Your business is humming right along. Things are going well. And then a thought occurs to you – “Should I open another location?”
Don’t panic. You’re not going crazy. This is a natural part of owning a successful business. Many business owners just like you ask themselves this very same question. Sometimes because they need another location to add capacity. Sometimes because they want to grow their business. Sometimes there’s another reason.
Adding another location can be a difficult decision because, at this point, you have likely built a successful business, and you don’t want to jeopardize that by pouring money into the expenses of a new location. On the other hand, it can be a great opportunity to grow and expand your business.
Considerations for adding a new location
Let’s look at a few of the things you should consider when adding a new location – whether it’s your second location, or your tenth. Keep in mind that every business is different, and the determining factors for adding a location will vary depending on the business.
- LOCATION. Makes sense. It’s right there in the title. When considering adding a location, consider location. As they say in real estate – location, location, location. This is a huge factor that will often determine whether your new location will succeed or not. Regular readers of this blog know I’m a big advocate of using analytics, and choosing a location is an ideal time. Consulting with real estate experts can also help in this respect.
- POTENTIAL CLIENTS. What kind of client will be attracted to your new location? This is important, as it may be an opportunity for you to expand and diversify your client base by adding a new demographic. Are you moving into a more affluent area, or a more rural or urban location? Make sure that you will be able to track the demographics of customers coming to your new location. And if you think you may open additional locations in the future, consider the overall demographics and geography of your business empire.
- TYPE OF GROWTH. What effect will adding this location have on your overall business? In other words, will the location produce all new growth, or will it cannibalize a portion of your existing business? This is an important consideration if you are putting your new location close to an existing location.
- STAFFING. Lastly, what will the management and staffing of the new location look like? This is an important point to determine if you (or your managers) are going to be commuting from one location to another. Will this be feasible, or will you need someone who to be the direct manager of the new location? And if so, do you have someone in mind? (I’ve seen businesses open a new location solely because they have someone very talented they want to hire in a new market).
Other variables to consider when adding a location
These are the main four things to consider, but a lot more variables exist – industry, client demographics, etc. One of the main factors that will help you understand this topic is having a good grasp on where your clients come from and who they are. (I have covered this in previous posts) Are you a “destination business” to which customers will travel a greater distance? Are you a service business which clients don’t often come to your office? Are you a high-traffic retail business? (retail businesses have much different location requirements than service businesses.)
Adding a location isn’t an easy decision, but it’s an important one. If you’re thinking about it, and want to discuss the pros and cons, stop by my office and I’d be happy to have that conversation with you.
Unless we add another branch location and my office moves.