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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

Is now the right time to expand the business?

Here are 11 factors to consider before you decide to open a second or third location.

Is now the right time to expand the business?
Members of Fast Company Executive Board share their expert insights. [Image: Courtesy of the individual members.]

If revenue streams are increasing at your flagship location, then your business may be ripe for an expansion. But just because business is booming doesn’t mean you should make assumptions about your potential to succeed in a new market (locally or globally).

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Taking on additional overhead should be a strategic decision that is driven by potential new revenue, a decrease in expenses, or provides a competitive advantage to make the company a standout. Below are essential questions that Fast Company Executive Board members urge you to ask yourself before you move forward with the right plans to grow the business.

1. IS YOUR TEAM READY?

The number one thing is team readiness. You can’t replicate yourself. Therefore, ask yourself, do you have a strong team around you who are aligned with your values, drive and motivations and can also be trusted? – Sunil Rajasekar, Mindbody

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2. WHAT ARE THE RISKS OR OBSTACLES?

Conduct a premortem analysis, and include skeptics in your discussions to factor in some cold and harsh truths. Whether you’re considering opening a second or third location to meet customer demand, penetrate a new market, or simply capitalize on opportunities that presented themselves, first assume the worst has happened. Then, work backward. The right time is when you’ve cleared all risks and obstacles. – Ido Wiesenberg, Voyantis

3. IS YOUR WORKFLOW PROCESS RUNNING SMOOTHLY?

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When you are absolutely sure you have nailed it once and when every part of that process is all set and running smoothly, then you may be ready to expand. You’ll also need to make sure that you have a team in place that can crisis-respond to every situation without you or with your minimal involvement. It’s the right time to move on to the second location when everything works so well that it’s even a bit boring. And the same goes for every consecutive one. – Solomon Thimothy, OneIMS

4. DOES THE NEW LOCATION MAKE BUSINESS SENSE?

For those of us who work in professional services, the key to new locations is based on being closer to customers, key vendors, or employee epicenters. Taking on additional overhead should be a strategic decision that is very clearly driving revenue, decreasing expenses, or providing a competitive advantage or differentiator. Additional locations and nice offices are a badge of honor and should make business sense. – Ed Beltran, Fierce, Inc.

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5. IS IT POSSIBLE TO OFFER A HYBRID-REMOTE SOLUTION?

When geo-targeting is needed for a particular market segment, it’s time to consider opening new locations. However, we noticed office consolidations and downshifting during the COVID-19 pandemic in the service and consulting industries due to increased hybrid work and work-from-home arrangements. As a result, companies are more efficient in serving clients remotely than they were in previous years. – Goran Paun, ArtVersion

6. ARE ANY EMPLOYEES IN THE TARGETED AREA?

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A healthy mixture between your target audience and employees will dictate the need for a new location for your business. In this distribution era, you can find out you already have five to 10 employees working remotely from a certain country. If you also have new business to find around the same area, a new office is a must. – Yoav Vilner, Walnut

7. ARE YOUR STAFF MEMBERS WILLING TO TRAIN AND EMPOWER OTHERS?

As your market demand and financial situation are starting to solidify in one market, start seizing opportunities and strategizing about your future expansion. To ensure success, you need to have the right people to head your second or third location, so explore if some of your existing staff members may be interested to share their knowledge with a new team and empower them to lead the way. – Andreea Vanacker, SPARKX5

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8. IS YOUR REVENUE STEADY?

If you are seeing steady revenue streams from your flagship location, your business may be ready to expand. It’s all about distribution. If you can scale it, why not? If you see an available location in a neighborhood, study the demographics, to learn if your business can fit within this individual community. If you find out that your business can be a welcome addition to a new community, then that is your sign! – Brandon Pena, BrandON Media Group

9. ARE YOU CHOOSING AN EFFECTIVE LOCATION?

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Pick the right location! Gary Halbert, a brilliant copywriter once said, “give me a hungry audience.” That’s why Wendy’s and Burger King put their restaurants across from McDonald’s. Neither have a research department, so doing that saves them a fortune. McDonald’s creates the demand. It’s about risk reduction! – Mike Koenigs, The Superpower Accelerator

10. WILL YOU PRE-SELL A NEW LOCATION TO CURRENT CUSTOMERS?

If you are waiting until you get all the kinks worked out before expanding, then it may never happen. A good strategy, when opening a second or third location is to pre-sell to customers in that second location area and migrate customers from the first location over to the new location to solidify growth and profitability. To do this, you must first have enough working capital. – Ray Titus, United Franchise Group

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11. CAN YOUR SYSTEMS AND PROCESSES BE EASILY REPEATED?

It’s time to expand once your systems and processes can be replicated with ease. Is your business systematized enough to hand to a new group of location managers who can quickly get up to speed and take the lead at a new location in a similar manner as your flagship locale? If so, it’s time to consider expanding, particularly if you feel expansion is required when one geography is tapped out.  – Tyrone Foster, InvestNet, LLC

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