Should we open another location?

March 02, 2023

When small business owners set out to open their first business locations, they dream of providing customers with products and services they will fall in love with. As their fan bases grow, many consider one day opening a second or third location. However, doing so is not always as simple of a decision as it may seem.

Small business owners considering opening another location must thoroughly contemplate whether doing so will benefit them and their stakeholders. They must carefully plan and research to determine if opening up another place is the right choice for them.

Here are five questions small business owners should ask themselves before deciding if they should open another location:

1. Is opening another location affordable?

This is perhaps one of the most critical questions small business owners can ask themselves before opening another location. While it may not be the most fun question, they must answer it to ensure the long-term success of the new site and their small business as a whole. Therefore, small business owners should set aside time to look at their finances. They should decide if opening another location is attainable. Furthermore, they should consider if doing so will put an abundance of unneeded stress on their financial situation. The last thing any small business owner wants is to open another location and quickly be drowning in bills. Therefore, they must establish a clear answer to this question before moving on to the next.

2. Will you be able to efficiently and effectively manage this location?

Before opening another location, small business owners must also thoroughly consider if they can dedicate the time and resources to managing it. If they cannot control their current location and this additional one themselves, they need to plan how they will do so.

  • Will they hire someone to manage the new site?
  • Do they have a business partner that can focus on the new location while they continue to focus on the original one?
  • How will they stay current on everything happening at this new location?
  • How often will they visit the new site to ensure everything meets their standards?

Small business owners must have a clear plan for successfully managing their original and unique locations.

3. What does this area have to offer?

Small business owners must also analyze where to open their new location and consider what that community offers.

  • Will this area bring in a whole new demographic of customers and employees?
  • What is the culture like in this area?
  • Will people value the business?
  • Do you have access to the same or better resources in this area?

Small business owners must ask themselves these questions to help determine the likely success of their new location in this area. Furthermore, they must consider if it is far enough away from the original sites that it will be more convenient for some new and returning customers to visit it over the original. Small business owners should avoid opening another location in an area that will likely not offer any new value to the business. If they think customers will still choose their original location over the new one in this area, it is probably best not to open it there.

4. Is there demand in this area?

Small business owners also must consider if there is demand in the area where they plan to open their new location. If there is a specific area where people have requested a place, small business owners should start there. However, small business owners will find it easier to open another location in an area with an established demand.

Furthermore, small business owners should ensure people living in the area where they plan to open the location have the income to support it. For example, if the business’s products and services are pricier, they may not want to open another site in an area where the median income tends to be on the lower side. Also, small business owners should consider if there is job demand in the area. They need to ensure they will be able to staff their new location. Therefore, the site must exhibit demand for small business products and services and its jobs.

5. What will be unique about this location?

When small business owners set out to open another location, they also must consider what will make it different from their current one:

  • What will differentiate it or make it unique?
  • Will the decor be slightly different?
  • Will some products or services be available at this new location that is unavailable at the original and vice versa?
  • Is there a demand for certain products and services at this location but not the original?

Small business owners must thoroughly consider how their new location will be similar to and different from the original. They may also have to consider if there are other building codes they must abide by at their new location that does not exist at the original. These may affect the way they can lay out and decorate the store.

Furthermore, if the new location is close to the original, small business owners may want to consider purposefully making each store unique. Suppose customers can quickly drive between each store in 10 to 15 minutes. In that case, small business owners may have their original location exhibit one theme or focus and their new location displays another. For example, a small business owner that sells personal care products could consider having their original location focus on lotions, face masks, body scrubs, and other unique hygiene products while having their new location focus on candles, essential oils, etc., and other home goods. However, if the locations are separated by more than 15 minutes, giving customers as many options as possible in each area may be best. Many will not want to drive to another store to pick up a product.

The thought of opening another location can be pretty daunting to small business owners.

Therefore, if they contemplate doing so, they should thoroughly consider if it makes sense.

Using the above questions as a guide, small business owners can better understand whether opening another location is the right choice. They must ensure that doing so will allow their original location and future one to thrive.

PaySmart is a payroll provider in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. We are dedicated to helping small businesses take care of their payroll needs. To learn more about how PaySmart may provide payroll solutions, don’t hesitate to contact us at 717-766-1777. Our New Client Concierge is waiting for you!