So you think you are ready to expand? You better make sure all of your ducks are in a row before you start trying to grow for the wrong reasons. Here are my 6 thoughts on expanding your location or opening another:
1. Are you generating a consistent growing revenue for your business, is it in the black and is it growing CONSISTENTLY? Just having a couple of prosperous months and a bunch of excitement is not enough. You need to have the RESOURCES and the REASONS to expand! It is absolutely GREAT and exciting to have positive net profits, but sustained positive net profits go a long way to PROVE you have the product / services, and resources to expand!
2. Do you have enough cash set aside to run your 2nd location for a minimum of 6-8 months and likely more on hand? Or are you willing to take on an investor and give up some ownership to fund it? Again, just a few strong months is not necessarily enough to get it done. Positive net profit over an extended period of time ALSO allows you to put up this cash base for growth. It’s like another litmus test, if the cash is not there, the need may not be there either!
3. Do you have the staff or team to support the split, or are you planning to do it yourself?? Is your team / staff on board and engaged in the growth? Have they been engaged and want to contribute to the expansion? It will be VERY overwhelming to go it without a team, and the chances are YOU CANNOT DO IT WOTHOUT A TEAM!!
4. Do you have a duplicable system that complements your team? A system that can run without you in house at all times? I am not just talking about business systems for the management side of your business, but also systems for your technical side or in the case of martial art schools, a system on the mat?
5. WHY do you desire to expand? Do you truly feel you have a “world-class” product that you want to serve others? Do you truly have a PASSION to spread that product, or is your desire to expand ego driven? Do you just want to serve your personal need to “grow”?
6. Location, Location, Location!!! Will your second location be in as good of or better location as your original? Will it be in a location that gets good drive by visibility and traffic? Is the location in a reputable area that people will want to frequent, does it have an anchor business of some sort that will help draw traffic to you? Do you have enough room in your area / city to justify opening up a second location? Will they be spread enough apart physically to keep one location from cannibalizing the other?? Inevitably there will be a few students jump ship from one location to the other for various reasons, but having 50% of your current customer base jump from your old location to the new one is NOT good!! You don’t want to be caught saying, “Well… I had 300 active customers at my original location, so I started a new location a mile away, and now I have 150 active customers at my original location and 150 active customers at my new location.” All you will have done is double your expenses……….NOT GOOD!