The new year is a time when most individuals make resolutions. It is also a time when small business owners take big steps forward to fulfill their business goals, such as expanding by opening a second, or even third, location. However, before taking that next step, there are a few questions you must answer to determine if expansion is right for your small business at this time.
First, ask yourself, “Why do I want to expand?” The answer to that question should be feasible. Without having concrete reasons to expand, you might find it difficult to outline a path to successful growth. Keep in mind that there are less-expensive alternatives to growth besides another physical location, such as an online store, so be 100 percent sure a second or third location is the best choice for your business.
Is your current location profitable? If your primary business is not making a profit, opening a new location is probably not right for you at this time. If it is profitable, and you feel secure in opening another branch, ask yourself what makes your existing operation successful and will those same factors work at a new location. Can you honestly envision the new proposed location attracting the same amount of customers or even more as your flagship? One way to help answer these questions is to do extensive market research on any proposed new location, such as determining the strength of demand in the area for your products and/or services and gauging the competition.
Finally, how will you pay for this expansion? Any new location should be considered a separate business venture from your existing one, of which you should not rely on for funding. It is crucial to have adequate funding in place before branching out, such as loans, outside investors and/or your own capital. The U.S. Small Business Administration (SBA) offers a variety of loan programs for specific purposes, from starting up or expanding a business to recovering from disasters. For more information about the various SBA loan programs, please visit https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs.