You may be overly excited about opening a second location but practically it is twice difficult as it was for your first opening. It is estimated that nearly 7 out of 10 businesses will fail in the upcoming 10 years. Opening a second location depends on so many variables and this time you have more to lose.
Thinking of opening in a second location largely depends on the brand of the business. Where, for some businesses it is just the evolution of the model, for others, it is a lot more. This is why business analysts heavily emphasize the trial runs as they can prevent you from losing the entirety of the investment. But before the physical test runs, there are some primal factors that you need to consider. Read along to know what these primal things are crucial before opening a second location.
1) Location
The first step of research is selecting a location that will answer important questions like how will the customers reach you and how will you gather the required labor. Before selecting a location, decide based on the demographics of the customer base that you will market your product to. It also depends on how far the second location is from the first one and how much foot traffic your first location receives. Your ideal second location should fit your brand. But before electing and finalizing your second location, you should visit the target locations and get some first-hand feedback fo4m the existing business owners.
2) Labor
For a business workers and employees are equally important as the customers. For this, you need to run demographic research that will bring you not only full-time but also part-time employees. Before you decide on labor costs, you need to consider some facts such as whether you are ready to pay for the relocation of the current employees. You also need to know the house rent on the location as well as the shopping cost. These factors will determine how much salary you can spare which will help you decide how many new hiring are going to be there.
3) Cash Flow
Your timing will most definitely depend on whether you are capable right now to open a second store that entirely depends on the cash flow. You need to decide whether your decision of opening a second location is justified by your profit margins. You can write a business plan and measure it with the profit margin your first store is giving you.
4) Regulations
Before taking the final step you need to know the state and local regulations. This is valuable especially if you are thinking about moving across state borders. Research the taxation process and stay up to date on the permits, licenses, and other legal components.
5) Timing
What time is the best time? The answer to this question is very important if you are looking to open a second store. Once you are done with your research it is now time to decide whether this is the right time to do an opening. You need to select the timing based on some simple answers like whether this opening justifies your business plan or is profitable for you at this time. First of all, you need to understand that just because you have two stores, it does not equal double profit. It can end up being the most necessary step in establishing your brand name further and gain you more profit than imaginable or can fail. These all depend on the calculations so take the next step very carefully.
Research is the key! Finding these things and making a business plan accordingly will minimize the business’ chances of failure.
