Many growing companies expand their service regions to deliver products and services to a larger market.  Restaurants that are successful in one community sometimes open a second restaurant nearby, and rely on positive word of mouth to promote the second eatery.  Legal professionals, accountants, medical practitioners, insurance brokerages, auto sales groups, and other businesses often consider expanding their service regions to grow the business.

However, before you buy or lease that satellite office, consider the pros and cons of service area expansion.

1. Is an expanded service area part of your long-term vision? Just because you have the resources to expand doesn’t mean that you have to, or even should, expand.  What’s your long-term vision? To purchase your existing office space? To expand into the store next door? To offer more services or sell more products?

In other words, consider the long-term implications of opening a remote site office. Was this what you had in mind when you started the company?

2. Does the company generate enough revenue to support an expanded service area? Crunch the numbers.  What will you need? An expanded fleet of panel trucks? A small service office that can be leased or bought? A new management team? Service employees? Insurance? A new copier and a dozen computers?

Spend a lot of time with your accountant and your banker to develop a sound estimate of the costs associated with: (1) actually creating a satellite outlet; and (2) maintaining that second (or third) outlet using current revenue and available credit.

3. Will you be able to deliver the same levels of service quality? Your service most likely played a big part in building your current business success, so it’s a critical consideration when planning to expand your covered territory.  Do you have enough staff? How many new hires are required, and what will that cost? How will you track service delivery from the home office?

Maintenance of service quality should not be a victim of an expanded service area. Plan to cover more ground.

4. Is a satellite office really necessary? An excellent place to start your considerations is determining if there’s a better alternative to a new office in an expanded service area.  Have you considered renting an office suite with support services, like a receptionist and a transcriptionist? These business suites are turn-key, so you can easily move in and start working.

How about an online virtual office with all the tools needed to deliver services anywhere? If your services are in demand, you may not need a physical office.  Check out virtual office services on the Web.

5. What impact will an expanded service area have on employees? Some may have a longer commute. Some may be moved to the new office and lose workplace friends. Discuss with your employees the impact a second or third office may have on them.

You may find that some love the idea because they don’t have to drive as far to get to work: a benefit that works for the employee and for your company.

6. How will satellite offices communicate with each other? You may have four or five offices across the state, but it’s still a single business entity that requires communication between employees. Communications can be simplified with quality IT solutions like Voice over Internet Protocol (VoIP), online collaboration within the company and with prospects and clients, virtual meetings and other information solutions.

Develop the tools your company players will need to communicate with each other, with leads, and with your current client base.

7. Will unified billing be a problem? It won’t be if you set up your bank accounts to accept deposits, and authorized withdrawals, from numerous remote business sites.

It’s even possible to safely place an order and electronically move funds from one account to another via smart phone, eliminating daily trips to the local bank branch. Talk to the Treasury Management department of your bank to develop safe, low-cost billing and financial management solutions.

8. Can you avoid business interruption as you expand? It takes time, energy and effort to plan a successful business expansion. It also takes the same to maintain a successful business, and you can’t be in two places at once.  Business goes on, even if you’re in the middle of leasing another office and hiring new staff.

During the initial stages of a planned expansion of your company’s service area, develop a management structure that enables you to manage current business activity and oversee the expansion. Learn to delegate to trusted staff. Develop priorities on a daily basis – those activities that require your attendance or attention. Use client relations management (CRM) software to track business activity at a glance.

You’ll have a lot on your plate during this time of expansion. Plan to use every minute of every day to effective purpose.

Get Good Advice

Business planning requires time, analysis and expertise. If you don’t feel qualified or comfortable making the decision to expand your business’ service area, hire a consultant, or talk to your local bank representative.

These professionals know your business and they know the territory you’re considering for expansion. Get good advice, add it to your own research, and make the smart move when you and the company are ready.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.