Congratulations, you’ve got your first couple locations up and running successfully! You’re doing great too; your sales are booming and you’ve never been so busy in your life. You may even be considering opening more locations, but are you really ready to branch out, though? When opening a new location, there’s a lot to consider. Here are some key points to make that launch successful:
1. Manage your money.
Money is one of the most important factors when opening a new location. You have to make sure you have enough cash flow to support the new location until it turns its own profit, budget properly for the upkeep costs, and make sure you have enough to sink into opening that location to begin with. It’s vital to make sure you accurately project your upkeep on that space and plan for unexpected expenses. One good way to do this is to make your initial projection of costs, and then double or even triple that amount. This gives you a good amount of room for unforeseen expenses, and if you don’t spend that money, well then you have more capital to use on upgrades or other necessary items.
Now that you have your projected overhead, you need to make sure your current business’s income can support it. Make sure you know exactly what you have coming in and going out before you decide whether you can support a new location; any mistakes could end up bleeding your business dry.
2. Measure the strength of your current locations.
Ask yourself a couple questions: Are your current locations profitable and generating a positive cash flow for you? What are the keys to your current success, and can these factors be transplanted to a new location? Are there any other businesses near your current ones that help generate and sustain the traffic of potential customers on which your business relies for its current customer base? What changes in your business model, staff, or other systems could be transferred and improved at a new location? Does the new location offer access to your target market? These are key items to consider when evaluating the pros and cons of expanding to a new location.
3. Location is key.
The first thing you want to think about is whether your new location will have the traffic it needs to drive your business further. Is there a demand or niche for your product or service there? If the demand doesn’t currently exist, what is the potential time and cost to generate that demand? It’s also important to think about how you’re going to advertise your new location and if it’s at a cost that is within your budget.
Another thing to think about is the property itself. Is there going to be more upkeep and overhead in maintaining the building than it’s worth? One more thing you’ll want to consider is how far away this new location is compared to your other ones. If it’s too close, it might end up draining the customers from your current locations. But, if you put it too far away, trying to run multiple locations could leave you running in too big of a circle and end up being more stress than you can handle.
4. Have the right people.
How well can your business run if you aren’t physically there? If customers or staff come specifically to see you, and you handle the vast majority of the customer interaction, then expanding may not be the best idea. If you have well-trained, quality employees and people you can trust though, this will go much easier. Always make sure you have a good core staff set up that you can trust to run your business before you open that new location. Having the right people in place will help your business flourish and can give you sound peace of mind.
5. Plan carefully, but don’t overthink it.
While it does take a lot of meticulous planning and careful consideration, if you sit and overthink opening a new location, you will more than likely talk yourself right out of it. Do your homework and make sure that your final decision is based on business logic and not solely on the desire to replicate the success of your current locations in a different geographical area. Go with your plans and trust your instinct; when the time is right, you’ll know.
If you would like more help with a strategy on how to open a new location or are not even sure where to begin, please contact us! We would be more than happy to help you create a roadmap. Download our free persona worksheet below to make sure that all of your locations are targeting the right customers for the highest chances of success!