Congrats, You’re Expanding! Tips for Opening a New Branch
Many entrepreneurs dream of opening a business, then growing and expanding until they’re a household name. If your business is doing exceptionally well, it might be time for you to take a leap of faith and open a second location.
To reverse the well-known quote, with great reward comes great risk. Regardless of the industry you’re in, there are, unfortunately, a number of things that can go wrong when opening a new branch. While you can’t avoid every single one of them, going into the situation prepared and with an understanding of what to expect can help you prevent small threats from turning into costly errors.
We’ve collected advice from entrepreneurs who share the things they wish they knew before expanding their business, our own top tips, and some red flags to look out for when opening a new branch.
Clarify your ‘why’
Businesses open a second branch for any number of valid reasons. Clarify the exact reasons why you want to expand. Define your expectations, and take these things into account before writing your second business plan. Your ‘why’ will impact your future decision-making. So, why are you expanding?
- To better satisfy existing customer demand in multiple locations?
- To penetrate a new market?
- For logistical reasons?
- For better brand establishment?
- You feel that a limited space is limiting revenue?
You might think deeply about your reasons for expansion and decide that there are better courses of action. In some cases, opening an online retail store or a new warehouse for order fulfillment might be a better option for your business.
Reassess and remodel your entire business plan
The top five reasons why new businesses failed in 2019 are:
- Not investigating the market well enough
- Too little financing
- Business plan problems
- Bad location and marketing
- Expanding too soon [1]
You may have written a bullet-proof business plan when you initially opened the first branch, but chances are, the market, customer expectations, and lots of other factors will have changed by the time you’re ready to open a new branch.
Some things to look at when writing a new expansion plan include:
Location
- Have you created brand awareness in your chosen business location?
- Is there much foot traffic?
- Do you have existing customers in your new location?
- Have you looked at demographics and competition in your chosen location?
Branding and marketing
- Is your new branch an extension of your current business or catering to a new market? How does your marketing and branding reflect that?
- Is your branding consistent, recognisable, unique, and eye-catching?
- If your target market has changed, does your marketing plan reflect that?
Financing
- Do you have enough cash flow to sustain your current branch while working on your new branch?
- Have you assessed various financing? You might want to read our resources about small business financing, small business loans and grants
- Is your pricing strategy changing to aid the funding of your business expansion?
Business continuity
- Have you created a disaster recovery plan and a business continuity plan?
- Have you taken out adequate business insurance to mitigate severe business damage in the worst case scenario?
Logistics
- Have you considered how inventory management will be handled across multiple locations?
- Do you have a suitable bookkeeping and accounting system in place that will track finance across multiple locations?
- Are you using the same vendors and suppliers in both locations?
Working relationships matter… a lot
According to entrepreneur and author Sinem Günel, fostering genuine connections with people in your industry is a must. As your business journey advances, you’ll run into obstacles that your peers may have experienced too, and will share some guidance on.
Networking can lead you to some excellent sources of knowledge, advice, and a second opinion that you can rely on. Sinem says that ‘building these relationships might not take more than a few hours per month, but the return on investment is priceless’ [2].
Once you’ve hired someone trustworthy enough to manage your second location, forming a strong working relationship will simplify communication and promote an open, creative environment.
The best knowledge comes from personal experience
We’ll preface the last piece of advice with another wise quote from Sinem Günel: “You can read ten books on how to be a good writer but you’ll still suck at writing if you don’t practice it” [3].
When you’re thinking of expanding, it can be easy to procrastinate by learning as much as you can about the subject, reading countless resources, and watching endless YouTube videos. While preparation is a very necessary and important first step, you need to remember that you’re already equipped with the personal experience and knowledge gained from opening your first store.
You’ll make some mistakes when opening your second location - it’s inevitable. Make your mistakes, assess what went wrong, and learn from the experience moving forward. The most relevant and impactful information you’ll gain will come from launching your second branch.
Automate your business with a powerful POS system
Epos Now offers state-of-the-art POS systems for businesses in retail. We let you choose the tools and insights to help your business achieve its goals, no matter how many locations you have. Designed to work as a complete business management system, you can control all vital aspects of your company from one cloud-based system.
Receive detailed analysis on the areas that matter to your business:
- Review profitability reports based on individual product performance, trending items, best and worst sellers, and employee sales
- Multi-location management dashboard for organisation and clarity
- View sales analyses on profit margin, cash flow, and other expenses
- Access multi-award-winning inventory management systems that sync online sales and in-person sales for the most up-to-date stock levels
- Automate stock purchasing so you never miss a sales opportunity
- Create and send invoices using simple templates and a built-in VAT calculator
- Customer management systems that save customer contact details and shopping preferences for more targeted marketing.
- Schedule emails and SMS messages to be sent at the most impactful time of day
- Integrate with the business automation apps that are right for your business
- Simplify employee management for more efficient scheduling and payroll
If you’d like to learn more about our industry-leading software, request a free callback with one of our experts.