How to expand your business: Does a new location make sense?

Even if business is booming, a second location is a major decision. Here’s how to decide whether an expansion makes sense for you.

Tags: Business loans, Financing, Planning, Be prepared
Published: December 20, 2019

You have loyal customers, hard-working employees and good cash flow. Your business is a success and you’re thinking of expanding your business to a new location. Should you?

Take the temperature of your current business situation and weigh the changes an additional location would bring. There’s a lot to consider.

What does your current location offer?

How does your current location contribute to your success? Would these things be transferable to a new location? Consider things like:

  •  Exclusivity in the area
  • Longevity or hyper local name recognition
  • Proximity to foot traffic
  • Easy access to parking
  • A vibrant business scene

What would your additional location offer?

No two locations are exactly the same. Find out how well other businesses in the new area are doing and how long they’ve been around. Potential obstacles to look for when scouting a second location:

  • Stiffer competition
  • A declining business environment in the area
  • Parking issues or a lack of foot traffic
  • A different customer demographic than you’re used to
  •  Potential name recognition issues

Can you delegate and still succeed?

How closely are you identified with your business? If you are the face of your company and customers expect to see you, what will happen by adding another location? You don’t want your expansion to be seen as a pale imitation of the original.

Even if customers don’t know you personally, opening a second location could double your stress if you try to juggle responsibilities at both. Can you afford to move some experienced people from your original location or hire new management?

Where will you find the money to grow your business?

Consider how much in sales you’ll need in your new location. How will you fund your expansion? Consultants advise against using the first location to pay for the second. Determine if you’ll need investors, partners, a business loan, savings or another source of funds for growing your business.

A second location also means more employees and more overhead. Do you have the funds to keep both afloat while the new place is getting up to speed?

Are you ready to start from scratch again?

You should treat a second location like it’s a new business. No matter how similar your two locations are, create a separate business plan for your new shop. This will help you pinpoint the differences between the two and avoid unexpected expenses. For example, you might need different types of permits and licenses or different kinds of advertising.

What are some alternatives to a permanent second location?

There are ways to grow your business without an additional physical location.

  • An e-commerce website can help you expand sales without boundaries — and without all the overhead of a second location.
  • If your business has seasonal spikes, consider a pop-up store. Empty storefronts, shopping mall kiosks and farmers’ markets all offer opportunities to expand your reach on a seasonal basis.
  • You might be able to take your show on the road. Businesses from dog groomers to boutiques to restaurants create mobile versions via van or bus.

When looking at whether to open a new location, weigh what you’re hoping to get out of it as well as if the financials make sense. After a full assessment, if you’re confident that expanding is the right course, it may be time to get started.


Ready to look at options?  Visit to see how U.S. Bank can help support you and your business.