You worked hard to make your first retail business a success. Now that your store, restaurant, flower shop, or coffee shop is turning a tidy profit, it’s only natural that you think about expanding to a second location. But as many growing businesses find out, duplicating your success requires a different approach than the one you took with your first store and managing multiple locations can be difficult.
The best way to increase the chances of succeeding when managing multiple locations is to avoid the mistakes that other business owners make when plotting their failed expansion strategy. The tips that follow are designed to stack the odds of success for your second location decidedly in your favor.
Step One: Know When the Time is Right to Expand Your Business
Even though your business is doing well and your loyal customers are clamoring for another outlet for your retail operation, all the pieces have to be in place before you can begin to plan and implement your expansion strategy. The U.S. Small Business Administration’s SCORE service highlights the importance of correctly gauging demand for a second location prior to making concrete plans:
- Keep in mind that a recent spike in revenue may not be sustainable. Don’t think about expanding until your first business has recorded three years of steady profitability.
- Hold off any new business plans until you are confident that your store’s current positive cash flow will persist and not be subject to seasonal ups and downs.
- Ensure that the managers operating your existing location are able to keep everything running smoothly in your absence as you focus on getting the second location ready.
- Be realistic about how much business the second location is likely to attract. If your current store is experiencing long lines of customers and you find yourself turning away business, it’s likely you’re ready to expand.
Once you’re confident you’ve got the human resources and capital you’ll need to make a second location a success, you still have to take a close look at the reasons why you feel the need to expand your business. It’s recommended that you clarify your primary objective prior to putting your expansion plans in gear:
- Are you driven primarily by the need to meet the growing demand for your product among your existing customers, or by a desire to reach new markets?
- If your focus is on better serving your current customers, are there alternatives to opening a second location that would achieve your goals more simply and quickly, such as working with your suppliers to speed deliveries and qualify for discounts?
- If your main goal is to attract talented employees in new areas, will your current recruitment and training operations be sufficient to achieve your purpose?
- If you’re motivated primarily by a desire to build your reputation and gain prestige in the market, will this translate into a positive return on your investment?
Step Two: Standardize Your Existing Operations When Managing Multiple Locations
The same effort you put into ensuring the quality of the products and services you provide must be applied to the processes and communication channels you’ll rely on to keep both the existing and new businesses running smoothly. Entrepreneur points out that documenting business processes is rarely at the top of a retailer’s to-do list, yet failing to record how your store functions risks losing mountains of business intelligence once key employees depart.
Here is a checklist for creating a complete record of how your business operates on a daily basis and over longer periods of time:
- Start by determining which processes need to be documented. This will likely include customer contact lists, supplier information, your marketing and branding strategy, financial and accounting processes, hiring and managing employees, and regulatory compliance.
- Thoroughly document all training activities to ensure new employees at both the new and old locations are properly prepared to offer consistent high-quality service to your customers. Effective training pays for itself by getting new hires up to speed quickly.
- Once your business’s processes have been recorded and are safely stored, make sure all employees have ready access to the material, and emphasize to workers the importance of taking advantage of the documents to improve the efficiency of the operation.
Step Three: Apply Technology to Streamline Processes and Enhance Communication
One of the primary benefits of operating two or more retail outlets is the efficiency of managing multiple locations from a single place. In addition to combining such tasks as inventory tracking, sales records, payroll, and scheduling, automation lets you integrate communications between locations to ensure all managers and employees share up-to-date data and work as a single team.
It’s important to have a single system that syncs information about products, staffing, discounts, and special offers via a single consistent, complete, and easy-to-use interface. SCORE recommends using cloud-based applications for time tracking, project management, accounting, inventory management, training, team-building, and other forms of communication. In particular, mobile applications allow employees to integrate these and other technologies into their daily work, making them more productive and allowing them to spend less time on administration and more time focused on keeping your customers happy.
Other tips for facilitating communication among managers and employees working in multiple locations include holding regular virtual meetings and webinars, providing employees with webcams so they can interact face-to-face more often, and encouraging workers to switch between locations when it is practical to do so.
Knowing you’ve succeeded in establishing one profitable retail business gives you the confidence to grow your company by expanding to a second location. While much of what made the initial business a success will translate directly to the new operation, there are also many aspects of managing multiple locations that will require a new approach. Knowing when the time is right to expand, hiring the right people, keeping the lines of communication open, and the judicious application of technology will improve the chances that your second location will meet with the same success as your first one.
Learn more about how the talech POS system helps retailers prepare for the future while meeting today’s needs with features that optimize their business processes. We work with you to determine the best ways to meet the needs of your customers and employees so your business can thrive. We take the time to learn your business so we can balance your specific needs with your budget and comfort level in a custom POS system implementation. The result is a valued investment that will pay for itself in short order. Reach out to us today to sign up for a free demo and learn more about how talech can be your valued partner in the POS world.
