Opening a Branch Location
Q: I have a home remodeling business, and I want to expand. I could open a second office locally-there's enough business-but I really feel the best opportunity is in a town about 75 miles from my current office. I want to make sure both branches are successful. How can I run another office from so far away? Should I work part time at each office? Should I hire another manager? How can I be two places at once?
A: You have described a wonderful opportunity-the chance to be more successful by expanding into a new location. Moreover, you have two places to choose from; it doesn't get much better. You have also presented, we're afraid, a course of action that needs to be reconsidered. Not because it's unreasonable, but because we think you have better options.
Whether you expand locally or to a more distant town, you will have the same hurdles to overcome. And your questions perfectly address those hurdles. Whether you're near or far away, you'll probably have to divide your time between both places, you will feel as though you're in both offices all the time, and you will have to hire someone to manage the new office. When the inevitable problems crop up, you will find yourself on the road for nearly three unproductive hours, each time, if you opt to expand away from your base. When your new location needs a craftsman or craftswoman, because the local employee is unavailable, you'll have someone drive over, killing three hours and eating into your profits. That's assuming your local employee can leave his or her current remodeling job site without jeopardizing its quality and your relationship with the customer.
Assume for a moment that any problem you might face at a new local office would also occur at a new remote location. Those problems will cost more and take much longer to fix at your new remote office than they do locally, assuming your expertise would be required in fixing the problems. Before long, that more promising office will have you wondering why you expanded at all. Time with family and friends will be negatively impacted.
Rod can tell you, from personal experience, remote branches require a lot of effort to run successfully. He founded and has operated a multibranch inventory service for 31 years, and two or three offices don't require a proportionate increase in effort. Quite often, he'll tell you, they require a Herculean effort. Just because a Home Depot or a Wal-Mart can pull it off doesn't mean every entrepreneur can or should.
We're not here to rain on the American Dream, but we also believe we should listen to our own doubts. Those doubts are instinctive and not unreasonable. In our opinion, a better course of action would be to first increase your business activities at your current office, then expand locally; after all, "there's enough business." Get a feel for operating a multilocation business close to home. Then when your new location is running smoothly and generating a profit, expand further from home. That more distant opportunity will probably be just as viable a year from now as it is today. And if it isn't, there will be others. After all, good contractors are hard to find.
Rod Walsh and Dan Carrison are the founding partners of Semper Fi Consulting in Sherman Oaks, California and the authors of Semper Fi: Business Leadership the Marine Corps Way.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.