If your small business is growing at a steady rate, you may believe it is time for a second location. But just because your company as it stands today is profitable, does not mean that it will be profitable after an expansion. What are some factors to think about when determining if now is the right time to grow into other markets?
Do You Know Why Your Company Was Successful?
If your company is making money, it is a given that you have a proven business model. To increase the odds of continued success, it is important to know why the business model works. In some cases, your success is connected to a caring staff, or a price point that works for your target market. In others, it could be because the product is unique or otherwise not available in your area. By determining why your business works so well, you can take that aspect of your company and replicate it elsewhere.
Can You Manage Multiple Locations Effectively?
As your business expands, you will have to cede control to others in your organization. Instead of being able to directly supervise your workers or vet vendors, you may be reduced to weekly conference calls with managers or monthly tours of your other locations. Therefore, you will need to ensure you have a person or group of people who can effectively manage your locations without compromising what your brand stands for.
How Much Will It Cost to Expand?
Over the course of many months or years, your additional locations may grow revenues and increase profits. However, building those locations, buying additional inventory, and hiring additional workers will require an upfront investment. It is important that you know how much you will have to spend right away and how long it may take to recoup that money before you decide when, where and how to expand.
Franchising Your Business Isn’t Easy
Some business owners think franchising a company is the easiest way to make money right away. While franchise fees and royalty checks can raise tens of thousands of dollars for your business, you have to make sure that those franchises are given what they need to succeed. This means finding locations in areas where your target market either lives or shops as well as finding owners who can maximize revenues. The corporate office also needs to be available to answer questions or deal with any issues that franchisees have. Ultimately, your success as a company is related to their success as franchise owners, which means that you may need to work harder than you would if you owned the locations on your own.
What Does the Transition Period Look Like?
You may decide to relocate people or ship other resources to your second location to help it get off the ground faster. If you choose to do this, you will need an efficient way to help your people get settled and get your equipment and other resources installed and operational. You might also need to check with a site like American Auto Shipping to see rates for moving and equipment fees. Regardless of what the transition process looks like, it will be in the company’s best interest to have your second location open as soon as possible. This allows the company to start making money and earning a return on its investment.
Expansion can be the first sign that a small business is going to be successful in the long-term. If done correctly, it could set the stage for further expansion and rapid growth in the near future. Therefore, it is critical that a small business owner looks at the financial cost and true investment of resources needed to ensure expansion works for the business and ensures future success.