Tips for Opening Multiple Locations
Know what to expect before expanding your business
The University of Colorado recently released their quarterly Leeds Business Confidence Index, which showed that Colorado businesses were more optimistic about the economy in the upcoming quarter than they were about the previous quarter. This could mean that many businesses in Colorado and elsewhere might decide that now is a good time to expand. One way to expand your business is to open more locations. That way, you can extend your business's reach and take advantage of shortfalls in various locations for your product or service.
But there are several things you should do when opening up multiple locations:
- Be prepared to lose money. If you are opening multiple locations of a new business at once, keep in mind that many businesses do not turn a profit for the first few years. While your company might be an exception, you should be prepared to have a minimal salary (or none whatsoever) and even to take a loss. If you have an existing, successful location, don't expect that the secondary location will immediately be a moneymaker. Instead, prepare for the worst - even though the popularity of your first location might help the second location be profitable in year one.
- Insure all locations. Business insurance for property, interruption and liability should cover all your company locations. You should also have workers' compensation coverage for employees at all locations and key person insurance as well.
- Never make one location "secondary." While one of your locations may have existed before another, that should not mean one is primary and the other secondary. You should be prepared to give your business, and your employees, equal time at all locations.
- Try to fill a gap. When you open up additional locations, you should choose the areas with an eye toward filling a service gap. For example, if you have a sub shop, you might want to choose locations with few or no sub shops rather than a storefront located right next door to another sub shop. An easy way to do this is to check Google Maps and take a look at the concentration of similar businesses in the areas you are considering for the new spot.
- Have cohesive procedures and enforcement. The employees and management of all your locations should be operating under the same rules and procedures, with the exception of location-specific issues. This will give you more flexibility in moving employees from location to location and help keep turnover steady for each property.
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