How do you know when to expand your business?

If you’re thinking about opening another location, then congratulations!  You’re probably seeing strong sales, a steady flow of customers (maybe even customers complaining that they have to wait too long), and healthy profits. But just because you’re doing well doesn’t mean that it’s time to expand.

There are a number of questions you should ask yourself before expanding. Most importantly, you should have a compelling reason to expand.

Are You Ready To Hand Over the Reins? 
Your business is your baby! You probably do most (or all) of the work. Are you comfortable with walking away for a couple of months as you open another location? Is there someone you trust to take over the day-to-day operations?

Are You Ready Financially? 
One of the biggest mistakes that small business owners make when opening another location is borrowing too much money from their original location. The last thing you want to do is allow another location to cannibalize the original one.

A good rule of thumb here is to treat your expansion project like you would a brand new business. Hold off on moving ahead unless you can draw from an outside bank account or find a source of funding that is distinct from your original location.

Are There Customers (and Employees) Waiting For You? 
Only expand to another location if you can open yourself up to new markets. Think about who your current customers are. Do they travel long distances to get to you? Are they centered in your neighborhood? Are there new customers that will want to try your product if you expand to another location?

Also, consider your hiring potential. Maybe you’ve already exhausted your current employee market and would like to move to a new location to attract diverse talent.

Can You Recreate Your Brand?
Don’t expand to another location unless you can keep your unique brand voice intact. Huge brands, like Target and Starbucks, have tried to expand into new markets and failed miserably. Make sure you can maintain whatever it is that makes your business unique.

Check out this flowchart created by Fundera that guides you through a number of questions to decide if you should open a new location.

Use this flowchart to determine if your business should open a new location.

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