Entrepreneurship stats say that over 60% of billionaires are self-made. In 2016, Wealth-X conducted research and found that 20% of the US billionaires achieved their status through inheritance, the rest are self-made. This is probably the news you need to open a second location for your business. The remaining 20% billionaires reached their status through a mix of hard work and inheritance.
Opening the second location for your business is a great achievement because it marks your success. You already grew a loyal customer base and a steady cash flow, now you can use your resources to expand. However, before taking this step you should ensure your brand is ready for this.
Measure the success of the existing shop
Don't create a business plan for your next location until you measure the success of the first one. Does it produce positive cash flow? What triggers success to your current location and how can you transplant these factors to the next one? Or you should better ask yourself if you can transplant them because often what applies to a location, it doesn't to another. You need to analyse the factors that influence the success of the first location (what sustains traffic and engages customers).
Do you have to bring any changes to the new one to achieve the same success? Does the next location offer access to the same triggers? What are the characteristics that promote it as a prosperous site?
And don't forget to compare the competitive rates from the two locations. Does the second come with a strong and well-established competition? Are you the first brand that offers these services on the local market?
Run market research
Run objective market research to understand if there's an audience that needs your product. You may love San Francisco as a travel destination, but it doesn't mean it's also a good destination for your business. You believe you know what the public wants, but you cannot identify their preferences until you complete market research. When you identify a possible target market you need to measure the existing demand and identify the current and expected competition. Does adequate demand exist in the new market? How much do you have to invest in marketing to promote your new location?
Market research should find out what advertising medium the local audience prefers, and what strategies you need to use to reach your target public. The ideal market research includes test marketing and pilot test sales to help you understand if your venture will reach success.
Check for competition
Who are your main competitors in the area? Focus on identifying your rivals because you must bring on the market better services than they do. How do their products compare to yours? What benefits do their products bring? Do you offer the same advantages?
Before opening a business location in a new city, research your competitors as much as possible. If the market is oversaturated it doesn't worth the effort because it'll cost more to promote your brand that what you'll earn.
Analyse buyer power
Don't expand your business before you understand how much power does your public have over you. Research the new market and measure the size of the targeted demographic to figure out if it's worth to bring your products there. Is smart to expand to a market filled with consumers who need your products and few competitors that can rival your offer. If the buyers are few and the alternatives plenty then the expansion will cost you more than the revenue you'll get. Almost 70% of small business owners use personal savings to deal with financial challenges, and they are plenty when you open a second location. Are you ready to pay for the expansion from your own pockets? When your current location is profitable, and the second one is unlikely to generate income, you should better search for other solutions to grow your brand.
Pick the new location
You like San Francisco because it provides plenty of business opportunities and you're sure it will be a good location for your company to flourish. But to make sure you start a successful venture there, pick a point of sale in a key area. As you already know, location is crucial for the success of a brand. Don't start operations in San Francisco if the best site you can find is on a side street. Rent a space on a major road where your target clients can easily find it. The surrounding area plays a major role in boosting sales. When you offer home insurance you need to place the sale point close to a residential area because it attracts more clients than when located close to a business centre.
Make a list of potential locations and check their parking solutions because most people travel by car. You can compare the locations on your list with the ones from a parking directory because it offers information about monthly parking San Francisco. You compare the options and decide which area is convenient for you. Pick the spot with access to a safe and secure parking area because it will boost your reliability.
Create a business plan
Every new location needs its business plan. You cannot use the first one, but you can remodel it to match the features of the second location. In fact, it's advisable to keep the main business plan and readjust it to every new scenario because it guarantees consistency between your stores.
You already know how you want to run your new office but you should write it down to ensure you don't forget or skip some steps in the process. You'll hire a new team to help you operate it, and the business plan can help them complete their tasks according to your preferences. If you need an investor, they'll ask your business plan to check if your idea is profitable.
Are you ready to expand your company? It's challenging but if you research you have greater chances to succeed.