Whether you are just opening your first store, or have already been in business for some time, you may be tempted by an opportunity to consider a second location.  I invite you to think about the opportunities that opening a new branch presents — as well as the pitfalls.

Perhaps I should start by mentioning that our shop is celebrating its 43rd anniversary this month — still in our same single location.  We have put an addition on our building and also bought the store next door and connected it to ours, so when asked why we never opened another store I can point out that these two expansions allowed us to grow in place.

I must admit that from time to time I think that opening a new store has a certain romantic appeal, just as falling in love again would for someone who has been married a long time.  There is so much excitement around choosing a location, designing a store to fit the new space, selecting the merchandise, hiring all new staff, and holding a grand opening.

But for me, that potential excitement is outweighed by the fact that I know I can’t be in two places at one time, and my feeling that being present is one of the things that makes an independent retailer successful.  I am also not motivated by the possibility of making more money with more than one store, even though I know that there is a limit to how much income can be generate by a single location.   

For some retailers, though, the idea of additional profits is a strong motivation, and it is true that from an economic standpoint, having more than one store may be more efficient.  You can pool the buying for all your locations, which is particularly effective if you are doing direct importing.  There are other economies to be had, from purchasing supplies in bulk to centralized bookkeeping and advertising.

The drawback of the owner not being present can be overcome by hiring wonderful managers, and keeping them motivated and involved.  More than one store has opened a branch in order to give a son or daughter, or a stellar employee, the chance to manage their own shop.

The key to selecting a location for a branch store is to find one that has a demand for the products you carry — so be sure to do a market study, just as you did for your first location — and one that is far enough away from the other store that it will not “cannibalize” the sales of the mother store.  There is some gruesome imagery in that phrase, but it comes down to not wanting to diminish the original store’s sales by opening a second one.

Centralized communication among your stores is essential, so you will want a POS that sends reports to the home office to track what is selling.  Another factor to consider is how to handle staff training and motivation in more that one location.  Some stores make creative use of texts, email and FaceTime to keep far-flung staff members in the loop. 

Your own time management may be challenged by running more that one store. It’s important that you get comfortable with the idea of relinquishing real power to the branch managers, and that you realize that your role will be different than it has been in the past. You will need to meet regularly with the management team from each store, making sure that everything is running smoothly.  This supervisory role is different from those you may have played in the past.  But opening a branch store can be a great way to provide more jobs, take advantage of the economy of scale that comes from pooling your expenses and buying, and grow your business to be a greater financial success. 

Happy Retailing,

Carol “Orange” Schroeder