How to Pick the Perfect Second Business Location

Jan 15, 2020

How to Pick the Perfect Second Business Location

When your business is bustling, it may feel like a second location would be the best way to capitalize on that momentum. Perhaps your restaurant often has lines snaking out the door. Or your tax business has identified a prime market in another city. Or your medical practice has more patients than the available space can accommodate.

Scenarios like these certainly indicate that another location might be a solution. Here is a handful of questions you can ask yourself to get a clearer picture of whether or not expansion would be wise:

  • Is your business space limiting your ability to serve customers?
  • Is there a new market you can leverage?
  • Do you have the capital necessary to expand?
  • If not, do you have access to additional capital?
  • Would a new location boost your revenue?
  • Can the factors that have made your first location successful be duplicated?

If you answered yes to 3 or more of these questions, consider your business a prime candidate for expansion. This is a major decision, so due diligence is crucial. Take the time to consider growth alternatives that don’t require you to open another brick-and-mortar.

“For example, you may be able to grow your business by building a website, eliminating the need for considerable funding and the risk associated with opening a physical store,” according to business expansion strategies from Entrepreneur. “For many businesses, the internet offers low-cost access to a national market, with large numbers of potential customers. The viability of the internet marketing medium for your business is a function of your business’s ability to successfully and profitably deliver your products and services outside your existing local market.”

Once you’ve taken the time to survey the situation, you can make your decision. If a new business location is your preferred route, you’ll need to maintain your deliberate approach. This care can be difficult, especially when you feel compelled to leap for a rare opportunity in a new market. But always strive to balance your enthusiasm with caution.

Here are 10 considerations that will aid you in choosing the right location and setting yourself up for success once you move in:


  1. How much the venture will cost: You can’t make solid business decisions until you know the price tag. Don’t simply focus on the cost of the physical property—you’ll also need to take into account the utilities and other expenses. Depending on your industry and business model, these costs can add up quickly.You can get started by evaluating the average utility costs where you’re thinking about opening another location. This information will help you contrast your current utilities with the projected expenses associated with the new one.
  2. How you’ll continue what has made you successful: Many entrepreneurs capture something special with their first business location. Whether it’s the location, ambiance, staff, or a combination of many factors, customers are consistently drawn to that store.Your challenge is to transfer what’s working so well to your next location. This can be difficult, as the details associated with the store or office will undoubtedly differ from your first. For this reason, it’s more of a translation than a straight transfer. You’ll need to find a way to effectively incorporate the best parts of your business into a new place.
  3. How you’ll improve upon what has made you successful: Don’t stop at simply replicating your first location. This is your chance to transcend the status quo. Look for at least 5 ways you can elevate your operations, with particular focus on the customer experience. After all, opening a new location can be extremely stressful for entrepreneurs. And that’s when you run the risk of losing sight of your customers.Perhaps you’ll add new inventory in this new store or offer exclusive promotions. Whatever you decide, the point is that a rising tide lifts all boats. By improving things at your new location, you’ll benefit your operations across the board.
  4. The foot traffic in the area: Even if your business is primarily driven by advertising or referrals, don’t underestimate the importance of foot traffic. The more people passing by your business, the better. So when choosing a location, look somewhere that people care about and visit often.You can get a general idea of foot traffic by simply spending time in a potential area. Beyond that, don’t be afraid to visit with other business owners in the neighborhood and ask them about the foot traffic they experience on a monthly basis.
  5. Car traffic in the area: Another important aspect of your business will be vehicle traffic. For example, will a lot of potential customers be driving in the area of your new business? Taking that a step further—will there be too many cars in the area? If so, parking and accessibility could become a problem for you, your staff, and your customers.This is another opportunity to speak with local businesses and get their insights on the traffic situation. If there are too few people driving in the area, that dearth of customers could impact your success. And if there are congestion problems, be wary of setting up shop in the midst of them.
  6. Get to know the competition: On the topic of neighboring businesses, it’s important for you to find out what competitors are already established there. This isn’t just to avoid setting up your business next door to someone who already does what you do. It’s to see how other local businesses promote their products or services. You can never stand out if you don’t know what you’re standing around.It’s important to find an area where customer needs aren’t being met. Perhaps there’s a business on the same block that is similar to yours, but if you can articulate why yours will be more effective at serving customers, you have a strong chance of succeeding.
  7. Establish a network: Opening a second business location is nearly always a tricky endeavor. Rather than go it alone, leverage other businesses and contacts in the local area. Not only will this help you gain insider knowledge of your new market, but you’ll make contacts that can boost your business. Even the briefest of conversations with other small business owners can yield strong results, as they may then go on to consciously or subconsciously promote your business.A good way to get your foot in the door is to join any business organizations in your new neighborhood. Each event you attend is another way to rally support for your business and make a few friends along the way.
  8. Keep your eye on the horizon: Your network will be an excellent source of information regarding the future of your second business location. What’s in store for the region? For example, housing and transportation projects can be gold mines, as they bring more potential customers into your radius.On the flip side, be aware that the current condition of a potential location is never set in stone. Many small businesses have struggled when undesirable businesses or projects emerged in their vicinity. The more you know in advance, the less you’ll need to worry about this happening to you.
  9. Account for logistics: A new location means you’ll need to figure out how to handle shipping and receiving, parking, and a host of other nuances. You can take best practices from your current business location, but plan that many may need to be retrofitted.The more time you devote to evaluating the day-to-day logistics of your new location, the fewer surprises will pop up once you begin your operations. It can be helpful to talk to your employees about their unique roles and how they would recommend tackling the new logistical approaches your second location will demand.
  10. Rent first and buy later: There are times when you may feel confident buying the property for a second location. Perhaps you are already familiar with the area or have found an opportunity so lucrative that buying isn’t a substantial gamble.Most of the time, however, it’s recommended that you think about renting first. This gives you the chance to learn the area and find solutions to any complexities. If things go smoothly, you can always think about buying in the future. And, if long-term problems arise, you’ll be thankful for the flexibility your rental agreement allows.

About the Author

Grant Olsen

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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