For most business owners, the next big step is expansion. As your success builds and you find yourself dreaming of more workers, more space, and—let’s be real—more profit, those growing pains start to make themselves known. Before you rush into scouting new locations and making big plans, there are a few important things you’ll want to think about first.
Should I Open a New Location?
Opening your first location was a major feat, but now imagine trying to do it all over again—while still keeping your current business running smoothly. Spoiler alert: You can't be in two places at once. So, don’t even think about opening a new location while still handling everything at the first one.
Before you take the plunge, make sure your first location is running smoothly—reliable employees, clear procedures, and steady cash flow. Once you've got that, you're ready to tackle a second spot. Just don’t forget to keep the management that made the first location a success while you focus on growing the new one.
Can I Afford to Expand?
With a new location comes new workers, supplying product for the new store, and the need for a larger operational budget. You likely had to dip into your own personal finances at the opening of the first storefront, can you afford to do so again? This will depend upon how well the first business is running. If profits are doing well and you can afford opening a new location, with every worst case scenario thought out, then it might be time. Make sure you’re accounting for the loss of key-employees at the first location to train new hires for the second and your budget is cushioned for construction costs (foreseen and unforeseen).
Is the Location Right?
When you start reviewing location possibilities be sure to take into account the competitors in the area and the customer range of your first location. Spacing out your storefronts will ensure that neither location is taking the customers of the other.
Ready to Take the Leap?
You’ve thought it over and you are ready to expand into a new location. What are your next steps?
- Review Your Business Continuity Plan
Do you have a business continuity plan? This is a plan for in the case of any major changes within your business, or that could affect your business (such as a natural disaster). When adding a new location, your business continuity plan should clearly outline staffing needs for the new site, procedures for training staff on both existing and new equipment, and plans to prepare junior employees for senior roles. Make sure to regularly update the continuity plan to reflect the growing needs of multiple locations.
- Talk to Your Financial Advisor
During the planning of your first business location, you most likely enlisted financial help from a trusted institution. Approach the financial advisor that helped you with the first location, you will have prior experience working together and the advisor can anticipate funding needs having worked on the first business with you. Don’t underestimate the insight that your lender can give you, and have a preplanned way to fund the project of the second business.
- Plan for Management
For both locations of your storefronts, you need to decide on the chain-of-command when you are not there. In an ideal situation, both storefronts should be able to operate without you. This may mean hiring another manager, or training a trusted employee for the management position at the new store.
- Location is Everything
As stated above, when considering opening a new location make sure both storefronts are spaced a good distance apart from each other. Then, as you review heavy traffic locations make a decision on whether you will be building from the ground up or if you will rent out an available store space.
NMLS #407985