Ready to Open a Second Location? How To Tell!
Opening up a second location is an exciting opportunity for any small business – and many don’t even get the chance. But a business expansion is NOT something you want to jump into prematurely.
Sales may be through the roof, but if you don’t have the proper infrastructure and processes in place, a second location could cause more harm than good.
Below, we’ve listed 6 telltale signs that your small business is ready to take the leap and expand to a second location.
Signs you’re ready to expand your business
1. You’ve had stable profits for at least a few years.
Customer demand fluctuates from season to season. Depending on your industry or the economic climate, your profits can range dramatically from year to year. You’ll want to have multiple consecutive years of substantial profits before diving into an expansion. That way, you’ll be able to predict the cash flow you can expect during the transition.
There are a few things you’ll want to see before you expand:
- Positive yearly profit trends for several years
- Consistent month-to-month cash flow
- And a Customer Acquisition Cost (CAC) that’s significantly lower than any given customer’s Lifetime Value (LTV)
2. Customer demand is growing.
Not only should your profits be in a good place, but your customer base should be growing, as well. Perhaps you’ve been placing customers on a waitlist or you’ve got a backlog of work orders. You may even be running out of your most popular products or receiving requests for products or services you don’t currently offer!
These are all strong indicators that customer demand is on the up-and-up.
This is an exciting place to be as a small business. To continue satisfying the growing needs of your customers, a second location may actually be necessary. You’ll need this kind of strong momentum to push you through a successful expansion.
3. You have (or can get) the necessary resources.
If you have more money and staff than you know what to do with, you’re golden! You can tackle an expansion, no problem. But odds are, you’ll need to run some calculations to determine whether you actually have all the resources you need to open a new location.
There are several new costs you’ll need to consider.
- How much will it cost to buy or rent the second location?
- Will you need to do any renovation or construction?
- Do you have the means to purchase any new equipment you’ll need in the new facility?
- How will your inventory have to grow to meet the requirements of a second location?
- How will you recruit, train, and pay additional employees for the new location?
Even if you have an impressive cash flow, you may still need to explore additional funding options. Fortunately, there are a variety of business expansion loans and grants available in the Fayetteville-Cumberland area.
4. Your employee retention is strong.
When your team members like their jobs and enjoy coming into work each day, they tend to produce better results and stick around with your company longer.
How does that apply to an expansion?
Good employee retention means two things:
- You have a loyal team who will remain supportive as you navigate the change of business structure.
- You likely won’t have much trouble recruiting new staff for your second location.
5. You and your team EXCEL at communication.
A second location requires excellent cross-company communication…between you (the owner) and your managers, even down to individual employees. Without on-point communication, you can expect service quality and customer satisfaction to go downhill fast.
Can you trust your current team to handle things at the original location (for the most part) while you focus on the expansion?
With two locations to run, you’ve got to have a great team to back you up. You can’t be in two places at once, after all. That means you need rock-solid location managers who are reliable, adaptable, and know company processes like the back of their hands.
6. You’ve nailed operational efficiency.
If your day-to-day processes generally run smoothly – without any major hiccups – an expansion will be MUCH easier than, say, if your team struggles to meet deadlines or fulfill orders in a timely manner.
You know how it was when you first started your business…
There was most likely a learning curve as you determined the best, most cost-effective ways to get things done.
But if you are already operating at maximum efficiency, that’s one less thing you have to figure out when you open up a new location. Of course, you will need to adapt your processes to accommodate the new facility, staff resources, and clientele. But most of your operations should remain largely the same.
Develop your expansion strategy with FSU HUB
It’s unwise to open a second location without a detailed launch plan.
You’ll need to be strategic when choosing WHERE to expand and HOW to approach the transition. You’ll need to reconsider WHO your target market is and how to market your new business location. Ultimately, you’ll need to have a clear idea WHAT you aim to achieve with the expansion and the steps required to achieve that goal.
All of this can be overwhelming – especially as you continue to manage your base operation.
But if you want to expand into one of the North Carolina counties listed below, you can (and should) absolutely take advantage of FSU HUB’s small business development resources.
Fayetteville-Cumberland Regional Entrepreneur & Business HUB – Small Business Resources
Think you might be ready to expand your small business in the Fayetteville-Cumberland area?
We’re here to help! The Fayetteville-Cumberland Regional Entrepreneur & Business HUB team provides the training, tools, and resources you need to move your business forward in any of the following North Carolina counties:
- Bladen County
- Columbus County
- Cumberland County
- Harnett County
- Hoke County
- Moore County
- Richmond County
- Robeson County
- Sampson County
- Scotland County