Running a successful business often drives entrepreneur to keep going and reach bigger goals such as expanding their business. Opening your business in a new location can generate more profit. However, it shouldn’t be done in a rush without a well-planned strategy. Expanding business is not something you can underestimate just because you have been successful with your business previously. Opening up a second location in a new market should be based on well-thought consideration.
What to consider for opening up a second location
One of the most important points of opening a second location is to make sure that your primary business won’t be affected negatively. If you open up new location by sacrificing your primary business, it means you are not ready to do it at all. Here are few things to consider before duplicating your business in a new location:
Create a detailed business plan
It’s strongly suggested that the second location takes as much work and consideration as your initial one. It means you must create a business plan for the second location just as you did for the first. You can write your business plan in two different formats, a lean up startup plan or a traditional plan. Make sure to be detailed with your business plan to avoid missing anything important.
Consider expanding business into cyberspace
Instead of opening up a second location in a new market, you may consider expanding your business into cyberspace with an online store. You will get the advantages of expanding business but far more cheaply. Building a new brick and mortar is more expensive because you will need to spend additional expenses and tasks, utilities, rent, cleaning, and more. Another advantage of opening up online store is that you can keep it open and accessible 24/7.
Follow up your plan with a proper research
Even if you are already sure about the new location, you still have to do your homework. Follow your plan up with a proper research to evaluate the market. Find out more about the possible competitors, available space for your business, etc. By researching, you will know more information to help you make the best decision whether or not to continue with your plan or find new location.
Make projections about the inventory
Your business inventory needs change with expansion because every location requires its own stock. For example, your customers visit your new location but the item they requested is not available and you cannot get it fast enough to serve the customer. Hence, it’s a must to estimate inventory needs at a new location, review current and future supply chain, as well as warehouse needs.
Have the money on hand
You need to secure your cash flow before opening up a second location. Having ample cash flow means you are ready to handle worst-case scenarios such as slow months in the beginning while you get established. If you don’t have ample cash flow then you may consider looking for angel investors.