Business is booming, the future looks bright and you believe that the time has come to open another branch of your business. But just because your first location has been a success is no guarantee that the second will be. Give careful consideration to what's driving your desire to expand. Is it based on current customer demand or a broader social or economic trend? If your current one-location operation is not profitable or does not have a track record of generating steady, consistent earnings, you may not be ready to branch out.
Here are some issues to consider:
- Do you have the capital to bankroll the opening months of a new location?
- Do you have excellent management and administrative staff already in place to run the first location while you focus on launching the second?
- Can you count on your current customer base to support the new location or will you have to build a new customer base?
Here are some specific measures you can take to tip the odds in your favor:
Rally your customer baseBefore you sign a lease on a new location, talk to your current customer base. If they are the reason you believe you need a second location, persuade them to commit to doing more business with you before you sign that lease.
Write a business plan for the new locationAlthough it will be part of an existing business, the new locale represents a change in strategy and market presence. Take the time to map out its specific characteristics, funding sources and competitive strengths and weaknesses.
Identify additional sources of capitalA cash cushion to cover the second location's fixed costs during its first quarter of operations is a must. Make generous estimates of expenses to cover any contingency.
Small Business Administration or CIT Small Business Lending Corporation.