Trying to figure out whether or not you should open another location? Well, here’s an excerpt or two from an Inc.com article on the subject. My, my, how timely, eh? The article had some good pointers.
“You have a reliable person to run the second location.Since opening a second location is actually more like starting up an entirely new business, Loos believes it’s important that the owner is present during the early stages of the second location to help it launch.”
I agree with this, to some extent. If you have a manager or member of your executive team who is passionate about the business and, you surmise, needs a continual challenge to stay fully engaged, by all means have that individual go open up the new location. But don’t abdicate. Provide clear goals, expectations, and guidance at the outset and be available to support him or her as needed or wanted.
“You have sufficient cash flow.”
Open up a new location when you have the operational or financial cash flow to do so. If you are expanding rapidly, you may be generating insufficient operational cash flow to support physical expansion. But if that new location is strategically vital to your company’s objectives, then you may have already tapped a bank line of credit, investors, etc. to support your rollout. If not, do so. Sometimes new locations do become self-supporting within a month but that’s rare. Be prepared to lose money the first 6-9 months by ensuring you have sufficient business cash flow from another source. That way, you or your team won’t feel compelled to pull the plug right before the new location takes off.