How to Expand Your Startup to a Second Location Without the Hassle

August 5, 2016

10:00 pm

Startups are always in various stages of growth. There were 1800 venture capitalist deals in 2015, and many of them allowed businesses to expand. This could have been out of the garage or to a second office. You need to think about how you’re going to expand your startup to another location when the time is right.

Your second office can be one of the best places to work for your staff, but it has to be justified. You need to know whether now is the time to cash in or whether it makes sense to wait to expand. Here’s how to expand and promote your services without any hassle.

What is Your Existing Business Like?

Your business has to be in a good place before you can even consider an expansion. Your sales should be healthy and you should be overflowing with customers at your current location. You may want to open a new location to help with B2B lead generation, for example.

A good sign a second location would benefit you would be if you’re turning away money because you’re filled to capacity. There has to be a business argument here. It should have nothing to do with ego. That’s one of the essentials you need before opening a second location, otherwise it could come back to bite you later.

Crucially, you should have a stable financial situation.

Do You Have the Extra Money Needed?

There are a lot of extra expenses associated with opening up a second location. You must have the cash flow to pay for those extra expenses. This isn’t about having the alternative financing to throw open your doors. It’s about being able to sustain that second location after it opens.

One of the biggest reasons for business failure is when you open a second location yet you haven’t considered the regular costs. You have to pay for more rent, more inventory, more rent, and more insurance, to name just a few of the expenses involved.

Loans can help when you don’t already have the business capital, but you need to think about what happens after that second location opens. How soon is it going to be before it can pay for itself?

Did You Look at the Market?

A lot of early success comes not from what you do but from your location. A startup in a trendy area is far more likely to succeed there than if it established itself in middle-class suburbia. You have to acknowledge that your location could form a huge part of your success story.

Research the area before you open more locations. Look at the locale and whether you’re still going to be receiving the same number of customers. Even a successful company can flop in the wrong area.

Can You Delegate?

Some entrepreneurs are so used to having complete control they find themselves unable to delegate. This is one time when you have no choice but to delegate. You can’t be in two places at the same time. Delegation means you have to find someone you trust to stop your second office becoming neglected.

In some cases, you might be forced to change the percentage of ownership within your company. Expanding to another location means you have to have someone who’s willing to run the location like it was their own.

Think about hiring from inside your own company. They will already come with many of the skills and knowledge necessary to run your company’s expansion program. It’s also a great morale booster because your staff know that you’re concerned about their professional development.

Consider the Financial and Legal Problems

Every state has its own laws and financial issues regarding second locations. Some states will force you to register your two locations as independent companies, whereas others will allow you to use the same EIN for every location. Also potetnial problems: the usual health and safety requirements and filing requirements that come with every state.

Make sure you study these things before opening the doors of a second location. You also need to consider the financial side. Some states will require you to go through the hassle of switching from a sole proprietorship to the corporation type of company.


These are the main facts you have to consider before opening a second location. The answer to this conundrum is to commit yourself to doing research. One of the worst mistakes you can make is to not consider the financial and logistical implications of an expansion.

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I’m a lifetime blogger, entrepreneur and marketing enthusiast.

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