Are you considering opening a second business location, but the thought of managing two businesses is...dizzying? Vagaro empowers business owners to manage multiple locations seamlessly by adapting their daily business processes to all their locations. Still, opening a second business location is a big decision that involves careful planning and execution—well before a single appointment is booked. Read on to learn how expansion can help your brand, how to know if you’re ready for it, and the steps to follow when opening your second business location.
Are You Ready to Open a Second Location?
Having businesses in multiple locales is a form of diversification, the main benefit of which is that it reduces your dependence on a single market (area) or customer base. In other words, it helps you avoid putting all your eggs into one basket.
But, how do you know if the time is right? Before we dive into how to open your second business location, let’s go over the following to make sure you’re ready to take the leap.
Consistent Profitability
Your current business is consistently profitable, and you have a strong financial foundation. Positive cash flow and sustained profits suggest stability.
Business is Going TOO Well
Admittedly, having more business than you can handle is a good problem to have. But if you’re consistently selling out of products, running out of space and are regularly turning away new clients, then expansion may be a necessity.
Your Customer Base is Expanding
It’s not uncommon to have a handful of loyal, non-local clients who are willing to travel the extra mile or two for your services. But if an ever-growing chunk of your client base is coming in from out of town, then that’s a sign that there’s a demand in those areas for what you do that is currently unmet.
You Have a Strong, Capable Team
Are your employees skilled, experienced, trustworthy and accountable? Great! Opening a second location means you’ll be stretched thin and need to delegate many new responsibilities. That could mean asking them to manage one of your businesses, train new hires, keep track of finances or simply solve problems with minimal guidance.
You Have a Market in Mind
You’ve done some investigating into where those out-of-town clients are coming from, or simply determined that there is a demand for what you do in an adjacent region with little competition around. This could be the opportunity you’re looking for.
Daily Operations are Flawless
You run a tight ship. Your current systems for booking, client intake, payment processing, customer service, onboarding new employees and so forth are streamlined, documented and can be easily replicated at your new location.
You’re Financially Ready
Profitability in your first business doesn't automatically signal financial readiness for a second location. But you’ve assessed your books for sufficient revenue, profits, cash flow, and financing—all good. You’ve also consulted a CPA about the financial stability for your current business, and everything came back positive.
If you ticked all those boxes, continue!
10 Steps For Opening a Second Business Location
We’ve touched upon a few of these already, and a good chunk of the legwork will be documented in an updated or new business plan, so let’s start there.
Business Plan
Your original business plan was a roadmap for opening your flagship business and its next chapter will similarly guide your expansion. There’s no reinventing the wheel here, per se. The components are simply geared toward your new location:
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Executive Summary: Briefly outline the purpose of your business expansion, with your new location's goals, target market, and expected outcomes.
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Company Description: Provide an overview of your current business (mission, values, etc.) and how a second location fits into the overall business strategy.
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Market Research & Analysis: Analyze the market where the new location will be to identify competition, demographics, potential customer base, impactful trends, etc.
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SWOT Analysis: Evaluate the strengths, weaknesses, opportunities, and threats associated with your expansion.
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Products or Services: Define the products or services offered at your new location, and how they complement or enhance your existing business.
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Operational Plan: Detail your new location's day-to-day operations, including information on staffing, hours of operation, suppliers, etc.
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Marketing & Promotion Strategy: Develop a marketing strategy to promote the opening of the new location. Consider local advertising, social media, and community engagement, as well as email & text marketing. Also consider how you will attract and keep customers in the long term.
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Financial Projections: Give detailed financial projections, including startup costs, operating expenses, revenue forecasts, and break-even analysis.
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Funding Requirements: State how much funding is needed for the new location, and how it will be financed. Determine if it will be self-funded, outside capital-funded, or supported by investors.
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Risk Management: Outline potential risks associated with expansion and strategies to mitigate them.
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Implementation Timeline: Develop a timeline with key milestones for the opening of the new location.
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Monitoring & Evaluation: Define metrics and key performance indicators (KPIs) you’ll use to monitor the success of the new location.
Site Selection
You have a city, town, or neighborhood picked out for your next location. Now, it’s time to choose a specific site within the new market. Consider the following factors, and how they relate to your target demographic:
- Foot traffic
- Automotive traffic
- Accessibility
- Parking
- Public transit
- Proximity to competitors
Lease or Purchase Property
Negotiate and finalize a lease or purchase agreement for your new location. There are pros and cons to both options, so you’ll have to determine which aligns best with your business goals and financial reality:
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Leasing: Consider lease duration, rent increases, and any other costs associated with the lease. Ensure that the lease agreement follows local zoning laws and regulations. Leasing may require less upfront capital but involves ongoing rental expenses. Negotiate lease terms that align with your business goals.
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Purchasing: Find suitable properties, and consider factors such as property value appreciation, potential for future expansion, and financing options for the purchase. Purchasing may require a larger upfront cost but can provide long-term stability and potential appreciation in property value. Work with real estate professionals to evaluate the market in your new location.
Build-Out or Renovation
If necessary, plan and oversee the construction or renovation of the new space and ensure it meets the specific needs of your business. Renovation and upgrades can get very pricey, and things can come up that your initial financial projections didn’t account for. Small business funding, like Vagaro Capital, is a great option for covering the costs of renovations, upgrades and remodeling. It can make up to $300,000 available with flexible payment options with no interest!
Staffing
Recruit and hire staff for the second location or promote current employees to lead the way, if possible. Ensure that they are well-trained and familiar with the company's values and operations. Only you can instill your values in your employees, but Vagaro provides ongoing software training and support for all of you whenever you need it.
Technology Infrastructure
Set up the necessary technological infrastructure, including POS (point of sale) systems, booking & scheduling capability, inventory management, and other tools for running multi-location businesses. A multi-location booking and management software, like Vagaro, provides all of these and more, ensuring that everything, from payment processing to employee payroll works seamlessly with its scheduling platform.
Operational Integration
Integrate your new location into your existing operations, ensuring seamless communication and coordination between the two. Multi-location software like Vagaro’s ensures that everything is done the exact same way at your new business locations as it is done at your flagship location. Additionally, Flagship Syncing makes it easy to add services, classes and products across any location.
Soft Opening
With everything in place, consider a soft opening to test operations and gather feedback before a grand opening. This allows you to address any issues and make improvements.
Grand Opening
You remember how your flagship’s grand opening generated buzz and attracted customers? It’s time to do it again. Offer promotions, giveaways or exclusive deals to encourage attendance. If you’re offering something unique, with a good story behind it, local newspapers and other publications may be interested in giving you a write-up.
Monitor
Regularly monitor the performance of your second location. Analyze customer feedback, pore through sales data & reports, send out customer surveys to learn what works and what doesn’t, and make any necessary adjustments to improve operations.
Benefits & Risks Checklist
Benefits & Risks of Opening a Second Business Location
Benefits:
1. Increases Market Presence: Opening a second business location expands your footprint and enables you to reach more customers in new markets that your competitors haven’t gotten to yet.
2. Diversification: Having multiple business locations reduces your dependence on a single market or customer base, which can bolster your business against unforeseen economic events.
3. Economies of Scale: Twice the number of locations equals twice the products you’re going to need, right? Well, Economies of Scale is a fancy term that basically means you may be able to negotiate better deals with your product suppliers because you have multiple business locations.
4. Increased Brand Recognition: It pays to be seen and having a second business location (and maybe more in the future) enhances your brand’s visibility, recognition and strength in the eyes of clients.
5. New Demographics: Breaking into new markets can enable you to reach diverse demographics and cater to a wider range of client needs, thereby significantly increasing your client base overall.
Risks:
1. Increased Stress: Balancing work and life becomes challenging. Traveling between sites, ensuring consistent client experiences, and troubleshooting problems takes a lot of stamina. The right business management app, however, can help alleviate much of that stress and leave you with more time to do what you love.
2. Financial Burden: Opening a new business location entails significant upfront and ongoing costs. Without proper preparation, it can strain finances, potentially drawing customers away from your flagship location before the new one becomes profitable.
3. Operational Complexity: Managing multiple locations is operationally complex, requiring effective coordination, communication and streamlined management software.
4. Quality Control: Maintaining consistent product or service quality across separate locations can be challenging, potentially impacting customer satisfaction.
5. Staffing Challenges: Recruiting, training, and managing staff across multiple locations can pose challenges, affecting overall employee performance and customer service.
Opening a second business location is an ambitious, rewarding, and potentially daunting challenge for growth-oriented business owners. It’s a way to elevate your brand, significantly increase revenue, and diversify your business by expanding into new markets. Beyond a positive attitude, however, it involves careful planning & analysis, long hours—and the right tools to make it work. If you’ve got the dream and the drive, Vagaro’s multi-location & enterprise features can help you run multiple profitable businesses smoothly every day, whether they’re 3 miles apart or 300. Sign up for your 30-day FREE trial and experience it for yourself!
