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:
Action Steps
The best contacts and resources to help you get it done
Rally your customer base
Before 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.I recommend: The National Federation of Independent Business details steps to take to get your current clientele in your corner and articulates the pros and cons of having a second location.
Write a business plan for the new location
Although 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.I recommend: Do you need a refresher tutorial on business planning? Check out Inc. magazine's online primer. Additional resources, templates and advice are available at BusinessTown.com and PlanWare.
Identify additional sources of capital
A 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.I recommend: Check your small business credit score through Fair Isaac. See what types of loans are available through the Small Business Administration or CIT Small Business Lending Corporation.
Find the right staff
Make sure you have strong, reliable managers and administrative staff in the first location. Hire a local staffing company to screen job applicants for the second location. Establish clear goals and deadlines to unify the two groups of employees.I recommend: AllBusiness has extensive human resources information for small enterprises. NextSource has a Web application that automates all aspects of tracking and managing temps, consultants, contractors and full-time staff.
Tips & Tactics
Helpful advice for making the most of this Guide
- Ask key suppliers to temporarily grant better financing terms on payment to give your second location some financial breathing room; for example, 120 days instead of 30.
- Ask customers to give referrals to the new location.
- A physical expansion of your business is not always the best step to take. The formation of a mutually beneficial alliance with another company may be the most appropriate action to take at this stage of your business' development.
- Consider turning your business into a franchise opportunity. That way you minimize your financial outlay but reap the benefits of having others carry out the expansion of your concept.
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