10 Things to Consider Before You Open a Second Location
If your business is growing fast, you may think it’s time to open a second location. That’s a big step forward for your company. After all, the decision to expand is a big one, and it requires quite a few resources. Is it time to take that step forward? Only if you’ve made these key considerations first!
- Do You Have Clear Objectives In Place?
Before you do anything else, make certain you know why you’re opening that second location. Are you working toward market penetration or would it meet customer demand better? If you’re just trying to meet that demand, have you considered other options that accomplish the same goal? Understanding why you’re expanding, and ensuring you’ve explored every possible alternative that might offer you the same solution is essential so you can reach the level of success you want with expansion.
2. Do You Have a Good Location Available?
Before you do anything else, you may want to take some time to ensure you actually have a great spot for your new location. Obviously, you’ll want to consider the rent and purchase price, but you’ll also want to consider whether you can reasonably expand your business to your desired spot. Will it actually fit? Will it help create a unified feel for your brand? If you’re not sure it’s going to fit well with your current strategy, now may not be the right time to expand.
3. Have You Investigated the Legalities?
No matter what kind of business you run, there are legal considerations regarding your products and services. In your second location, you need to ensure you can legally provide what you’re selling and that it fits with local regulations. Additionally, check any new regulations you must consider when it comes to taxation and your business structure. If you’re moving to another state, you may also need to register your business differently or trademark your products or services.
4. Can You Expand Your Culture To Include a Second Location?
Your company’s culture is those shared values and beliefs you’ve established and reinforced throughout the company. It shapes how your team feels about your space and how they understand your company’s goals. Strong company culture is really important because it affects every single team member’s performance as well as things like branding. Unfortunately, the larger an organization gets, the tougher it is to maintain. If you don’t have a solid company culture in place, adding a second location may be difficult.
You want your second location to run exactly the same way your first one does, so if you haven’t carefully documented your processes, you’ll want to do so before you open your new space. Training manuals should be available for almost everything. From the right documentation in place to explain communication, all things HR, and financial management, ensuring this task is complete means you can easily replicate what you’re doing now in your new space.
6. Do You Have Enough Cash?
Even if you’re running a profitable company now, you may still not be financially ready to open your new location. Take a closer look at your finances. You’ll need strong revenue, great profits, excellent cash flow, and the right financing if you’re going to create a new expansion, sustain it, and keep your current location running exactly as it is now. Understand how soon your second location will begin to generate its own revenue to fund its operations without any added investments from you. You may want to work with your accountant on this point to ensure you’re looking closely enough at the overall financial picture.
7. Have You Already Completed the Necessary Market Research?
When you opened your original location, you did quite a bit of market research. Opening a second location requires the same level of market research. Does your target audience change based on this location? Is there really a need for your products and services in that second location? Is the market even big enough to support a second location with your products and services? Don’t forget to consider your customer base, too. You probably already have a fairly loyal customer base, but will you have that same level of loyalty at a second location? Once you know the answers to these questions, you’ll know whether the market is ready for a duplicate of your first location.
8. Is Your Team Ready?
Adding a second location can create quite a bit of stress on your team, and because you’ll need to be in both places, you won’t always be there to help keep things calm. If you don’t already have a great management team on your side and lots of fantastic employees who can support you in both places, it may not be time to open a second location. Remember, your entire team will need to take on a bit more work, and some of them will be asked to step into leadership roles, so think carefully about whether everyone is ready for those responsibilities.
9. Have You Looked At the Competition?
You may already have a fairly good understanding of your competition in your present location, but how does that competition change if you open a new location? Consider what new competitors you might have in that second location, and do a SWOT analysis to learn how your challenges might increase if you add that location to your present company.
10. Are You Actually Available?
You may remember how much time it took to open your current location. Opening a second location is a little different in that regard. You need to make sure you’re available to put that much time and effort into this space. The success of your first location doesn’t necessarily mean your second one will succeed, so you’ll need to be prepared to put just as much time and effort into this venture as you did in the first one.
Opening a second location could lead to amazing business growth, and whether you’re ready now or you think you might be in the future, there’s never been a better time to work with a business coach to help define your plans and goals and create continued success for your company.