Liquidation sales, covered windows, “Closed for business” signs on the doors…the remnants of a good idea gone wrong. What makes an otherwise successful business fail when opening its second location?
I see it often – the potential was there and the projections looked great, but something important was overlooked in the planning and execution. A few critical areas need to be assessed prior to taking that leap!
Systems & Processes
First of all, you’ll need to do a detailed analysis of your systems and processes to be sure they’re running smoothly and you’ve worked out all the kinks. A small detail, like that messy workaround you have for importing your Shopify sales into your accounting software, can become a major hurdle down the road if it’s not dealt with right away.
Forecasts & Budgets
Forecasts and budgets are only useful if (1) they’re accurate and (2) you use them. I recommend forecasting at least the first two years of your second location and creating a budget based on your forecast. Revisiting your forecast and budget every 1-3 months will help you stay on track and maintain accuracy.
Just how much is enough when it comes to saving for unplanned events? I recommend putting away double to triple your anticipated expenses in case you run into a leaky roof, mold in the walls, or plumbing issues. Unexpected things will inevitably come up that cost more than you bargained for; having the financial cushion available in advance can save your rear! If you don’t end up needing it – bonus!
**Don’t pull money from your first location to fund your second location! It may weaken your first location and leave it susceptible to failure.
Make sure your second location isn’t so close that it leaches sales from your first location, or so far that it requires a lot of travel (and expense) to manage. You don’t want to overstretch yourself. Is the property in an area saturated with competition? If so, do you have a truly unique service or selling point that will distinguish you from the competition and bring new customers through your door instead of theirs?
Managing your time between locations can be tough, so plan your time well. Will your customers/clients from the first location miss your presence? Are you a big part of why they come to your business? If so, how much can you delegate to a trusted manager to get things done when you can’t be at the new location?
Hiring a great staff can make or break the new location, especially if the staff are a primary reason for the success of your first location. Make sure your well-seasoned employees train the newbies and that everyone has their job down to a science. Some other things to consider – does your new staff have the personality traits and skills that your customers and clients value? Can you send some of your veteran staff members to help open the new location?
Business is good and you’re turning a profit. That’s a great sign, but not a guarantee that you’ll be able to replicate that same success at your next location. What was the secret ingredient that made your first location so successful? Was it a winning business strategy, a kickass manager, an amazing staff, an awesome location, on-point advertising? Figure out what it was that made your first location a success and reproduce it!
Need expert perspective on your financial strategy? Book a session with Melissa at Pregame HQ to get your questions answered.