How do you know when it's time to expand your business to a second location? Rick Davis, CEO of CCG Venture Partners LLC, a Houston firm that specializes in helping single-location businesses expand to multiple markets, suggests a five-point test.
1.Do you have the desire to make the effort, take the risk, and own a business that you don't personally operate? "Owning and operating a business is very different from owning a business that someone else operates for you," Davis says.
2.Is your business performing well financially? If your first location isn't doing well, chances are a second one won't, either.
3.Do you have the know-how to own a business that you don't operate? "This requires an entirely different set of skills," Davis says.
4.Is your existing business running smoothly? Consider how much time your business requires; be sure that you can realistically take time and energy away from it to focus on a second location.
5.Do you have the money? Opening a second location takes initial capital as well as operating funds. Davis recommends having sufficient cash resources to get you through a worst-case scenario.