It’s not the cheapest or the easiest road to travel, but many small businesses choose location expansion as their vehicle for business growth. The general thinking is that more locations could introduce your products and services to a wider customer base. However, expansion could deliver the opposite effect: too much overhead without the expected bump in sales. Let’s consider the benefits and potential pitfalls of opening in a new location.
Know the bottom line. If you’re thinking of opening a new location, don’t go for the Hail Mary play. You should have provable profit and growth potential that you can show on paper. An “all-in” attitude could cost you in painful ways.
Assemble a reliable team. Before you open an added location, you need to have a management team you can depend on. There’s no way you can be in two locations at once. It’s crucial to have someone or several someones who can help you run your businesses. Even if everything else is in place, you need a strong group of leaders to expand.
Create a specific business plan. Your second (or third) location needs a new plan. While your mission statement or vision may be similar to the original business, there’s no doubt that you’ll have to tweak the plan for the new store to fit the new group of customers you’ll be assisting. Try to take a fresh approach to business planning for each new location.
Search for locations based on the new business. If you go into an expansion with the mindset, “This is all I can afford,” you probably aren’t financially ready to expand. When searching for a new store, you need to make location decisions based on your business plan, not solely on your bottom line.
Creating a chain of stores is a lucrative task, but one that requires significant positioning and planning. Give your expanded business the best shot at success by tackling these important points.
Remember, running a business successfully does not need to be complicated. Keep it simple!
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Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.