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Knowing When to Expand to a Second Location

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You’ve done the hard part—you’ve taken an idea and made it a reality by forming a business and cultivating a dedicated and growing customer base. You’ve literally beaten the odds stacked against you and you’ve generated revenue. So much so, in fact, that you’ve got your eyes set not internally to your current location, but externally.  

Building a successful multi-unit franchise starts with the truly scary first step of opening your second location. Knowing when exactly to make that critical step can mean the difference between rapid expansion and stretching yourself too thin and jeopardizing the entire operation.  

That’s why you need to look out for both the red flags and the green lights when making the final decision to pull the trigger on that second location to make your dreams a reality. When you know the following, you’ll be more prepared to expand into that second location:  

 

Know The Market You’re Breaking Into 

 

Unless you plan to open your business down the street, which is likely not the wisest business decision, you’ll be opening your second location into a different market. A new location, with different traffic access points, access to public transportation (if any), and different demographics.  

Have you driven around the area immediately surrounding your prospective second location? Are you familiar with how much traffic will pass your storefront? Do you know if your second location is far enough away from your first so as to not split the customer base and cannibalize your own brand? Are their competitors in the area that aren’t near the original location? 

These are the type of questions you need to be asking yourself as you work to become a master in market research for your brand. Locations are about markets almost as much as they are about price.  

 

Know How to Market Your Expansion 

 

We’ve talked about marketing in detail before, and for good reason. Marketing matters.  

Your expansion will need to justify its location and prove value to a new customer base. Similarly, your existing customer base will need to know the reasons behind your expansion and will likely want to know if they can expect a drop in service or quality because of it.  

Make sure you’ve designed a proper launch for your second location—giving it the love and support it needs without neglecting that original location. Remember that expansion isn’t moving. You’ll need to be able to support two locations 100% of the time, not two locations 50% of the time as you travel back and forth.  

Communicating your understanding of these concerns, which will be inherent in the existing customer base, is an important step in marketing your expansion. Likewise, communicating the value you’re bringing to your new market will help you build out your clientele that will frequent your second location. 

 

Have the Infrastructure In Place 

 

A second location means a second set of staff. A new manager. And ideallya right-hand leader in charge of that second location.  

Are you financially prepared to support these new helping hands as you generate revenue at the new location? 

Likewise, you’ll need tools to monitor the growing success of the company. Reporting that tells you how much product is moving, and when you need to order new product or transport product from one location to another. This can become a quagmire very quickly with the wrong tools in place.  

That’s why your point-of-sale is absolutely critical, and where Franpos can help cement your growth prospects. Franpos is the only point-of-sale system designed for franchisees, franchisors, and multiple locations. You’ll have all the tools you need to succeed and be able to monitor every aspect of your business from one singular location.  

If you’re thinking about that second location and want to make that dream a reality, feel free to reach out 

 

Final Thoughts 

 

Building out your company will take a serious amount of forethought to build the appropriate infrastructure, marketing approach, and necessary goodwill from your customer base as you expand. Make sure you leave no stone unturned as you begin the process of replicating the successful brand you’ve built as you expand from one location to many, many more.  

 

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Michael Ruiz
Michael is a Content Strategist at Franpos. Based in Atlanta, he loves helping business owners understand how to build strong customer relationships through smart data.
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