Mary Rae Floresca | Negosentro.com
You may have the capital to branch out your business but there are factors to consider to know if it will be successful. Here are a few things to consider before expanding your business.
1. Be clear with the reason why you want to expand
Don’t rely on your instinct. Convince yourself why expanding your business is what you really want. It is a big step to consider for your business. It may cause you brand’s pitfall if ever done drastically. If you just want to test the waters, go right ahead but make sure you are ready for the consequences. But don’t be afraid, just be prepared and stick to the reason you want to branch out your business.
2. Is your first business successful?
Are you confident that the first business you opened can stand alone? Because you will really divert your attention to opening the new branches you want. Do you have the right team that will handle your “baby” store? If not, reconsider this before branching out. Strengthen your operational skills together with your employees. Try going on a vacation, how would they handle without you? Also, is your first business still needs support in terms of marketing and foot traffic?
3. Expanding competitors
Opening branches from one location to another is a risk that measures if that area will swoon over your business. It may be successful during the first 3 months, but then the sales trajectory may fall after some time. Are you ready to gauge with that? If your competitors have expanded at different locations, what you need to do is either observe them or follow them. You may wait and see if they will close after sometime, then you would know the market doesn’t work there. Unless, you want to amplify your competition, you can do the rave competition of fastfood chains like Jolibee and Mcdonalds.
4. Financial stability
Carefully study your financial status of your business. Is your cash flow enough to open up another store? That means more operational materials and manpower. Opening a new venture requires you to spend more rather than getting the cashback. Do you have enough money to start with it? Would you need additional capital? You might need a loan from the bank, that is something you should really reconsider. The risk is, will the business will really profitable to pay off the loan?
Of course adding a branch for your brand means new set of manpower. Carefully strategize if you have to hire more employees to be located at the new branch or the old ones will lead the new branch. Sometimes, the latter is the best. It will be a bit of struggle for the old employees to relocate their duties but you are also testing their flexibility. Consider yourself as an added manpower as well. How often do you need to visit the new branch? The old branch? How much supervision do they both need?