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If you’re considering opening a new location, chances are you’ve done a pretty good job building up your business. Maybe you’re seeing steady sales growth or hearing customers complain that they have to travel too far to get to your business. Whatever your reason for considering expansion, congratulations! It should be a point of pride to be among the 80% of small businesses that succeed in their first year.
Just because business is booming, however, doesn’t mean you should open a new location immediately. It might be wiser to stick with your existing location and hire more people or set aside additional resources, depending on your situation. This strategy could allow you to expand without assuming the risk of opening a new location.
You should also consider the many benefits of opening a new location. A new location could offer access to new customers, especially if you introduce new location-specific products or services. It could also offer diversification, an increase in your revenue stream, and growth in brand recognition. If it leads to you ordering larger quantities of products, you could even negotiate discounts from your suppliers.
There are also a number of risks associated with expanding your business too soon. The new location could turn out to be a flop if you incorrectly assess customer demand. Your original location could suffer if you divert too many resources to the new location. You could even lose sight of your company’s brand voice if the new location differs substantially from the original one.
Additionally, of course, there’s the all-important question of how you’re going to pay for the new location. Managing your business accounting could become even trickier when there are two locations in the picture.
Dive into this flowchart to determine if it might be the right time for your business to open a new location:
If you ultimately decide to open another location, make sure your new location doesn’t cannibalize the original one. Ensure that you can continue to devote a healthy amount of time and creative energy to your original location.
Perhaps most importantly, try to treat the new location as a separate business from a financial standpoint. Avoid taking too much money from the original location, and look for funding from outside investors or business loans.
Sources: Small Business Trends | Entrepreneur | Entrepreneur | Houston Chronicle | Small Business Administration | eCorner