Five Tips on Opening a New Business Location

So your business has been running for a couple of years, and you realize that you're ready to expand. There's a need for your products on the other side of town, and you want to reach the client base there. If that goes well, the sky's the limit; in fact, you're already scouting third and fourth locations.

Stop! This is why most businesses fail when they decide to open a new business location. While money might be pouring in at your first location, that doesn't mean that your second location will be an immediate hit. If you start to think too far in the future and allow your immagination to run amok, you'll likely miss some of the finer points on opening a new business location.

Opening a New Business Location Tip #1: Plan, Plan, Plan

In fact, plan until you can't plan anymore. Although you can't possibly forsee every possible calamity that might befall your new business location, you should have a good idea of what could potentially go wrong. The planning stage should be the longest and most thorough in the process, and if you aren't sure about a few things, hold off. If you jump into a new location too fast, you might wind up in hot water. How are you going to staff the new location? Are you going to transfer employees from your current location to get the ball rolling? Have you checked out zoning regulations, inventory strategies and parking space? The more planning you do, the more capable you will be of handling issues as they crop up.

Opening a New Business Location Tip #2: Consider Natural Expansion

One mistake that many business owners make when scouting territory for a new location is that they don't consider the natural expansion process. You shouldn't decide on a new location based solely on statistics or demographics, though those facts are important. Instead, study the economical climate of several locations and picture your customers shopping there. If you have been in business long enough, then you know who your target customer is. If you can see your current customers shopping in a different location, that might be a candidate for natural expansion.

Opening a New Business Location Tip #3: Take Baby Steps

As mentioned above, the single biggest mistake you can make is charging ahead too fast. Calm down and look at the situation objectively. Just because you want to open a new location doesn't mean that it will prosper, and just because you can project sales doesn't mean that they are realistic. Before throwing thousands (or millions) of dollars into your expansion, take a few baby steps. Poll your current customers to find out why and how often they shop at your store. Attend a business expo or a trade show and gauge the interest in your booth. Set up a kiosk at your local mall. All of these things can give you a more healthy and accurate perception of how expansion will go.

Opening a New Business Location Tip #4: Solicit Outside Help

If you don't know how a business expansion should progress, find someone who does. Outside sources - consultants, for example - are invaulable resources that you should be tapping. If you jump into something without an idea of how to do it, you are setting yourself up to fail from the beginning. Instead, talk to other businesses that have undergone similar expansions and collect the names of reputable consultants who might be able to provide their services.

Opening a New Business Location Tip #5: Seek External Funding

Many businesses that used outside funding for their start-up business fall entirely to internal resources for an expansion. This isn't always the best way to go. First of all, if your second location fails, you might wind up declaring bankruptcy and shutting the entire operation down. Secondly, external funding will help to cover all of your expenses - even the ones you didn't necessarily foresee. Obviously, this isn't the case for a business that already has six locations, but if you are expanding for the first time, seek external funding.