October 4, 2016 - WRITTEN BY GEORGE WANG
Once your business gets off the ground and becomes profitable, you might be looking for new opportunities to grow. If you have consistent positive cash flow, happy customers, and as much business as you can handle, it might be time to consider expanding.
But doing so comes with substantial costs in time, money, and effort. To make sure you’re really ready to take the next step and open a second location, ask yourself these questions.
Opening a second store or office is a major undertaking, with its own costs for facilities, equipment, staffing, and other expenses. It’s critical to make sure you have sufficient funding available to cover setup costs without pushing your existing business into the red.
If your current business can’t support that investment on its own, it can be advantageous to treat a new location as its own business—and seek funding through traditional channels such as investors or banks.
But if you can afford it, it’s best to finance the expansion with your business’s existing cash flow. You’ll avoid creating new interest payments or giving up equity in your company, and won’t be on the hook to achieve the returns investors might require.
Put differently, are you critical to the success of your first location? If the business doesn’t function at full capacity when you’re not physically there, it will be hard to maintain while you focus your efforts on setting up a second location.
Your employees and managers need to be able to handle things without you managing the day-to-day operations, or business at your established location will suffer. If you decide instead to entrust the management of the new place to a supervisor, they need to be just as well-trained in making the business work.
The people you hire for your second store or office will need to be trained, and doing it all yourself would take you away from many of the tasks that only you can do for your business. That means you need to have at least some of your existing employees train the new people, whether they’re hired to staff the new location or fill scheduling holes in the original one. Carefully assess whether you have as many people as you need to ensure both sites have enough experienced workers.
First off, whether you’re opening an office or a retail store, it should be far enough from your current place of business that the two don’t simply split your customer base. Beyond that, make sure to do your due diligence when finding a site for the new location—pay close attention to information on the demographics and current level of competition in the area. If there’s no market for what you offer, look elsewhere.
Often it’s possible to expand your business without increasing its physical footprint—or incurring the expense of opening a new location—by leveraging your web presence, namely your website and social media.
Effective use of technology can help you increase your market reach, streamline your processes, and make your existing business more efficient. It’s also a great option if you’ve reached a plateau and want to keep growing, but you’re not quite in the right position to expand into a second location.
Depending on the nature of your business, and how you currently use your business website, you may be able to simply expand the information or functions it provides to accommodate both locations. On the other hand, if the new location is significantly distinct from the existing one—for example, if it offers different products or services—it may be worthwhile to set up a separate website. Doing so can also help with local search engine optimization.
If you’re considering opening a second location, Kaidoora can help you assess the best ways to utilize your website in support of that effort. For more information on what Kaidoora can do for your business, schedule an appointment today.