Is your business healthy enough to expand to a new location?

Grow Your Business Feb 02, 2016

Before you decide to open a second business location, consider these factors and options.

Your business has taken off just as you hoped it would. You have loyal customers, hard-working employees, and good cash flow. You’re ready to take your company to the next level and think adding a new location could be the way to do it. Before you decide, take the temperature of your current business situation and weigh the changes an additional location would bring. Then decide if a new location is a healthy choice for your company.

Is it possible to clone success?

How does your current location contribute to your success? Consider factors like exclusivity, longevity, proximity to office buildings and other foot traffic, easy access and parking.


Find out how well other businesses in the area are doing and how long they’ve been around.


No two locations are exactly the same. Determine if the new location you’re considering will present obstacles such as parking issues or increased competition.

Also compare the demographics of your new location and if you’ll need to accommodate different customer needs. Find out how well other businesses in the area are doing and how long they’ve been around.

Unfortunately, cloning yourself is not an option

How closely are you identified with your business? If you are the face of your company and customers expect to see you, what will happen by adding another location? You don’t want your expansion to be seen as a pale imitation of the original.

Even if customers don’t know you personally, opening a second location could double your stress if you try to juggle responsibilities at both. Can you afford to move some experienced people from your original location or hire new management?

Funding: The heart of the matter

Think about what you expect a new location to do for your company. Consider how much you’ll need sales to increase. How will you fund your expansion? Consultants advise against using the first location to pay for the second. Determine if you’ll need investors, partners, a business loan, savings, or another source of funds.

A second location also means more employees and more overhead. Do you have the funds to keep both afloat while the new place is getting up to speed?

Treat a second location like a new business

No matter how similar your two locations, you should have a separate business plan for your new shop. This will help you pinpoint the differences between the two and avoid unexpected expenses. For example, you might need different types of permits and licenses, or different kinds of advertising.

Other ideas for a second location

Even if the numbers needed for a second location don’t add up, there are ways to expand your presence without an additional physical location. If you don’t already have one, consider an ecommerce website for selling without boundaries.

If your business has seasonal spikes, consider a pop-up store for a limited time. Successful pop-ups include empty storefronts, shopping mall kiosks, and farmers’ markets. 

You might be able to take your show on the road. Businesses from dog groomers to boutiques and restaurants create mobile versions via van or bus.

If the benefits of adding a second location outweigh the risks, it’s a good indication your business is healthy enough to expand.


Kelly Burkart is a freelance writer from Minneapolis, Minn. While she has spent most of her time writing about financial services the past 15 years, she has also explored and written about everything from cardiovascular health to travel, higher education and sustainable energy practices.

Article by KELLY BURKART, Content Strategist/writer