If your business is booming, you might be considering the next logical step–growth. Why else would you be reading a post about opening additional store locations? First, congratulations! Building a successful, secure, and (hopefully) profitable company is no simple feat. This is an exciting time for you and your organization.
Now, you’re likely thinking,”what is next?” If you’re trying to build off your prior accomplishment and replicate your formula for success in new shops, you have come to the perfect location. Below, we’ll help you through the process of opening additional retail business places — the ideal way.
Why open additional retail business locations?
Before you make grand plans to set up shop in a brand new location, it is important to consider the pros and cons of the decision:
Pros of further places:
- Grow earnings: another location lets you reach and serve more customers, increasing your ability to earn more money.
- Scale company: Economies of scale make things more affordable when you construct another location. Yes, an excess location will boost your fixed costs, but the more goods you produce, the cheaper they become.
- Reach new markets: A new physical storefront may let you get to new geographical markets. Additionally, it could provide you room to market new products.
- Satisfy demand: If your shop can’t accommodate clients (too long of lines or too far away), another place could satisfy demand.
- Maintain momentum: Adding a different place can help you build the momentum off of your first.
However, it is not all sunshine and rainbows. There are a number of drawbacks to adding additional places.
Cons of further places:
- Time required: particularly in the early days, you will want to be heavily involved in getting the new place ready to go. At some point, you can train and hire managers to run things smoothly without you, but it will need a bit of micromanagement in the get-go.
- Financial commitment: While economies of scale will lead to decreased production costs later on, it is likely to require an initial investment to get things moving. You will need real estate, equipment, inventory, employees, and much more –and it costs money.
- Logistical complexities: Managing extra locations can multiply the complexities. There are now more programs, employees, customers, orders, and requirements to manage.
3 Common reasons to open additional retail locations
Building off the benefits we recorded above, here are a few of the typical motives (and examples) companies add additional retail locations. Even though some of the cases include non-retail shops, you will see how they relate to any kind of business expansion.
1. Reach new markets
If you’re trying to present your brand to new customers, additional locations may provide you the freedom to start new products and compete in new geographical regions.
By way of instance, Downeast started as a humble clothes shop to resell brand-name apparel. After opening additional locations, they developed their own label and expanded to include furniture, also. The business now owns over 40 retail locations across three countries –some of that sell clothing and furniture, while others are clothes exclusive.
If you wish to explore new products–or only want to get in front of a wider audience–extra store locations can make it happen.
2. Scale the company
Provided that there’s demand, scaling a company permits you to push the earnings by reducing your costs. Your profit margins do not have to be enormous if you have got the scale to turn a profit.
Crumbl, a cookie store launched in 2017 in Logan, Utah, has opened 100 locations in 17 states. Why expand so fast, you ask?
“Initially, we did not set out to create the country’s biggest cookie industry, but after seeing the joy we could bring to clients, slow-paced growth just was not an option,” explained Sawyer Hemsley, Crumbl Co-founder & COO.
Crumbl is capitalizing on the country’s brand-new trendy cookie trend, and there is enough demand to keep them opening an increasing number of locations.
3. Grow maximum earnings
Finally, a physical storefront can only sell so many products. There’s limited property and workers available to serve clients, which places a cap on the maximum earnings that can be made. Sure, you can drive up prices, but that only works for so long in the retail world.
J. Dawgs, a hotdog restaurant (though many would claim it is much more than only a hotdog place), suffered from a fantastic problem–it always had big lines stretching out the door. To relieve this”issue,” J. Dawgs opened another location just 4 miles later on. This spread out the crowds to 2 places and enabled J. Dawgs to serve more clients every night. Now, J. Dawgs has 5 locations across Utah.
The best way to open additional retail business places
Attempting to open a new place and actually doing it are two very different things. You’re going to have to commit the identical idea and energy you used on your original shop to make sure your additional locations triumph.
Here’s a simple 7-step procedure to adding a new location:
1. Find a place that matches your purpose
Finding the ideal place for your next site is often the most difficult part. You want to be certain it fulfills your needs, but in addition, it has to be properly situated. By way of instance, if you’re trying to expand to another city, it is not enough to locate any ol’ vacant storefront in the town –you want one in a heavily populated, secure site.
Additionally, you will want to bear in mind the status of the local market. If you’re attempting to sell discount clothing to a high-end marketplace, you might encounter issues. Do your historical research into prospective property, also. If multiple businesses have cycled in and out in the past few years, this might signal a weak place or struggling market.
2. Create your game strategy
Opening another location should make sound management and fiscal sense. You need a strategy for how you are going to start and operate your extra locations and make them powerful. This necessitates crunching the numbers.
You will need to use your current cash flow forecasts to create estimates for your location. Then, you will need to tweak those quotes based on other factors such as:
- Brand consciousness
Do your studying to estimate your costs, also. You will possibly need renovations, equipment, inventory, supplies, workers, and much more. Calculate how much that is going to cost you.
Bear in mind that it is not likely to be an apples-to-apples contrast to your existing retail business place. By way of instance, if you are starting a new storefront in a metropolitan area, you’re going to have to budget for more costly property and higher wages.
3. Safe necessary funding
As soon as you’ve got a strategy for what you need, you need funding to make it happen. Unless you’ve got a massive pile of money sitting in the bank, you will have to secure financing or find investors. Loans have paid off, but equity costs you a part of your company forever–so choose wisely how you fund your small business expansion.
If You Decide to go the small company loan path, here are a few of your choices:
- Commercial Mortgage: Get the funds you will need to purchase, renovate, build, or enlarge.
- Business Line of Credit: Expand your working capital and get access to more money when you need it with a business line of credit.
- Short Term Loan: Finance everything from gear to stock with a loan that’s all about speed.
- Merchant Cash Advance: Trade your prospective earnings for money now with a merchant cash advance.
- Equipment Financing: Invest in any gear your new retail location requirements.
4. Hire your staff
With your place locked in and cash in your pocket, you are prepared to begin assembling your fantasy team. At first, you might want to think about personally handling the new location to be certain it’s running smoothly. At some point, you can train and hire a supervisor to take over.
When it’s possible, consider sending a trustworthy worker from a current location to help get the new website settled. This employee will probably have a fantastic sense of your company’s culture and procedures, helping smooth out some of the learning curve to your new team.
5. Stock up on stock and provides
Sufficiently stock your shelves and backroom before launching. You don’t need to run out of goods if you’ve got a successful opening day or week. If your company runs on tight margins, then think about getting stock financing or a business line of credit to invest in your inventory. This will free up your cash flow from sitting at the warehouse.
6. Use the Ideal software
Equip your business with technology that lets you manage multiple shops. One of the crucial pieces of applications to invest in is a point of sale and inventory management system which has multi-outlet capabilities.
Ideally, your applications should make it easy to see how your company is performing as a whole, while providing you with the ability to drill down on the operation of specific locations. This can allow you to make smarter high-level and store-specific decisions.
Zoe Neuner, who conducts three accessories and fashion retail stores, says that having multi-store retail coverage has been invaluable for her enterprise. Zoe utilizes Vend to manage her shops , and this enables her to conduct all of her places without difficulty.
“I have three outlets, and I enjoy Vend’s reporting features because I can look at my shops all together or I can unclick the buttons and I will look at them individually,” she says.
Multi-store inventory management is another important one. Get yourself a retail platform which makes it simple to see products in each store and lets you transfer inventory from one location to another.
This will make certain your stores are stocked with the proper products at the ideal time. Spoilt, a gift and homeware retailer with 4 shops in Australia uses Vend’s multi-out inventory management to track products across many places.
“Being able to transfer inventory and having it sit in Vend till it arrives in the store helps to keep track of what is physically in the stores,” says Laura Semple, Marketing & Business Development Coordinator in Spoilt.
“Another feature we really like is your inventory available. Being able to observe that really quickly when you are serving a customer is terrific.”
7. Open for business
When you have done the legwork to spread the word and create foot traffic, cut the red ribbon and allow your doors open for business. If you have done your part researching, planning, and investing in your extra location, there is no reason it should not be as powerful as your present stores. But don’t expect everything to go flawlessly. Like when you opened your first place, surprises and hiccups will happen along the way–do not let them dissuade you!
As soon as you’ve launched your next place, keep the momentum going. With two flourishing shops under your belt, why not go for three, four, or more places? Start easy and one new place at one time. With a plan and a procedure, you can make every inclusion smoother than the past.
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