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.
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.
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.
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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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.
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.
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:
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.
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:
How will you set up?
You’ve been through this once, but every location is different. Have a clear plan for:
The more you prepare, the better off you’ll be when opening day arrives.
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:
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.
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.
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated reinsurance carrier by A.M. Best. Harborway Insurance is a trade name of Simply Business, Inc., which is a licensed insurance producer in all 50 states and the District of Columbia.