8 Questions to Ask Before Opening a New Business Location
Your current business location is running without a hitch, you trust your team and demand for your products or services is high. Now may be the time to open a second location! Still, expanding your business into a new geographical location, building and market requires significant research and planning and can feel like starting a whole new business from scratch.
Before you enter a new market, make sure you’ve done your due diligence and considered the following eight questions.
Is the Location On-Brand?
The state, city or even street address where you choose to open your second business is incredibly important to your brand. Choose the wrong spot and you may find that the people in your new market don’t what you have to offer, or they may be interested but at a different price point.
Think about how your products and services, your window presentation and your brand values fit with the new location. What businesses are nearby? Are they businesses you want to be aligned with?
How Prosperous Is the Community?
Prosperity is an important indicator of business success. After all, you want a location that will attract employees who want to work there and will ensure success for years to come. Prosperity is also something that any lender will consider. Banks will want to know whether your business plan is viable and that the location has plenty of potential.
Economic indicators such as housing costs, employment figures, crime statistics and school performance are all helpful in determining the viability of a new location. Census.gov has several tools that can help you in your research, such as the Census Business Builder, which includes useful data to help you understand the business landscape anywhere in America.
Is the Location Small Business Friendly?
You should not automatically assume that your chosen location will be small business friendly. Laws and regulations could make it difficult for you to get started and to hire people.
A 2018 survey by Thumbtack ranks the country’s states and cities based on their friendliness toward small businesses, considering sentiment is a useful guide. For example, South Dakota is ranked as one of the most small business friendly states for its tax and licensing regulations; training and networking opportunities; and especially its easy-to-navigate government website, as these portals are the main resource for business owners seeking information about operating in the community.
How Accessible Is the Location?
Accessibility is another consideration. Is the location close to transportation hubs? What about parking options? Will employees be able to get to and from work without issue? Also, think about your supply chain. Do your vendors have a distribution center that serves the area?
How Is the Location Zoned?
Zoning laws will determine if you can do business in a location and whether certain regulations apply to that space, such as accessibility for the disabled, fire escapes, parking rules, health regulations, safety requirements and more. To find out what zone a building is in, what a business can do in that spot and what the building requirements are, refer to your local government website (typically the county where your business will be situated).
Is There Room to Grow?
If your second location is a hit, does the property have the space you may need to expand? Again, refer to zoning laws and any clauses in your commercial lease agreement about making changes to the building. You don’t want to move again if you don’t have to.
How Affordable Is the Location?
As you review potential locations with your budget in mind, it’s important to consider not only affordability, but also the big picture. A low monthly lease payment on a new store or office space is great, but not if it’s at the expense of being in a dodgy neighborhood that could put your business at risk. Be prepared for trade-offs, but make sure they don’t come at the expense of your wider expansion goals.
Also, don’t forget to factor in costs such as utilities, property taxes, minimum wage rates and insurance.
Are There Networking Opportunities?
As you review your second location options, don’t overlook the importance of networking opportunities, especially if you’re a B2B operation. Are there flourishing businesses in the area that occupy the same ecosystem as you? Does the location have a healthy entrepreneurial scene that includes business incubators, co-working spaces and small business or sector-specific meetups? B2B operations thrive on the networks they build, so be sure to choose a location that fosters them.
Account for Everything in Your Business Plan
Finally, as you enter a new market, factor all these considerations into your business plan. You may need to work up a new go-to-market plan that accounts for changes in demographics, costs of doing business, brand-building efforts and more.
For more information on this topic, check out the U.S. Small Business Administration guide to expanding to new locations.