Is It Time for Your Small Business to Open Another Location?

A financial advisor in Upstate New York recently announced his new location in Long Island. This was his third location, and he was particularly happy about it.


Because his new office could reach a particular client base—one he’s been trying to reach for some time. The word is still out about how well it’ll do, but I have a hunch he made the right move. Here’s why: he thought long and hard about opening a new location. He had a good reason for doing so (reaching customers), and he staffed it appropriately.

If you’ve been thinking about opening a new location too, ask a few questions first. You’ll want to make sure your new location pays off and doesn’t drag you down.

9 Questions to Ask Before Opening Another Location

1. Is your first business location doing well?

Opening a new business location is costly, so make sure your first location is financially sound. It’s even better if it can help offset the cost of opening a second location. Look carefully at the numbers. Is it bringing in enough revenue to cover expenses associated with securing and staffing a new location?

Even if you plan to secure funding or a loan, your first location should be doing well—so well that you don’t feel stressed or financially burdened.

2. Do you have a team in place?

Sadly, your new location can’t run on its own. You’ll need a manager and a strong team to run it when you can’t be there.

But here’s the thing. Finding trustworthy and reliable staff is challenging and can be expensive. Make sure you have the money to pay their salaries and benefits. Then go out and find the right people.

Remember, you’ll also need to pay for tools and software at this second site. Will you use the same systems or get something new? Factor in these costs too.

3. Do you have business insurance?

Look at your current business insurance plan (hopefully you have one!) Will you have enough coverage for a second location or do you need to get a new quote? Consider getting both general liability insurance and professional liability insurance. Because you have employees, workers compensation is a good idea too.

Business insurance is critical, especially when you have more than one location and a team. You never know what can happen when you’re not there, and you want to be prepared.

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4. Do you have the money now?

Let’s say your first location is doing well, but you don’t have enough extra money to fund a second store or office. That’s okay. You can secure a loan too.

  • Estimate how much cash you’ll need for your new location.
  • Research loans with the lowest interest rates.
  • Talk to an accountant or financial advisor to make sure it’s financially wise.

There’s nothing wrong with getting a small business loan. Just do your due diligence first. You don’t want to take on extra costs that you can’t pay back.

5. Do you already have the perfect location?

Think back. How did you know your first location was right? Chances are, the following factors played a role:

  • There was a market need. There was a need for your original business. Now ask yourself, does your new location have the same need? Or is the market different?
  • It was convenient for customers. Hopefully you’re serving customers who are local. But if most of your buyers live far away, a new location could be more convenient and a big boost to business.

6. Will it increase revenue?

Let’s say the stars align. You’re financially ready. You’ve secured the funding. You’re ready to hire a team. But wait, will a new location increase revenue?

Unfortunately, sometimes the answer is no. Maybe the market is saturated, or your location is difficult to access. Whatever it is, do market research to make sure you’ll be profitable. You’ll want to understand what the local demographics and how they’re different from customers at your first location. You’ll also want to understand local competition.

The bottom line: If you don’t think it’ll be profitable, throw in the towel. You want a location that will help your business grow, not bring it down.

7. What’s your marketing strategy?

To succeed, you’ll need to market your new location. Start with your current customer base. You already have a product people enjoy and loyal customers can provide feedback. When you’re ready to promote your new office or storefront, try:

  • Social media: Use your business social media accounts to keep customers updated on the progress of the new location.
  • Target the new area: Your goal isn’t to split your current customers into two separate locations. You want to reach new people who will benefit from your business. To help, partner with local businesses nearby to spread the word.
  • Reward customers: This time around you have advertising at your fingertips—your clients. Their word-of-mouth recommendation is one of the most powerful forms of marketing. Encourage clients to post online reviews and refer friends.

8. How will you set up?

You’ve been through this once, but every location is different. Have a clear plan for:

  • Training new employees.
  • Creating processes and procedures for the new location.
  • Setting up software and technology.
  • Installing tools and equipment.
  • The design of the new location—how will it be similar or different?

The more you prepare, the better off you’ll be when opening day arrives.

9. How will you monitor and track progress?

Once your new storefront or office is up and running, now what? It’s important to keep track of what works and what doesn’t. Keep data for both locations on:

  • Sales
  • Labor (i.e. hours worked)
  • Product and inventory
  • Marketing (find out what brings in new customers)

One thing’s for sure. Your second location will be different than your first, in some way, shape, or form. Take the opportunity to learn as you grow your business. Opening a new location is a big step that can add big revenue. Just take it methodically and slowly.

Emily Thompson

I earned a B.A. in Journalism from the University of Wisconsin at Madison (go Bucky). After realizing my first job might involve carrying a police scanner at 2 am in pursuit of “newsworthy” crimes, I decided I was better suited for freelance blogging and marketing writing. Since 2010, I’ve owned my freelance writing business, EST Creative. When I’m not penning, doodling ideas, or chatting with clients, you’ll find me hiking with my husband, baby boy, and 2 mischievous mutts.

Emily writes on a number of topics such as entrepreneurship, small business networking, and budgeting.