But expansion can also be risky. There is no guarantee your new location will be as successful as the original. And it can put a hamper on your entire business if it suffers. This worry is often enough to prevent business owners who are ready to expand from taking the chance.
The key to successful expansion is to first consider if your business is truly ready. If you determine you are, you can then make more detailed plans. But you should first ask yourself the follow questions:
Are you accomplishing the goals in your business plan?
Your business plan is the first document you should consult when considering expansion since it should contain a detailed strategy for your first 3-5 years of operation.
Review the strategy you set at the onset of your business and ask yourself if you’ve been following the plan. If you’ve gone off the rails, it’s probably a sign there is still work to do before you open new units.
Your business plan should also have detailed financial projections, which you can compare against your business’s actually financial performance. If you’re surpassing your original goals, it’s a good sign that you might be ready to expand. But if you’re falling short or just barely meeting your targets, you should probably continue to focus on the current location.
Does your current location have too much business?
If your current location has more business than the space can handle, you should likely consider expanding to multiple units. Moving to a bigger space also makes sense but opening an additional location gives you the opportunity to maintain the success your business has already established.
While too much business sounds like a good thing, it can actually harm your business in the long run. Loyal customers might grow frustrated with long waits or a lack of attention. Spreading your business out across multiple units is often a good idea in that situation.
Do you have the money to open new units?
This question might sound obvious but don’t make the mistake of thinking launching a second location will be much less expensive than your first. Think back to when you opened your business. It likely took some time to establish and turn a profit.
Before you expand, you should project your start-up costs and make sure you’ll have the funds to pay for the expenses across all your locations. If you do decide to expand, creating a detailed budget will be very helpful.
Do you have the right people to help you grow?
No matter how hard you work, you can’t be in two places at once. You’re likely going to spend the majority of your time at your new location as it gets going, so you should make sure you have a solid team overseeing your original location.
Working with other supportive partners can also be very beneficial as you consider expansion. For example, an accountant or bookkeeper who serves multi-unit businesses can keep your records updated and provide financial reports that detail the performance of each location.
Read the original article here.