When you decide you’re ready to open a second business location, you’ve likely been putting in an incredible amount of hard work already to achieve some success. It can be a fantastic feeling to know your dream is becoming a reality in more places than one.
But before you can open another outlet, you’ll have financial considerations to weigh, of course. A second business location will mean roughly double of everything: twice the rent payments, double the labor costs, possibly another 100 percent of your past legal fees … but, if you play your cards right, double the profits.
Before you’ll see that money rolling in, however, you must make a few financial adjustments.
1. Business Loans
Most company owners don’t wait until they’ve secured enough savings to open a second location; they apply for a loan, instead. If you choose to go this route, you’ll have to land a good business loan to cover at least part of the cost of your second location.
You might unthinkingly assume you’ll be applying for conventional lending at a bank, but there are other options that entail fewer qualifications and easier applications. Look online for a start up business loan option that meets your needs without having to go through too much of a hassle.
2. Quality Help
Labor is always one of the biggest expenses in running a business. You’ll have to calculate the extra labor cost you’ll need to cover on top of what you’re already paying.
More important, though: Don’t skimp on the quality. When you open your second business location, remember that you probably can’t make a duplicate of yourself.
While you’re at one location, someone you can trust will have to be managing the other one. If you don’t take the trouble to screen high-quality employees and pay them what they’re worth, you’ll have a difficult time finding someone you can trust to run the second location.
Research from Entrepreneur shows it’s better to pull from your existing staff to manage a second location. You’ve already gotten to know that person, and he or she has proven their worth through on-the-job performance.
Naturally, this will likely mean this employee will merit a raise that factors in his or her years of experience as well as potentially heightened responsibilities and duties. Most business owners have said this course is worth it, though.
3. The Market
During the time you’re worrying about what you’ll have to spend to get your second location up and running, also try to think about how much you might earn. Evaluate the market where you’d like to open your second shop with care, to raise the odds that you can be successful.
Research the current economic conditions in the region, look at how you many competitors there are and how they’re faring, assess whether there might indeed be room for another operation like yours, and any other factors that could factor into your fortunes. If some of the answers are not favorable, you should seriously consider locating your second store somewhere else.
You might also think about an online alternative. Rather than open a brick-and-mortar storefront, why not take your products online? That way, you’ll need only a warehouse to hold your wares, and it won’t matter much how well the market on the ground is doing.
Again, choose a market that can sustain your company without too much competition.
4. Buying or Renting
The geographical and space expense is one of the most obvious costs of opening a second location. Business owners often prefer to rent when they’re starting out.
When you rent or lease, you don’t have to worry about building upkeep, and as long as you make your payments, a landlord should guarantee a habitable place to do business. But some new business owners choose to buy property instead.
That course entails a commercial mortgage, building insurance, and mortgage insurance, which are added expenses, obviously. However, many company owners prefer this option because, if the business fails for some reason, they’ve still built equity into the real estate.
One may rent the property to someone else later, or sell it and make back your investment. Select the option that makes the most sense for you at this point, and factor those expenses into your calculations for the new business.
5. Legal Implications
You should be well aware, from opening your first location, that there are legal implications to opening a storefront, and those cost money. The laws vary from state to state, so you should research how much it will cost to register a business in your area and what you’ll need to do to stay up to date on your permits and licenses.
Many business attorneys will offer a free consultation, but after that, their services will cost you at least $100 per hour. Factor in this essential cost to make sure your business is legally sound and ready to make a profit.