4 Questions To Ask Before Expanding Your Small Business

expanding your small business

If there are two things you can always count on to grow faster than you planned, it’s children…and your own small business.

Whatever type of business you own, from restaurants to retail stores to bike repair or anything else you can dream up, if you’re open and successful long enough the question is going to rear its head: Should I open a second location?

It’s a big question to ask. Opening a second location carries some risk, sure, but it’s also a fantastic opportunity to grow your customer base and expand into new markets that you might not have considered before. If you’re thinking of expanding your business into multiple locations or markets, here are a few things you might want to ask yourself before you move forward:

How well has my business been doing? Probably the most obvious one to start with, but there’s a reason it’s listed first. If your business is doing well enough to plant the seed of expansion in your head, you’ll want to sit down and look at the last 6-12 months’ worth of financial records to see if your growth is really sustainable or if your recent profitability is just a temporary surge. Make sure your business has (or will have) the long-term success needed to sustain more than one operation.

How big is my customer base? Expanding a business could run the risk of dividing your loyal customers, so taking a closer look at your repeat business could make a lot of difference when it comes time to expand. Are there a number of other businesses near your first location that turn to you for products? How many shoppers return to your store to see your new products and arrivals? Any sort of business expansion runs the risk of dividing your customer base, so you’ll want to make sure you have the current and potential business to justify a second location.

Do I have the right team? The most difficult step for a lot of business owners accustomed to doing it all themselves is delegating responsibilities to a new team at a new location. If you’re going to operate two or more storefronts or offices, you’re going to have to learn to work with a team.

Either take some of your better current employees or be choosy when assembling a new team, and make sure they’re trained in handling customer requests, generating leads, and managing the day-to-day operations at your new location. It’ll be hard to get used to at first, but you just won’t be able to manage every little thing in two locations at once.

Where am I getting the money to finance my expansion? Once you’ve crunched all the numbers and brought the right people together, the last step is finding out how to pay for it all. You’ve got a few options, such as dipping into your savings or regular profits, but these tend to be a little riskier for your credit score and overall financial health.

A better way to go would be to get financing that can specifically be used for the costs of business expansion. Small business expansion loans are a good way to access money that’s specifically earmarked for your expansion and won’t impact your overall savings — and once you’ve embarked on opening a second location, you’re going to want all the savings you can get.

This is just the tip of the iceberg, of course, and expanding your business is going to take almost as much foresight and planning as it did to open your business in the first place. But as long as you have the right answers to all of these questions, it might just be time for you to branch out.