11 Aug Are You Ready for a Second Location?
“Success breeds success,” motivational speakers at business luncheons like to say. When a company regularly turns a profit and gets rapturous Yelp! reviews, it’s only natural for the person in charge to consider the possibility of cloning that success at a second location. And why not? Two sites could mean twice the profits, maybe more. But then again, two locations can also bring extra risks.
It’s a big decision – one that requires due diligence, and sometimes, a leap of faith. To maximize the potential advantages and minimize the risks to opening a second location, here are things you’ll want to consider.
Will your first location remain strong?
It’s likely that while a second location is getting off the ground, you’ll be relying on the profits from your first. So it’s really important that you trust in its continuing success. But here’s the thing, if YOU are a critical component of that success and if Location Number One can’t function without you, it’s probably not a good idea to branch out yet – because, be forewarned, the success of Location Number Two is going to require you to be “all in.”
How do you plan to fund Location Number Two?
As tempting as it might be to draw funds from your first site to fund your second, experts caution against it. That approach has the potential to weaken your first location and hurt your business overall. Instead, view the second location as a separate business venture and look for funding from lenders or investors — just as you did when you were starting out.
Where’s the best location?
One thing you don’t want to do is have your second location leech customers from your first. But unfortunately, there’s no magic formula for the perfect distance between locations. This is where your research comes in. It pays to spend time evaluating different markets, regions, and neighborhoods. (Consider, too, how much advertising you’re going to need to reach a new audience.) Choosing the right location relies to a large extent on solid marketing research and your own assessment of the new site’s potential for sustainability and growth.
Are there better alternatives to opening a new location?
As ready as you are to take new steps to grow your business, opening a second location isn’t the only way to do that. There are alternatives worth considering that might accomplish the same thing, including:
- Adding more staff
- Diversifying your inventory
- Broadening your audience
- Offering your products and/or services online
New steps – like the ones just listed — often require additional funding. It pays to explore the range of lenders and financing options available to today. When businesses are able to grow and expand, business owners benefit – as do their customers and the economy as a whole. Further proof, if any is needed, that “success breeds success.”