6 things to consider before opening a second location for your business

Editorial Team

5 min read
Strip mall with new empty storefronts

Opening a second location, or even franchising across several locations, is the dream of many a small business owner. After all, a successful business is one that grows. However, there are many factors to consider when opening a new branch.

Here are six things you should think through before opening a second location.

1. Market demand

Before you commit to opening a second location, do some research to make sure there’s a market demand for your products or services in the new location. With a robust POS system, you can track sales on your products and services and get real-time granular data on what you’re selling and who’s buying it. You can then use that data to help make an informed decision about expanding.

You should also consider if and how opening a second location might actually affect the market demand for your products or services. Some stores and restaurants are successful because they’re operating in an area without a lot of hefty competition. Before franchising, take some time to figure out if that’s still true at the new location. Research the nearby competition and make sure your second location can stay as competitive as your first. Additionally, there is some brand value to take into account when your popular product or star service can only be purchased at one location.

And speaking of location…

2. Location

Before selecting a location for your first storefront, you presumably did lots of research on things like the neighborhood, foot traffic, proximity to other businesses plus vendors and suppliers, square footage, and rent. Well, get ready to do that all again for your second location, but with the additional considerations of how the two locations might affect each other. If your new store is close enough to peel away customers from your first store, it might negatively impact sales at that first location. If your second location is far away from your loyal customer base, it could just end up being a poor investment. There’s a delicate balance to be found, and it will take some research to find it.

A good question you might want to ask yourself is: are you opening a second location just to expand? Or will the second location bring something new to the table? If your second location offers a new brand experience or a different product or service menu, that might help its chances of success because your most loyal first-location customers will have reason to check out spot #2!

3. Financing

Opening a second location can and will be expensive. Assuming you’ve already raised enough capital to be considering a down payment, it is worth asking yourself if that’s the best thing to do with that money right now. Could that funding be better used to improve your first location, invest in new products, launch a big marketing campaign, or hire more staff?

4. Brand consistency

Your most loyal customers have come to expect a particular brand experience, which is why they keep coming back. Will you be able to easily repeat that experience at the new location? Will you have a hands-on role in bringing that brand experience and culture to life at the new spot? If so, how will you ensure that those things remain consistent at the first location while you oversee location number two?

5. Logistics and legal requirements

Keep in mind that the logistical process of opening a brick-and-mortar business can vary wildly from state to state, county to county, and even neighborhood to neighborhood. Don’t assume that the hurdles and red tape you cut through to open your first location will be exactly the same at location number two. It might take longer, it might cost more money, and there might be different restrictions and requirements you have to follow. Think through and research all these logistics as soon as you can, and it can help save you from some headaches later.

6. Mental bandwidth

As you undoubtedly know, running a business with only one location can be all-consuming. Before branching out, take a moment to consider how overseeing two locations might affect your mental health and your ability to be an effective leader. Even if you’ve got lots of help, opening a second location for your business will essentially double the things you have to worry about on a daily basis. Growing your business is great, but not if it’s at the cost of your mental health. Consider bringing on a partner, or elevating a trusted employee to manage the new location, or even hold down the fort at your first while you focus on the second. Splitting responsibilities will lighten the load for everyone.

Let us help you grow your business

Opening a second location can be an exciting and fruitful opportunity for your business. However, it’s not something that you should walk into lightly. Taking the time to carefully prepare and plan your expansion can help you can set yourself up for success and exponential business growth.

Clover’s POS and business management solutions can help you accept payments, run your business, and sell more–whether you have one location or many. Talk to a Clover Business Consultant today to learn more.


Popular Topics

Recent Stories

Please share your contact information
to access our premium content.