Credit: Elliott Brown (Flickr)
Businesses need to expand exponentially to keep increasing profits. But when your profits are stalling, one option you may consider is expanding to another location. Setting up shop in another area can often help you get more customers and fulfill your business potential. But it isn’t always a good idea.
Opening up a second location will always take a lot of money and time. Sometimes just expanding your business premises or moving to a larger workplace can work just as well. Here are some questions to ask to determine whether opening another location is a smart option.
Does It Suit Your Business?
Whether opening a new location is a good idea often depends on what kind of company you’re running.
For instance, fast food outlets and grocery stores often rely on being convenient. By opening in a location with many people close by, they can attract more customers and make much more profit. The same goes for restaurants, which often open as many chains as they can.
Client-facing businesses like law firms and I.T. consultancies often rely more on reaching out to clients. If they need to bring in more employees, they may simply need a larger building as opposed to two smaller ones. Services like these can also make things more convenient for clients by having workers travel to them, or doing business over the phone.
Do You Have The Funds?
When you’re opening up a new location for your business, you’re going to spend a lot of money. Buying or renting comes first, but you also have to design and equip it. You also have to pay for regular upkeep. It can feel like you’re opening a whole new business.
Keep in mind that even if you don’t have the money, you can raise funds. There are plenty options to borrow money and get more working capital. Figure out how much opening your new location will cost before jumping into it.
Consider whether the expenses are justified. For some businesses, a new location can increase profits massively, so it pays itself off. But if you’ll be taking a significant loss, you may want to reconsider.
Have You Found A Good Location?
It’s best to see what kind of places are available before you decide to expand. You may find a commercial property available in a high-value area for your business.
For instance, a commercial building in a student location will often be quickly snapped up. Bars and takeaways can increase profits massively in these kinds of areas. There are also business locations which many companies thrive on being in.
If you find an excellent location in a valuable area, it will often be a smart investment.
Can You Sacrifice The Time?
You’ll have to spend a lot of time on planning, preparing, and opening your new location. As well as finding a place and setting it up, you’ll also have to deal with the long employment process.
You and your colleagues will have to spend a lot of time away from your headquarters. This can make your profits drop as you’re less productive at work.
This is less of an issue for thriving businesses. But if profits are dwindling, you may want to put more effort into improving your primary location rather than opening a second one.
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