Is your first business healthy enough?
There are several reasons why your first business really needs to be doing well before you consider opening up a second location. When you are considering your small business funding options, your first business will work as collateral in one way or another: either to secure small business funding from a lender or to float your second location. Also, your first business will act as a blueprint for the second so an accurate assessment of its strengths and weaknesses is useful when creating a business plan for the second location.
Do you have sufficient funds?
This seems like the most obvious question but it is recommended by the SBA that small business owners plan on spending 2-3 times more than their initial projection. Acquiring business funding is the make or break factor so make sure you have pre-arranged adequate funding with the right conditions to suit your needs before you rush into your new venture. If your first business is hemorrhaging all of its profits into your second location that is not a good sign at all. It is advisable never to count on your first business to fund the second. The second business needs to be considered its own venture and funded accordingly.
Does the neighborhood need you?
You will need to have a realistic idea of the existing demand for your product/services in the area that you plan to open in. By this stage you will understand your main target market and their behaviors. The location must have a high percentage of this demographic group and they must be demonstrating demand. If these factors are not present you will have to create demand and this requires funding for a comprehensive marketing plan. It is also advisable to avoid setting up another location too close to your primary business, otherwise you will cannibalize your first business and they will both be unsuccessful.
Do you have a great manager to run it?
Do you have good staff in your first location as well? Your business systems and management need to be rock solid in your original business so that when you are funding your second venture you are betting on a successful model. If you are staying in your first business you need a first class manager and staff to open up the second. If you are going to run the second business you have to leave your first in good hands. All of the funding you secured to expand will go down the drain before you know it if there aren’t capable people at the helm.
Is your marketing strategy in place?
When it comes to drawing up a budget to secure funding for a second enterprise, marketing needs to be considered a high priority. Viewing the business as its own entity with its own business plan, marketing strategy and funding source will enable you to understand the unique needs that belong to the second business. Consult with a professional and have a marketing strategy ready to go which you specifically allocate funds to.
The bottom line is: considered planning and preparedness will pave the path to success. If you are attempting to secure funds to plug a leak in your business it’s probably too late. Contact us now and Fundkite can have the funds in your account in less than 3 days!