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Article Contributed by Jeanna Marnela Lising 

You are doing well as a first-time entrepreneur. Your current venture is going great, and with the way things are going, it just feels right to ride the hot hand and see where your current winning streak takes you.  After all, you have the capital to expand your business and branch out. You are probably thinking, since what you are currently doing is working, why not take the same business model to another city or state right? What could go wrong?

To answer the question, there are a lot of things that could go wrong. Branching out is not as easy as duplicating what you are doing in your current location and expect it to be successful in another. While some aspects can be retained, there are some factors that you need to consider before actually branching out like:

Laws and regulations

Different cities and states may have different sets of requirements for new businesses that intend to operate in their location. Most states would require a state identification number, your trade name registration, and zoning approval. Then there are other documentary requirements like professional licenses and special operating permits depending on your product or service. You better make sure that you are compliant to whatever laws and regulations apply to your business based on your industry in the new location as well. You are basically starting another business in another location even if it is completely based on your current venture.


You have to also consider that you will be entering a market where there is already a dominant player. Even if you do well in the first months because of market curiosity, you might see your sales dwindle after as the market goes back to what is familiar to them.

Research the strength of your competitors in the new location. Do you have something of value that can keep you competitive or even give you an edge? Or are you just presenting the market of more of the same? If you are the latter, then you might as well just pack your bags. If you are not presenting the market with anything different, consumers will always go to what they already know and those are the old established businesses in their area.

Current financial status

Do you remember how hard it was to even breakeven during the first months of your business? That’s right, you will be going through that again as you will be spending more than you are getting while you are trying to set your business footing in the new location. After all, you will be spending on capital expenses and you might even end up getting a loan to really get the ball rolling in your new branch.

Review your financial status and make sure that the profit you are currently getting from your first location is enough to get you by while you open your new location. You do not want to live as a pauper while trying to get the new branch running.


Manpower or labor

You will also have to consider the labor or manpower aspect of your new branch. Do you get people from your current business and transfer them to the new location? It has the advantage of having people already familiar with your business operations and may result in a more seamless transition. However, these people will be relocating and there should be an incentive for them to move to another city or state. You could also hire people from the area as they are already within the vicinity of your new location. However, you will have to invest more on training and on-boarding to ensure that they know the ins and outs of your business come opening day.

You also have to consider that the standard of pay may be different in each location. If you are paying most of your employees the minimum wage, you might be surprised that each state has different minimum wage rates. Tips are another thing to consider. Some states say that tips given to workers should be added on top of their wages while other states say that tips make up a percentage of the employee’s pay and companies can just pay the difference. These seems trivial, but it can affect your overall payroll.


The technology you are using in one location may not be feasible on the next location, implementation or cost wise. A good example is your business phone system. When you have only one location, it is perfectly fine to have an on-premise system. However, once you plan to branch out, the same phone system cannot be used on the new location anymore unless you install the same system there. That would, however, be very costly.

A good option is to turn to the cloud. Cloud services are delivered via the internet and can be accessed from anywhere, making it perfect for businesses that run in multiple locations. There are cloud services for different business functions including human resources, accounting, phone systems, and storage. Businesses can just subscribe to the service they need and it can cover all their locations.


An important factor that most entrepreneurs fail to consider is culture. What people like and appreciate in one place may be a big no-no in another. Just ask Anthony Bourdain. As a New Yorker, he is not a fan of catsup on anything. Then he arrives in Ecuador and he finds that most dishes use ketchup (banana ketchup at that), and it boggled his mind. So before even considering opening a business in another location, you need to know if your product or service will be appreciated. Without research, you might find yourself offending your market’s sensibilities, and that will be the start of your downfall.

This is not to discourage you from expanding your business. Expansion is a good thing; it means growth and is a good sign that your business is doing well. This is just a reminder that previous success does not guarantee success in another location. The same amount of research and hard work when you started your current business will be needed to get your new branch up and running.



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