Expanding a business to multiple locations is something many entrepreneurs anxiously look forward to. Multiple locations mean multiple revenue streams, but it also means multiplied challenges. Tempting as it is to take your concepts across the city, state, or country to reach a new audience, you need to be mindful of when and how you expand. Watch out for these common pitfalls so you can make your business growth as smooth as possible.
Moving Too Quickly
Expanding your business is an exciting endeavor, so it’s tempting to jump into this stage before you’re really ready. Opening a second location while the first one is still getting established can prove disastrous for both. Before expanding, make sure that your first location has a steady stream of income and that you have a solid customer base.
Ideally, you’re in a position where you’re running out of space or inventory in your first location. If your current business is so successful you simply can’t keep up with demand, this is a good indicator that it’s time to expand.
Spreading Yourself Too Thin
Many entrepreneurs like the feeling of being in control and want to maintain this level of immersion in multiple locations. Unfortunately, you simply can’t efficiently oversee all the day-to-day activities of your first business while also giving your expansion the care and attention it needs. You must delegate when you’re expanding. Give your first business over to a capable manager and only check in periodically. Let go of the daily minutiae and free your focus for the bigger picture.
Taking On Too Much Debt
Carefully analyze the financial health of your first business before you decide to expand. You should already have functional accounting software in place that can give you an in-depth look at your profits, losses, and debt. If you’re still deep in the hole from your first business opening, you may want to focus on paying off your initial loans before you dig yourself in further. This is a good time to upgrade to a more robust industry solution like QuickBooks Desktop Enterprise so you have the functionality you need to efficiently manage multiple locations within a single system.
Overlooking Market Research
A good business owner knows his customers well. You should have a solid understanding of the demographic that you’re catering to. If your first business is thriving, it’s likely due in some part to the fact that it’s situated near your targeted shoppers. When you’re choosing the site for your expansion, make sure it’s within reach of a similar customer base. Ideally, you’ll find an area where your products or services aren’t currently available, so you’re meeting a well-established need for the demographic in that area.
Under the right circumstances, a business expansion can help you spread the word about your products and services to a whole new area, landing you a fresh group of loyal customers. Make sure you prepare carefully for any stage of major business growth so you can move smoothly into a new phase for your entrepreneurial efforts.