The Top 3 Essential Questions to Answer Before Opening a 2nd Location

December 23, 2016
It is crucial to have adequate funding in place before branching out, such as loans, outside investors and/or your own capital.

The new year is a time to take chances and big steps forward to fulfill your aspirations. It is also a time when most of us make resolutions, some of which we actually keep. For small business owners that have had a prosperous previous year, many resolve to expand their business in the new year with a new, second location. However, before taking a leap of faith, it is imperative that you ask yourself the following three questions prior to opening a second location to determine if expansion is feasible:

No. 1: Why do I want to expand? The first question that you should always ask yourself is why you are considering expanding, and the answer to that question should be compelling. Without having concrete reasons to expand, you might find it difficult to outline a path to successful growth. Keep in mind that there are less-expensive alternatives to growth besides another physical location, such as an online store, so be 100 percent sure a second location is the best choice for your business. 

No. 2: Is my current location profitable? Obviously, if your existing business is not making a profit, opening a new location is probably not warranted. If it is profitable, and you feel secure in opening another branch, ask yourself what makes your existing operation successful and will those same factors work at a new location. Can you honestly envision the new proposed location attracting the same amount of customers or even more as your flagship? One way to help answer these questions is to do extensive market research on any proposed new location, such as determining the strength of demand in the area for your products and/or services and gauging the competition.

No. 3: How will I pay for this expansion? Any new location should be considered a separate business venture from your existing location, of which you should not rely on for funding. It is crucial to have adequate funding in place before branching out, such as loans, outside investors and/or your own capital. The U.S. Small Business Administration (SBA) offers a variety of loan programs for very specific purposes, from starting up or expanding a business to recovering from disasters. For more information about the various SBA loan programs, please visit

Blog by Dale Myers. the NALA's Head Writer.

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