Question: I have a successful small business on Cape Cod. I am thinking about expanding to a 2nd location. What hints, tips or suggestions do you have?
Answer: You have several options to grow a business when you have reached the limit of market penetration in your current location. Move to a 2nd location, increase the size, depth, and breadth of the business in the original location or do nothing and remain the same size. Here are some thoughts to consider:
There are risks to expanding a business that is healthy, but there are also benefits of expanding. You can:
Become a regional business vs. a local business. You can reach the South Shore as well as the Cape and Islands with an additional “off Cape” location.
Meet customer demands more efficiently if you have Upper, Mid, and Lower Cape locations.
Generate buying leverage by having multiple locations and therefore buying more, less expensively, to support your multiple locations.
Shift inventory from location to location to maximize cash flow.
Move managers from one location to another depending on individual location needs. Share employees from one location to another to meet demand and service needs.
Have common POS (point of sale systems) to maintain inter-unit flexibility Increase brand awareness across the region.
The important issue for most small businesses is to know when to expand by:
Establishing milestones in revenue and profitability to know when it is time to expand. Demonstrate at least three years of profitable business, and you are not considering expanding just to satisfy a sudden surge in demand. If the demand is temporary or seasonal, then investing to grow or expand might not be justified. However, if you find that you have more business than you can handle at your one location and that some customers are coming from other geographic regions, then expanding might be the next step. For example, if you are currently located in Yarmouth and you have an overwhelming number of customers from the Orleans, Eastham, Wellfleet area, you might consider researching a 2nd location in the Orleans/Eastham area.
You are in an industry that is growing, nationally. If you see your industry or industry segment growing then expanding your business to additional outlets may be a worthwhile investment in financial and human resources. If you are doing residential cleaning and the number of year- round residents continues to increase, and you see that your customer distribution is getting more geographically dispersed, expanding might be appropriate. It is in your best interest to do your own research on the Cape and Islands to assure that a national trend is, in fact, being experienced here before investing in growth.
Maximizing the geographic area. You have maxed out the area in which you are located, or there are so many competitors that you cannot expand, so looking to adjacent geographic areas works to create a new base of business.
Creating a sustainable business so it can function on its own while you are expanding to a new location where your energies will be focused. In having a strong core business, you have a loyal customer base that demonstrates an ongoing demand for your products or services. Another factor in sustainability is to have a strong, dependable team that can operate independently of your continuous on-site management.
Customers are asking you to grow. They are seeking you out from geographic regions you don’t currently support such as the South Shore.
Codifying everything. Make sure you formalize all processes and procedures making them independent of outside influences.
Having multiple accounts for social media. If you have different brands, maintain their individual identifies. Be focused on each brand’s need in each location. If appropriate, show the interrelationship between the brands, but make them separate regarding the brand identity.
Growth in any business is a choice. Some businesses purposely stay small. Some choose growth by expanding in their original location. Others expand by opening 2nd, 3rd, and 4th locations.
Growth is a conscious decision founded on research and analysis.