Thinking of Opening Another Location? Ask Yourself These 4 Important Questions
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So your HVAC contracting business has grown, and you’re thinking of opening an additional location. While you may feel that 2016 is the right time to expand, before you do so, think through these 4 questions first.
What’s your reason?
Ask yourself: Why do I want to expand my business? Is your reason compelling enough to motivate you through the challenges you’ll likely face, or right now is it moreof a lofty dream?
The answers you give for this question can serve as a basis for identifying the goals you have for your next location. Once you know why you are expanding, you can more easily chart your progress as you make moves toward doing so.
Is your first location a solid foundation?
Many business owners choose to open additional locations because their original shops are peaking. They’ve got their kinks worked out, they’re turning a profit, and the business coming in can be relied on. Opening a second location can stretch your business financially, so before you make a move toward opening those doors, make sure you have a steady stream of revenue that you can depend on until your new business begins to turn a profit.
If there are problems that exist at your original location, it would be wise to conquer those before you set out to open another location. Managing your first location with success will create the foundation you need to put effective systems in place in additional shops, helping you perfect your business model.
Where will your next location be?
Think long and hard about where to place your next location. You need to position your business in an area where there is a demand for your products and services. You’ll need to identify who your prospective customers are and position yourself to serve them best.
Your next location needs to be positioned effectively in order not to encroach on the market your current location serves — the last thing you want to do is cannibalize your own sales. Your locations should be distanced far enough away from one another to avoid this problem.
When it comes to distance, make sure the location you choose for your second shop will not create management problems down the road. Choosing a neighboring metropolitan area is often a better choice than a location in another time zone. As a business owner, you will be enabled to handle issues as they arise by keeping a distance that is personally manageable.
What is your budget?
Opening additional locations does not come without challenges, and often times they are financial. Your new building may require significant repairs after move in, you may require infrastructure improvements to manage employees and jobs across two locations which weren’t foreseen.
As you carefully plan your budget, be sure to plan for the unknown. Business consultants recommend adding 35 percent to your budget for unforeseen expenses which can arise as you open a new location.
Opening a new location for your HVAC company can be an exciting and profitable move. We hope these questions will help you as you plan your expansion, this year or in the future.