From the CEO: What You Need to Know About Opening a Second Location
Michael Ly • June 7, 2019

If you’re an entrepreneur who is either considering growing your business or already moving forward — congratulations! This is an exciting step.

If your business has grown fast (like ours), you may be thinking that the next step is opening additional offices. Opening a second location (or third or fourth) is an important move for many service-based businesses, and when it’s done carefully, it can be extremely successful.

But there are also risks.

Let’s take a look at some key considerations for smaller businesses looking to expand geographically.

1. Have clearly defined goals    

Any business decision starts with the “why,” and in this case, you still have to consider the business case for expansion.

Examples of business goals:

  • Satisfy demand
  • Build reach
  • Save money
  • Penetrate a new market
  • Broaden talent pool
  • Test out a new version of an existing product
  • Find alternative ways of marketing

The key to starting up a successful second location is having a clear understanding of what works and what doesn’t in your current business ahead of time. Getting a third-party opinion can work wonders for this.

2. Establish your brand in the second location (but don’t lose your current focus)  

When I opened Reconciled, I began to offer my services to local businesses, and in that process, I quickly established myself as a trustworthy and competent person in the local business community.

While not all business leaders may have the luxury of doing this, establishing yourself locally and “doing the work first” is a great way to network. It also paves the way to brand awareness and engagement in a new location.

Here are a few tips for prospecting and engaging in a new locale:

  • Make sure that the people you hire to run your new office are well-versed in marketing, branding, and networking from the ground up in the new community.
  • Ensure your services are tailored to each location — for instance, we may put a stronger focus on marketing our CFO services in places with a high percentage of larger companies.  
  • Discuss the “why” behind your new locations with your staff and clients.

Even though we’re cloud-based, we make an extra effort to connect with local activities because we want to be a trusted face in the community. Some people might want to see their service provider face to face, others might be okay with doing it remotely. But making sure that you are a trusted face in the neighborhood is crucial to building ties in the local business community.

Strategic branding is important, but I believe that establishing yourself in real life in your community is crucial to making yourself — and your business — truly memorable.  

3. Make sure you have adequate cash flow

Are you up to speed with all aspects of your financials?

Cash flow is key when you’re trying to expand. Understanding and forecasting this realistically will help to keep you stable. Having a handle on your cash flow can help you to generate the right levels of revenue out of the new business. Also, it can be there as a backup in case unexpected issues arise.

In addition, it may take a while for the new location to break even, so you want to make sure you have liquid backing to carry it in the meantime.

The main question here is: is your primary location generating enough revenue to sustain the next location if it doesn’t break even? If not, you will want to look into more financing options.

4. Understand why you are growing

If you are experiencing a lot of growth, you know you’re doing something right. You’re probably beating the competition in your current locale and/or channels. But, how much of this growth is tied to geography?

Even if you are a mostly digital business, the answer might still be a lot . That’s why it’s important to pinpoint why the growth is happening. And whether this is truly sustainable before making a move to the new location.

Then you can prepare a growth strategy based on some key factors such as:

  • Cash flow
  • Marketing plan for that area
  • Differentiation (USP)  
  • Company culture

For more business tips, check out Our Favorite Tips from Everyday Entrepreneur 2018 .

5. Know your new market

According to Small Business Trends , 42% of small businesses fail because of “no market need,” and many others fail simply because they can’t maintain the cost.

  • Identify and analyze the local competition
  • Understand the need in the local market
  • Make sure the local market isn’t saturated

So, one of the main things you need to do is understand the need for your service in the particular marketplace you are expanding into. Are you offering your services at the right time?

And yes this still applies even if you’re digital because you will still probably need to network on the ground.

6. Don’t rush!  

Every business wants to see growth in one form or another. It’s only natural that if you are an entrepreneur you’ll be pushing for bigger, better, faster, or whatever you think will help you get an edge.  

But if you’re experiencing rapid growth and struggling to keep up, you may be experiencing a whole host of new problems. Even if you’re not, it might be a better idea to just slow down before rushing into expansion.

If you feel financially stable enough to open a new location, bear in mind that there are other risks to your bottom line.

Some negative consequences of quick growth can include:

  • Customer service snags
  • Lack of compliance with local laws and regulations
  • Lack of attention/research for the local market
  • Lack of attention to other employee-related issues

Make sure you have a clear handle on all aspects of your business before going forward with a move. Be sure to document your successes. Keep an eye on shorter-term (non-financial) goals. When these are in place, your business should be more sustainable and robust — which means there will be plenty of time to expand in the future.

Evolve smoothly and in balance instead of trying to forge on into new territory and going in blind.

7. Keep an eye on the long term 

If you’re expanding, you’re basically opening a new business. You might think of it as another “branch” but in reality, it may take just as many funds and energy as the initial business. You must be prepared for the same types of pitfalls — and the best way to do this is via careful financial planning and analysis.

Do you need help determining whether your budget or financials are at the right place for you to grow your business? Let our seasoned bookkeepers get you on track and help you plan a budget that fits your unique needs.

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For the 2nd Time, Reconciled Makes the Inc. 5000, Ranking at No. 1983, With Three-Year Revenue Growth of 282 Percent

By Reconciled It • August 18, 2023
New York, NY (August 15, 2023) - Inc. announced today that Reconciled, a leading provider of cloud-based bookkeeping and accounting services headquartered in Burlington, Vermont, ranks #1983 on the 2023 Inc. 5000, its annual list of the fastest-growing private companies in the United States. Reconciled also ranks #124 in the Financial Services category, solidifying its status as a trailblazer in the industry. “Running a business has only gotten harder since the end of the pandemic,” says Inc. editor-in-chief Scott Omelianuk. “To make the Inc. 5000—with the fast growth that requires—is truly an accomplishment. Inc. is thrilled to honor the companies that are building our future.” The Inc. 5000 class of 2023 represents companies that have driven rapid revenue growth while navigating inflationary pressure, the rising costs of capital, and seemingly intractable hiring challenges. Among this year’s top 500 companies, the average median three-year revenue growth rate ticked up to an astonishing 2,238 percent. In all, this year’s Inc. 5000 companies have added 1,187,266 jobs to the economy over the past three years. "It is a tremendous honor for Reconciled to be recognized on the INC 5000 list and to hold such a high rank in our category," said Michael Ly, CEO and Founder of Reconciled. "This achievement is a testament to the dedication and hard work of our team, the trust of our valued clients, and our unwavering commitment to delivering top-notch financial services. We are incredibly proud of this recognition and look forward to continuing our journey of growth and innovation." With a focus on leveraging cutting-edge technology, personalized support, and a team of highly skilled professionals, Reconciled has emerged as a leader in the virtual bookkeeping and accounting industry. Their leading-edge approach has enabled businesses to streamline financial processes, gain valuable insights, and make informed strategic decisions to drive growth. Reconciled's rank on the Inc. 5000 list signifies its impressive growth trajectory over the past year, with 282% 3-year growth. The company acquired three firms in the past three years: HR Business Solutions in Chattanooga, TN, Accounting Services Group in Tempe, AZ, and Bean Team in Tallahassee, FL. Reconciled also expanded its services with the launch of a new tax and advisory department. Reconciled’s dedication to driving efficiency and financial clarity for businesses has earned them the trust and loyalty of an expanding national client base of small and large companies, with client partners in manufacturing, e-commerce, non-profit, professional services, and food and beverage and several other industries. More about Inc. and the Inc. 5000 Methodology Companies on the 2023 Inc. 5000 are ranked according to percentage revenue growth from 2019 to 2022. To qualify, companies must have been founded and generating revenue by March 31, 2019. They must be U.S.-based, privately held, for-profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2022. (Since then, some on the list may have gone public or been acquired.) The minimum revenue required for 2019 is $100,000; the minimum for 2022 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Growth rates used to determine company rankings were calculated to four decimal places. About Inc. Inc. Business Media is the leading multimedia brand for entrepreneurs. Through its journalism, Inc. aims to inform, educate, and elevate the profile of our community: the risk-takers, the innovators, and the ultra-driven go-getters who are creating our future. Inc.’s award-winning work reaches more than 50 million people across a variety of channels, including events, print, digital, video, podcasts, newsletters, and social media. Its proprietary Inc. 5000 list, produced every year since 1982, analyzes company data to rank the fastest-growing privately held businesses in the United States. The recognition that comes with inclusion on this and other prestigious Inc. lists, such as Female Founders and Power Partners, gives the founders of top businesses the opportunity to engage with an exclusive community of their peers, and credibility that helps them drive sales and recruit talent. For more information and to see the full list of winners, visit www.inc.com .

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By Reconciled It • March 28, 2023
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