Continuing our series on growing your business…one way to do it is to add new locations. Many large corporations have found this a profitable action. Walmart has over 4,600 locations in the U.S. But adding locations isn’t limited to big businesses; small ones can grow by adding locations. These may be within the same general area or even in another state. Sure, adding locations presents the opportunity to grow your business, but it also comes with challenges. Besides satisfying yourself that there is a need for your company’s products or services in a new location and there isn’t competition saturation there, here are some things to think about.
SCORE says: “No matter how successful your business is now, it’s imperative that you do your homework when considering expanding to multiple locations. Just because something works in one area doesn’t mean it will be equally successful in another.”
Consider cost
You’ll want to have financing in place to underwrite the cost of a new location. Determine what an additional location for your store, restaurant, or other business will cost to open and operate. Take into account the obvious expenses, such as rent, utilities, and insurance. Also put into your budget additional costs for:
- Licensing and permits needed in the new location.
- Recruitment and training for additional staff.
- Marketing for a grand opening and continued actions related to the new location.
Taxes are another aspect of costs for your business. If your new location is in a different state, become familiar with tax rules there. What are the implications for payroll taxes? How does this impact your income taxes?
Professional fees related to expansion are yet another cost to consider. Will you need an attorney to review local zoning and handle any required filings (e.g., registering to do business in another state)? Will your CPA charge additional hours to create separate books or subaccounts for the new business location? Do you want a web designer to change your website so it features all your locations?
Consider your customers and employees
Your company’s mission is the same regardless of the number of locations you operate. How do you put this into practice?
Customers:
Adding a new location does not mean you need to change your approach to customers. You probably want to ensure the same customer experience across all locations if the situation dictates.
But consider the demographics for a new location. It may attract different customers or require you to change your messaging. Know what you’re getting into from the start.
Employees:
As in the case of customers, you probably want to maintain consistency in treating employees in terms of compensation, benefits, and hours, as well as communicating with them. Some existing employees may transfer to your new location and will probably need to be replaced. Determine how you, as the owner, plan to stay involved with your staff at each location.
Think about how much collaboration you want between locations, and how to make this happen. Clearly, technology can facilitate collaboration; you just have to decide if you want it.
Calendar planning
As the old saying goes, “timing is everything.” Create a timeline for the tasks you need to complete for expansion. Track your progress. Use technology to monitor what’s happening and how to operate over multiple locations. For example, Zoom meetings with contractors working on the new location can keep you informed; meetings with staff can be used for training and communication so everyone is ready when the doors open.
Final thought
“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” ~ Benjamin Franklin
Expansion by opening a new physical location isn’t the only way to go. You can also expand by adopting new selling channels—online, direct sales, etc. But if growth is your aim and an additional physical location fits your business plan, then get started now!
Additional blogs in this series about growing your business, can be found here.
