When is the Right Time to Expand?

Featuring, Marc Rockquemore

If you are a salon and spa owner like me, once you’ve experienced a certain amount of sustained success, it’s only a matter of time until the conversation turns to opening a second location! If you’re motivated by a second income stream (diversification), or eager to take advantage of an opportunity that’s presented itself, a second location could be for you – or not! I’ve seen highly enthusiastic, educated, and passionate people both wildly succeed and miserably fail with their second location endeavors. Where you fall on that continuum depends on the old adage: people don’t plan to fail, they fail to plan. Planning covers a lot of ground, so let’s dig in.

 
Our friends at Entrepreneur.com offer some great advice:

For those of you who have survived startup and built successful businesses, you may be wondering how to take the next step and grow your business beyond its current status. There are numerous possibilities.

Open another location. This might not be your best choice for business expansion, but it’s listed first here because that’s what often comes to mind first for so many entrepreneurs considering expansion. Consultant Frances McGuckin offers the following tips for anyone considering another location:

• Make sure you’re maintaining a consistent bottom-line profit and that you’ve shown steady growth over the past few years.
• Look at the trends, both economic and consumer, for indications on your company’s staying power.
• Make sure your administrative systems and management team are extraordinary-you’ll need them to get a new location up and running.
• Prepare a complete business plan for a new location.
• Determine where and how you’ll obtain financing. (See “Got Cash?”for financing tips.)
• Choose your location based on what’s best for your business, not your wallet.

The SSBC team was instrumental in helping my wife and I analyze the following before opening a second location:

• Evaluation of area demographics: household incomes, growth rates, traffic counts, competition, visibility, etc.

• Negotiating the lease and T.I. money (tenant improvement money) with the new landlord

• Floor plan design, which gives you an idea of how much money you need to bring to the table

• Establishing the break-even point (very important)

• Staff recruiting and advertising (prior to grand opening) to generate community interest