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Pros:
(Second Location)
1. New customer base to sell existing products.
2. Enhanced brand equity from generating greater overall awareness of product
3. Ability to exchange best practices across locations and to A/B test products/services/prices in one location.
4. Economies of scale in procurement: You can leverage greater savings in variable costs through drastic move of opening second location.
5. SEO - Getting Googled by a larger number of people across areas will enhance Page Rank.
Cons
(Second Location)
1. Heavier capital outlay. Expanding primary location can be an iterative process funded from retained earnings. Opening a second location will require heavy up front costs that will most likely require selling equity or taking on debt.
2. Spread out staffing can be dangerous. Remember, you can only be in one place at a time - meaning if there's "a fire" (short staff, security concerns, or literally - a fire) at both locations, you're in trouble.
(Second Location)
1. New customer base to sell existing products.
2. Enhanced brand equity from generating greater overall awareness of product
3. Ability to exchange best practices across locations and to A/B test products/services/prices in one location.
4. Economies of scale in procurement: You can leverage greater savings in variable costs through drastic move of opening second location.
5. SEO - Getting Googled by a larger number of people across areas will enhance Page Rank.
Cons
(Second Location)
1. Heavier capital outlay. Expanding primary location can be an iterative process funded from retained earnings. Opening a second location will require heavy up front costs that will most likely require selling equity or taking on debt.
2. Spread out staffing can be dangerous. Remember, you can only be in one place at a time - meaning if there's "a fire" (short staff, security concerns, or literally - a fire) at both locations, you're in trouble.
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Mark Wright advised on 04 Nov 2011
Business consultant to turnaround situations bringing to bear over 30 years of corporate and mid sized company leadership and success.
If you are a young business you need to very concerned about the use of resources as Matt outlined in cons. Having done this once, you will need to be able to place a manager that is an exact clone of yourself in the new location. If you can't do that, then don't do it. You'll be frustrated and the cash outflow may come back to haunt you. Your potential clone is someone on your current staff that knows how to do what you do the way you do it. They must be able to make decisions and keep the staff doing things the way you want them done AND keep customers coming in the door.
l...@verizon.net commented on 17 Jan 2012
Thanks Mark. I agree that it is critical to find the right person to leave current (or new) business to manage. Hopefully, we will get there in the future. Although I am sure no one is as committed as you are to your own business. Thanks for your valuable input.
Thanks Mark. I agree that it is critical to find the right person to leave current (or new) business to manage. Hopefully, we will get there in the future. Although I am sure no one is as committed as you are to your own business. Thanks for your valuable input.
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Pros: opening second location
The client can access all your services with least commute.
Depending on the location you want to extend, the initial cost may be less. (relative)
Cons: opening second location
All workforce related cost will be doubled.
Pros: expanding same location.
Optimal use of existing resources and addition of other resources can be on certain areas and not on all areas.
Cons: expanding same location.
Finding the right space at right area within the same zip code at optimal cost is a challenge.
...
.,.
The client can access all your services with least commute.
Depending on the location you want to extend, the initial cost may be less. (relative)
Cons: opening second location
All workforce related cost will be doubled.
Pros: expanding same location.
Optimal use of existing resources and addition of other resources can be on certain areas and not on all areas.
Cons: expanding same location.
Finding the right space at right area within the same zip code at optimal cost is a challenge.
...
.,.
l...@verizon.net commented on 17 Jan 2012
Ravi, Thanks so much for the list of pros and cons. It really helps to lay it out that way. I will continue to look back on this list as we make plans for future expansion. I am most grateful for your input!
Ravi, Thanks so much for the list of pros and cons. It really helps to lay it out that way. I will continue to look back on this list as we make plans for future expansion. I am most grateful for your input!
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Mathew, I really appreciate the list of pros and cons as laid out here regarding the question of when to consider opening a second location. I am going to incorporate these points into my business plan and expound on each one. I have been hearing a lot about pop-ups (occupying a space for a short amount of time) as a tool to test a new market. I would be curious to hear your ideas on this trend. Thanks again for this well-thought out informaiton. Lisa