Opening a Second Business Location– Are You Ready?

 In Business Operations, Case Study

Many business owners, once they have a successful operation think about opening a second location.  It could be in the same town, same state or a different town or different state.  Often times, however, if no robust planning takes place PRIOR to opening the second location, a variety of challenges can ensue.

Here are just some of the challenges that ensue:

  • Supply chain logistics– can we get raw product to the new location economically?
  • Is there an adequate labor supply to staff the new site?
  • Do we have processes in place to operate the second location?
  • How much additional inventory will we need to stock?
  • Do we have to operate different hours than the original location?  This is important if  a business elects to go into a mall, strip center or other facility where the hours of operation are dictated by the terms of the lease.
  • Even though the traffic count is high, will our customer come and stop and buy from us?
  • What about build out costs, facility repairs, advertising, signage costs

In each case, the initial location should be highly profitable before thinking about opening a second location.  Why?  Normally, the “optimistic” side of your brain forgets to address the plethora of additional costs associated with operating a second location.  New phones, shelving, furniture, equipment, machines all have to be purchased to operate the second location.  Don’t forget about increased insurance, utilities and advertising costs associated with a second location.

If you are thinking about a second location, assuming that your first location is successful, having a conversation with a business consultant is money well spent!  Although you may think of the consultation professional services fee as an expense, it is best thought of as an investment!  An investment into the future of the business.  Great business consultants are going to address a plethora of factors that may not have been initially addressed.  You may not like the answers you hear, but it is certainly better to understand what challenges you may face than to spend a lot of money in trying to open a second location and find that the site is unsustainable.  Read here to learn more about the challenges of a second site.

 

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