Chapter 6 includes a section on selecting a location. As your business becomes more successful you may decide to open a second location. How do you make that decision?

Watch the short video below:

"Many small business owners start with a successful operation but struggle to move beyond that. It's hard to duplicate success, especially with so many factors involved - location, demographics, product lines, etc. Opening a second location takes a whole lot of work and the right timing. This video walks you through 7 questions you should ask yourself when deciding how to open a second (or third, or fourth...) for your business. Remember, growth is great, but only if you can scale sustainably." (there is some point of sale advertising at the end of this video that you can ignore.) After you watch the video please Add your own 250-300 word Discussion Topic. Discuss the important topics from the video. Include what you found most interesting or surprising. Be specific. What do you think is the most important consideration to open a second location? What do you think would be most difficult in opening and operating a second location?

Hi, its Michael from KORONA POS. Im here today to talk to all those small business owners trying to take their business to the next level by opening a new location. Getting a new small business off the ground with your first location is a daunting task. It takes a remarkable amount of planning, a great team, and a willingness to take a risk. So, for those of you who have successfully opened your own small business, congratulations! For the ambitious and established business owner, perhaps at this point youre thinking about opening a second shop and expanding your retail business. After all, scaling your company is the next big step. And youve gotten the hardest part out of the way - youve developed a reliable customer base and figured out your cash flow. But its important to know when and how to open a second business location. Youll have a second team, a second set of costs, a second shop to manage your inventory, and a whole lot more to worry about. So, lets start by examining if your business is ready to expand and then go over the steps to turn your operation into a multi-store business. First, before starting the process of opening a new location, its important to be sure that its the right time to do so. So, start the process by determining if youre ready to scale.

AM I READY TO EXPAND?

Use these 4 questions as a baseline. Do I need more space? Maybe your retail space has become too small for the number of customers that come through or an expanded catalog of products. Second, is there a market for your product or services in a different location? Remember, what works in one neighborhood, city, or state may not work elsewhere. Third, wows your cash flow? Opening a second location is expensive so you need to have the cash on hand, or secure financing of some sort. And finally, can you manage the new obligations and stress of growing your business? Remember how hard it was to open your first store? Get ready to do it all over again! Carefully consider each of these items prior to making any big commitments. Aside from that, you also need to make sure that opening a second location is actually necessary. Prematurely opening a second location for your business can be catastrophic, even ruining the success of your first shop.

IS OPENING A SECOND LOCATION ACTUALLY NECESSARY?

Be aware of false signs that you may need to expand and take peremptory steps available before making the plunge into opening another location. Consider increasing your team so that they can serve more customers. Add new products to your inventory to attract a larger customer base. Target new demographics and continue to build your current location. And add better access and parking if possible. Its critical to open a new shop at the right time. And its better to err on the side of caution by waiting too long to open than doing so too early. Another way to make sure that youre ready to open a new location is to first exhaust all alternative sales channels.

HAVE I EXHAUSTED ALL OTHER SALES CHANNELS?

Selling your product or service solely at your brick-and-mortar store is not enough. First, look at creating an omnichannel shopping experience. Partner with other local businesses to test out new products or a new market. Its a great way to meet other retailers and become a deeper part of the community. Try out a pop-up shop or kiosk to test out a new area and market. Sell on social media channels. More and more shoppers are buying directly from Facebook, Instagram, and Pinterest. Open an eCommerce store. With your POS system integrated to both your brick and mortar and eCommerce platform, selling on both channels has never been easier. Once you feel confident and ready to open a second location, you need to prepare yourself for certain facts about the process. Most importantly, its not going to be easy.

ARE THERE PEOPLE I CAN TRUST?

One of the hardest things that small business owners face is the fact that they simply have to cede some control and responsibilities to their team. You wont be able to be at two locations at once. While a cloud-based POS system makes it easier to manage your business remotely, youll still need to put trust in your team at each location. A lot of businesses promote internally so that existing team members move on to bigger roles as your business expands. This helps give owners the peace of mind that their management are people that they can trust and rely on. Next, its important to replicate your success, but not copy the original location.

HOW CAN I KEEP WHAT WORKS BUT STILL MAKE IT UNIQUE?

Unless youre trying to franchise your business, its a better idea to keep things unique. Of course, if youre expanding your business, youve already established a successful shop. So, make sure youre still capitalizing on the success that youve already found. Keep your best sellers and any items that define your brand. If youre a QSR, for instance, any staples thatyour customers have come to expect should stay on the menu. Use your existing operational tools, including the same POS system. You need your sales reporting and inventory management to be under one system, so keeping a uniform point of sale for multiple locations is critical. Make all lines of communication streamlined by using the same service for each location. Your prices shouldnt vary too much. Shoppers who have been to your first location will be turned off if the new shop is more expensive. Implement the same CRM system so that shoppers can receive the same loyalty benefits at any of your businesses. And finally, make all branding on point and design similar enough so that customers recognize each store as being related. But, as I mentioned, you still want your new location to stand out. Add new menu items and some differences in your layout to make the experience unique. Its good if you have shoppers who prefer one location over another. This means that they have a personal connection to your business and will likely be back.

WHAT IS THE MARKET REALLY LIKE?

Next, plan to conduct some basic market research to ensure that youll have adequate demand for what you sell. You are likely to have a hunch on most factors that go into creating your new location. But make sure you confirm these with actual objective research into each matter. Build a separate business plan and start by defining a narrow target market. Consider the demand for your product and services while also taking into account the expected competition in the areas youre looking at. Gauge your marketing costs and the best advertising outlets for your target audience. Run some basic tests so that you can confirm all of this. As we mentioned earlier, pop-up shops are a great way to try out new products or test new markets. Its a far lower investment than an actual full retail space, but will most closely mimic an actual retail environment, giving you a more accurate picture of your future business.

HOW CAN I GET APPROPRIATE FUNDING?

Lastly, youll need to secure the appropriate funding. Opening a new shop is going to be expensive. Retail space leases are not cheap and putting together the infrastructure of an entirely new store adds up fast. So, its necessary to get all financials in order from the beginning. In part, this will be an aspect of your business plan. Determine how much liquid cash you have to invest yourself. You dont want to starve your existing location or yourself, but investing some of your money into the project is wise. Look for outside investments from friends, other business owners, or people excited about what youve created. Individual investors can go a long way towards funding a second location. Peer-to-peer lending options online are starting to replace traditional bank loans. Check out our blog on this alternative financing to learn more. And banks are still an option, too. There are typically better solutions for most businesses, but a local credit union or bank can also finance your new store. As I talked about earlier, its important that you have a uniform point of sale solution between all of your locations. And for businesses with a single location, youll need a POS system that can help your business scale. POS inventory management and sales reporting provide you with remarkable insight into your business. Youll be able to identify problem areas and the necessary changes to fix them. If youre interested in growing your business and expanding to new locations, try out KORONA. Its built to help retailers grow and become multi-store operations.