With an extensive background in franchising I have some very solid beliefs about owners and running before they can crawl.
All too often I see small business owners who have very good success in one location in a very short time and think to themselves: How easy is this – I am going to open another location!”
My advice if you are reading this and having similar thoughts – DON”T.
Put simply dividing your time, and more importantly focus, between multiple sites is something that very few people can do. The classic merry go round involves the owner relocating from the first site to the new one. This starts off well as they can easily replicate what they did well in the first place.
Then after a period, which will depend on the business, they start to see the original site struggling either in sales, cash or profits – or sometimes all three. So they move back there – “to get it right again” and guess what the new one starts to struggle.
Eventually what you experience is a continual cycle of running too and fro until both sites are under performing significantly and the owner is pulling her hair out.
In my time I have only seen multiple locations work in the following circumstances:
1. The owner brings in an equity partner who is responsible for the new location. Skin in the game is skin in the game.
2. The owner gets 2 managers – who are above average – pays them well and provides the right incentives to drive them. This then involves the owner managing his time equally between locations – with equally being the optimal word.
In all other cases this expansion is just a nightmare and I would recommend that most people stay happy with what they have and make sure that this business is the best that they can possibly get it to be.
Let me know your thoughts.
