A small business generally starts out in the home office of its founder or in a small storefront location, moving to a larger space as it grows. But over time, many businesses find that they can grow by adding locations in other areas. Whether you’re trying to serve customers on the other side of town, across the state, or in a different part of the country, timing is everything in expanding your small business.
Before you start shopping for a new storefront or additional office space, here are a few questions to ask yourself.
Since the right timing is crucial to the success of any expansion effort, it’s important to thoroughly investigate why you believe now is the right time to add a new location. One key factor is experience. If you’re a new business owner and your initial location has only been open a few months, chances are you aren’t ready. But once you’ve thoroughly explored the ins and outs of your particular business and customers have begun to respond, you may be ready to reach out to customers in other geographic areas.
Where Are My Customers? Chances are, you’ve already pinpointed your desired location long before you make the decision to expand. You may have discovered customers are driving from 20 or 30 miles away to shop in your location. Or maybe you’re a service-based business and you’ve realized you can provide something to an area that is currently underserved. Whatever the case, it’s important to do careful research before taking that big step. Conduct surveys in the area or set up a booth at a local event to determine customer interest in your product or service.
Can I Afford It?
If opening a second location requires adding to an already growing mountain of debt, it might be best to focus on your current location for the moment. Some small business owners choose to go to an investor for financing, but investors generally require a high rate of return, as well as partial ownership in your company.
Prior to opening a second location, set the money aside to pay for it. The best way to minimize your financial risks is to create as little debt as possible.
Am I Ready to Manage Multiple Locations?
A second location involves additional staff, equipment, and furniture. You’ll be charged with hiring responsible staff to manage the day-to-day operations of your new business, along with managing the finances of that location. When calculating the cost of a second location, don’t forget to factor in the cost to furnish and equip that location, as well as the cost of maintenance and repairs on that equipment.
Overseeing operations at multiple locations can prove challenging. Since you’ll likely be able to be at both stores simultaneously, it can be very beneficial to have someone in place to make sure things run smoothly and alert you if any problems arise. An improperly-run store in another area of town can damage the reputation of your existing shop, quickly unraveling years of hard work.
Before making the decision to expand your small business, spend time determining if it’s the right move. You’ll boost your chances of success by carefully researching and choosing the best location and time to grow your small business.