Challenges to Opening a Second Business Location

 In Business Operations, Operations Management

If you have a successful company, you may be thinking about opening a second business location. Regardless of where you’re thinking about opening the new location, if you don’t take the time to carefully plan for the second spot, a variety of challenges can ensue.

Second Location Challenges

  1. Supply chain logistics: can we economically get raw product to the new location?
  2. Labor: is there an adequate labor supply to staff the new site?
  3. Processes: do we have processes in place to operate the second location?
  4. Inventory: how much additional inventory will we need to stock?
  5. Operations: do we have to operate different hours than the original location?  This is important if a business elects to operate in a mall, strip center or another facility where the hours of operation are dictated by the terms of the lease.
  6. Sales: even though the traffic count is high, will our customer come and buy from us?
  7. Expenses: what about build-out costs, facility repairs, advertising, signage costs?

Our Advice

No matter what, you should not think about opening a second location until your first location is highly profitable. Why? Normally, the optimistic side of your brain forgets to address the plethora of additional costs associated with operating a second location.  You will need to purchase new phones, shelving, furniture, equipment, machines, etc. to operate the second location. And don’t forget about increased insurance, utilities and advertising costs associated with a second location.

If you are thinking about a second location, consider working through these potential challenges with a business consultant. Assuring you sidestep any pitfalls is an investment into the future of your business.  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. Ready to talk? Give us a call!

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