As a business begins to see a strong following and rise in demand, it may seem like a good time to open a second location. However, there are several aspects that must be considered before that location can be pursued. Those would be the level of demand, the potential revenue growth, and the commitment to the brand.
Demand
When your new business is booming and beginning to get some real traction, it may seem obvious that a second location would double that output. However, it is important to understand that a second location may lower the demand from the first. With these locations popping up there may now be unintentional competition between the first and second locations. An individual who has gone to the first location their whole life, may be closer to the second location and prioritize that one. In addition, when a second location is ready to open, you must assure that the demographics in that will be able to support the demand needed for that location.
Revenue Growth
The potential revenue growth of a new location comes hand in hand with the demand. This is important because although an area seems to be great, you need to look at the demographic and competition that could harm the efficiency and success of your location. With too much competition in a single area, your new location could take a rough start. Every location of a business has an overhead that must be achieved to make the location profitable. If there is no way to make a location profitable, then it could come back to affect the first location.
Brand Commitment
When questioning the commitment of a brand, that does not necessarily mean what you are willing to do for a brand. However, it is more directly referring to where the brand should lead to. Not every brand or company is meant to open endless locations and grow until there is nowhere left. When a good thing is working, why change it? The amount of effort a location takes may be the perfect amount for your business.