feedback.
• These relationships will ultimately determine your success or failure.

You want to find a small pond in which you can be a big fish. If you compete for everything, you’re going to win at nothing. However, if you pick one area to concentrate on, you can focus your efforts and stand out in your market. HyperEffects can work with you to devise a business strategy that is consistent with your needs and goals and, if necessary, act as an objective third party to help you identify issues that may need to be addressed. Contact us for our free one-hour session to discuss the critical issues of your business and media and let our experts chart out a plan for you!