Congratulations! You’ve worked hard, and your small business is flourishing. What’s next? For many entrepreneurs, the answer is to expand their businesses to multiple locations.
Before you take the plunge, you need to make sure you’re ready to start scaling to multiple locations.
First, consider the risks. A new location means spending more money on rent, utilities, insurance, marketing, staff, supplies, inventory, equipment, tech, and more. It also means your focus will be split between your new responsibilities and your old ones. So while your new location requires a lot of your attention, it’s critical that you pay attention to your current business operation so that nothing slips through the cracks.
On a more positive note, consider the opportunities. Opening multiple locations raises your company profile and introduces you to new customers and additional markets. Hopefully, it also leads to increased sales and profits.
How do you know you're ready to expand to multiple locations?
Consider these questions:
- Does your business have a steady cash flow?
- Have you been profitable for at least three years?
- Do you have enough financial resources to support your current location and fund expansion? It’s likely that your new place won’t earn enough money to cover your overhead right away. So sales from your existing business will have to support that too.
- Is your current business running smoothly? How hands-on are you? Can your business afford for you not to be around? For how long?
- Do you have a reliable team in place to keep your current location humming? Is there someone you can rely on to take charge? Your employees must be ready to run the existing company without having you around all the time since you’ll be spending much of your time at the new location/s.
- Is there a demand for your products or services that your current location can’t meet? Are you planning to replicate your business in this new location? If so, are you certain a second location won’t cannibalize sales from your current business?
- Are the consumers similar in your new area, or will you need to alter your offerings to cater to this demographic? Are you prepared to do that?
If you can confidently answer yes to these questions, then it’s time to take the next steps.
To ensure you stay ahead of the challenges of running multiple locations, follow these steps:
Organize, standardize, and document your operating procedures.
Nothing about your business operation is too trivial to document. Whether it concerns managing employees, ordering inventory, handling customer complaints, participating in community events, planning menus, or office procedures, you want to codify it all. This information will be helpful for the employees you hire at your new location and those who will keep your current business up and running.
Think of it as if you’re going to franchise your business and need to create a road map for others to follow detailing how everything works. Essentially, you’re systematizing your company’s operations.
You will likely need to update your operations manual and employee handbook. Do that before you open any new locations.
Consult with legal and financial experts to review operational details.
Opening another business in the same state your business is currently in is less complicated than expanding out of state. However, if that’s your plan, it’s wise to consult a lawyer to ensure your company name, logo, and any other intellectual property can be used in the state/s of your new businesses.
Also, if you expand out-of-state, familiarize yourself with the employment regulations of that state to ensure you are compliant. There are also different regulations governing businesses with employees in other states.
In addition, it’s smart to check with your attorney and accountant to make sure the current business structure of your company (C Corp, etc.) is the best one for a business with multiple locations.
Consult with your insurance agent to see if you can add coverage for the new location/s or if you need separate policies.
Build your teams.
While ultimately, you want to consider all your employees as one big team, you are, at first, building two (or more) strong teams of staff and managers. Hopefully, you already have a strong bench of trustworthy and reliable employees whom you can rely on to run the original company since you’ll likely spend most of your time at the new business when it first opens.
Ask some of your best employees if they would transfer to the new location (even if it’s just temporarily) so you have a mix of experienced and new workers. Depending on how far apart your locations are, you might need to incentivize them to do this (or at least cover their commuting costs).
Make sure the team running the original location is trained to manage the business as you do and confident enough to make decisions without calling you every 10 minutes. In the new place, your current employees should mentor the new hires.
At some point, especially if you plan to expand to multiple locations, you’ll want a strong management team in place at each location so you can focus on business development and the big picture.
Establish a strong communications system with your team.
As noted, it’s essential that your managers are empowered to make decisions. But they also need to know when to check with you when necessary.
While you may be spending most of your time establishing the new business, you should visit your original location at least once or twice a week. Make sure your team knows you’re always available by email, text, chat, instant messaging system, or phone. Consider creating a company intranet to keep all your employees informed.
Hold weekly or bi-weekly meetings with managers and key employees via conference call or video chat. Have your teams submit weekly reports as well.
Once you’ve established a good communication system, use it! According to one study, businesses with multiple locations spend an average of 17 hours a week repeating and clarifying communications.
Promote your company culture and engage your staff with team-building activities.
When your employees are scattered at multiple locations, keeping your team engaged is more challenging. It’s important for your entire staff to understand your company culture, vision, and mission and to feel connected—to the business and one another.
Have all-hands-on-deck meetings, online and in-person. It’s a good idea to hold company-wide fun activities a few times a year. A holiday party, company picnic, or group outing to a ballgame are all excellent team-building activities.
Invest in tools and technology.
The right technology simplifies your operations and helps your business function more smoothly. Using cloud-based software and apps is critical. Depending on the type of business you own, companies with multiple locations should look for software and apps for:
- POS (point of sale)
- Project management
- Inventory management
- Productivity suites
- File storage and transfer
- Video conferencing
- Customer Relationship Management (CRM)
- Communication tools
- Payment solutions
Using tools like these saves everyone time, allows for fewer errors, and frees you up for big-picture thinking and revenue-generating activities.
Train your entire staff to use the technology by holding in-person training sessions or hosting online webinars. If part of your staff works remotely, make sure they have the necessary tools to stay connected, work securely, and get their jobs done.
Plan for Success
No matter how successful your business is now, it’s imperative that you do your homework when considering expanding to multiple locations. Just because something works in one area doesn’t mean it will be equally successful in another.
It takes a lot of preparation to successfully run multiple business locations, whether a store, restaurant, fitness facility, salon, or office. But if you plan carefully, whether you’re opening one new location or a dozen, these steps will put you on the right track to success.
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