If your company is thriving and growing to the point where you’re seriously considering expanding, congratulations. You’ve already beaten some of the odds.
Despite the widely held belief that only about nine out of every ten small businesses fail, the Bureau of Labor Statistics states that about half of these enterprises fail within five years.
Although there are no official statistics on how many small businesses expand beyond one location, it’s widely believed that the figure is less than 50%.
Regardless of your industry, taking the risk of expanding can be daunting. There are many cautionary tales about entrepreneurs who underestimated the financial and other resources required to establish a second location.
Before you start considering an expansion, it’s important that you thoroughly consider the various risks associated with this type of growth. Doing so will allow you to avoid potential problems and maximize the success of your business.
Stick With What Works
One of the most common mistakes entrepreneurs make when planning an expansion is not taking the necessary steps to properly document and replicate the processes that helped their company become successful. A well-documented business process will allow you to easily transfer your operations to a new location.
Take Care of Your Financials
Before you start considering an expansion, you must have a realistic time frame for generating enough revenue to fund your second location. Having a sufficient cash reserve will allow you to maintain the operations of your new location.
If the first location is profitable, but you’re planning on expanding, is it possible to generate enough revenue to support the second location if it doesn’t break even as early as expected?
Like opening a new business, relocating to a new location can be a challenging and diverting experience for entrepreneurs. However, it’s important to remember that the overall success of the company is more important than the location.
Getting the proper systems and people in place will allow you to expand successfully. However, it’s important to remember that overdoing it can still lead to problems. Even though it’s early in the process, it’s still important to be cautious about the risks associated with expanding.
Preserve Company Culture
One of the most challenging and intangible aspects of relocating to a new location is maintaining the company culture.
There are various ways that a company can maintain its culture in multiple locations. Most often, a founder, partner, or trusted employee will relocate to the new office and head up the new culture. Doing so will allow the company to maintain its commitment to its values and mission.
One of the most effective ways to maintain a company culture is by holding regular video conferences. This can be done through the use of a variety of online tools such as Zoom. Having a company retreat can also help bring the team together for face-to-face meetings.
For many businesses, expansion is a great way to drive growth. However, it’s also very risky and can lead to failure. By following these steps, you can increase the chances of your second location being successful.