Opening a second business location is a tremendous achievement. Most business owners never go beyond their starting location, so if you can realistically have the option to court the idea of expanding, then you should be proud of yourself. It shows that you have successfully launched a business, built a steady customer base, and effectively managed your cash flow. For many business owners, opening a second location is a testament to their hard work and success.
However, no matter how successful you have been, you should never approach the idea of expanding your business without careful consideration. Even if you have had success with one location doesn’t mean that you can replicate everything you did at store one and have the same level of success with store two. Plus, some entrepreneurs simply won’t have the time or resources to operate a new location. If you’re interested though, it’s important to evaluate your current situation and decide if you’re ready.
How to Know You’re Ready
The first and important thing to determine when considering a second location is to see if your current business is doing well. If your business isn’t as strong or valuable as it should be, then it probably isn’t a good idea to hold off on an expansion. You will also need to consider if there is enough demand to warrant a second location. There are a few obvious signs of this: if you have more business than you can handle with one location, that’s a good sign that there is room for expansion in your business. Also, if you have both a strong local customer base and a lot of customers from out-of-town, that points to interest outside of your established location.
But just because you are busy at your current location doesn’t automatically mean that this will translate to sales if you launch somewhere else. Once you have a general idea of where you want to set up a secondary location, you will need to conduct some market research, identify your competition, and see if your business would be a good fit for the area. You should also conduct a thorough financial analysis to get an estimate for what you stand to gain and what you could potentially lose, both in the near future and the long term. Among other things, you should calculate the costs of purchasing a new property, hiring employees, and the additional overhead that comes with managing two locations.
If you don’t think that there’s enough demand to build a second location or if you just don’t have the money needed to invest in another property, consider taking your business online instead. The COVID-19 pandemic demonstrated just how important it is for businesses to have an online presence, serving both to expand your customer base and stay connected in the face of sudden disruptions. On top of that, taking your business online will almost certainly be less expensive than setting up and maintaining a whole second physical location.
If there is enough interest in expanding though and you are financially secure enough to go forward with the idea, you will need a plan.
Putting In The Work
If you have done your homework and believe that there is a market for a second location, you need to develop a plan. First, make a list of potential business locations, doing further research to see which spot has the best chances of success. This will involve looking at the demographics of the area, your target audience, and existing competition. Consider doing a test run, talking to local consumers, and testing your product on a small group to gain insights. Once you have the location settled, review any local zoning, permit, and tax regulations that you might need to worry about.
From there, you must develop a business and marketing plan. Ideally, you should already have one from when you launched your first location, so depending on how well it worked, you can model your new location after it. Be sure to consider where adjustments might be needed, however. You will also likely need to set up accounting for your business: even if you have typically handled your finances in the past, this can become difficult as your business grows. Going forward, you will need help from someone who can manage your books and determine if you have the revenue and cash flow to keep everything running smoothly.
Ready to Launch?
Opening a second location is a challenging and rewarding milestone for any small business owner. It might not be for everyone, but it offers so much opportunity for growth. Just make sure that you do your research, create a detailed plan, and use the lessons you have learned from your original location to launch your new business venture towards success.