If you’re considering opening a second location for your retail business, then congratulations are in order – your current location is doing great! If it’s not, then perhaps expanding isn’t the answer to your problems.
You should only consider opening a second location if you have the capital saved to do so, and if your first location has already proven to be successful. You should also make sure that the second location is currently underserved by your target market and that it will be easy for future customers to access. If the market is large enough at the new location for supporting your new location, then why not?
Each new retail location should be approached with the same thought and careful planning that went into the first location – if not more. As with everything, it’s going to take time. Once you’ve expanded, you don’t want one successful location and another that’s struggling to establish itself and eating into your total profits. So here are the questions that you’ll need to answer before making that leap to open a second retail location:
Can you find another good location?
The question is not whether you can expand, but whether you should. Opening a second retail location is only truly viable if you can do so in a place that will be receptive to it. Obviously, you’ll want this second location to be far enough away from your original retail shop so that you are not simply competing with yourself. Don’t just jump at what you think might be a busy spot; do the research.
What makes your first location successful?
Are you able to pinpoint the strengths of your current retail location, and will you be able to emulate these in a new location? Can you be sure that these strengths aren’t location specific? For example, are there other specialty shops nearby that help to generate and sustain the traffic of potential customers on which your business relies for its ongoing customer base? If so, are there similar places where your second location could nestle in comfortably?
What are the pros and cons?
Be sure to weigh up the pros and cons of your current retail location with those of the one that you’re looking to expand to. How might the new location adversely affect your business, is the existing competition there already deeply embedded, or is the average shopper there not within your demographics?
Can you be in two places at once?
Okay, that was a rhetorical question … but can you be sure that either of your locations will run smoothly when you’re not there? Do you have someone that you can trust to hold down the fort when you’re not there? It may be that you can’t or don’t want to travel between the two locations, and that means changing your mind-set from being in complete control to trusting someone else to completely manage that second location.
Have you considered the alternatives?
The potential is there to expand to a greater audience than even the best second location will provide – ecommerce. Is it perhaps a better option for you – depending upon your products – to invest in your infrastructure, online presence, and a delivery service, to reach out to more people than physical locations can offer? Perhaps you could even consider expanding upon your current location, buying out your neighbouring shops and building a bigger and more attractive shop for yourself – hopefully capitalising on the audience that have already made this first location successful for you.
Do you have enough capital?
Opening a second retail location requires significant business funding, do you have enough put away to cater for this? We advise that you should never count on your existing location for any funding, but instead to consider the new location a separate business venture. This new venture may require a second lease, more staff, and increased inventory.
At Boost Capital, we offer funding to grow your retail business. We can make the process of financing your expansion easy, without depending on traditional business loans to gain access to capital. Keep in mind, your final decision must always be based on logic and research, not merely your personal desire to expand and push the brand. In other words, always do your homework first!