Photo Credit: Ippei & Janine Naoi via Compfight cc
by Deborah Sweeney | Featured Contributor
Expansion into a new city is simultaneously exciting and trying for any small business owner. You’ll naturally be excited to try your hand at a different market and grow your business, but expanding requires a heavy investment of both time and money with no guarantee that your business will fully catch on in its new environment either. It can be a bit scary to throw that much into a plan that may never pan out! However, if you approach expansion in the right way, you’ll be much better prepared and protected for whatever this expansion may bring.
Research the new market
Before jumping in, it’s important to do your research and know the ins and outs of any new area, even if you’re only looking to set up shop in a town fifteen minutes away from your original location. Who are your direct competitors in this market? Where are your customers? How do they shop? Does anyone even recognize your brand? The answers to these sorts of questions will help you figure out exactly what needs to be done, and whether or not you’ll have any sort of head start in your new city.
Make sure you have an EIN
You can probably run one business on your own, but if you want to expand, you need to hire someone else. So if you haven’t already, make sure you apply for a federal employer identification number so you can legally employee someone new. Once you hire, you need to remember that you are now also responsible for collecting payroll taxes and adhering to any state and federal labor regulations applicable to your industry. It is also a great idea to look for employees familiar with the new area you want to set up shop in. They could have some great insight into the market that you don’t.
Incorporate or form an LLC
I cannot overstress the importance of forming a separate business entity before taking on any debt, or making a serious investment in your company. Your business’s debts should be its own, and you shouldn’t have to worry about losing your house or personal property if your plans don’t work out. Limited liability companies and corporations are considered separate, legal entities, allowing the company to take on, and be responsible for paying, its own debt. Forming an LLC or incorporating, however, will mean your business has to qualify as a foreign business entity if the new city you are looking to expand into is in another state. Luckily, all you usually need to do to qualify is file a certificate of recognition from your home state, register as a foreign business entity with the new state, and pay a fee.
Apply for local licenses
Nearly every city with its own government requires businesses within its borders to file for a business license. This can get a bit annoying the further you branch out, but it is a legality that you can’t get around. Luckily, filing for a business license is pretty easy. Most cities just want to know what the business’s name is, where it will be located, and whether or not it needs any special licensing, like liquor or tobacco licenses. And, of course, city governments almost always ask for a licensing fee.
Standardize operations
One of the most difficult parts of expanding is ensuring that your brand doesn’t get muddled, but standardizing your operations early does help. Do you want your employees to greet customers a certain way? Dress in a particular color? Use a specific sales technique? You can’t be in two places at once, so you need to tell management and any employees how the business should be run. Write down any special rules you’d like your employees at the new location to follow, and train them so they know what’s expected.
Planning really is your greatest tool during expansion. Figuring out where and how you want to expand, and then protecting yourself during that expansion, makes the entire process much less stressful. So scout out possible areas, find potential new hires, learn what local licenses you need, and then commence expansion. Duplicating the success of your first location isn’t going to be easy, but knowing exactly what you are getting into will certainly make finding that same success more likely.
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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA
As CEO of MyCorporation Business Services, Inc. (MyCorporation.com), Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With her experience in the fields of corporate and intellectual property law, Deborah has evolved from lawyer to business owner. She has extensive experience in the start-up and entrepreneurial industry as she has been involved in the formation of hundreds of thousands of businesses for MyCorporation.com’s customers.
Ms. Sweeney received her JD & MBA degrees from Pepperdine University. She is active in the community and loves working with students and aspiring entrepreneurs. She serves on the Board of Regents at California Lutheran University and is a founding member of Partners of Pepperdine. Deborah has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in the areas of corporate and intellectual property law. Ms. Sweeney is also well-recognized for her written work online as a contributing writer with top business and entrepreneurial blogging sites. She is a regular contributor on Forbes, American Express, Social Media Today, and BlogHer among many others.
In her ‘free’ time, Deborah enjoys spending time with her husband and two sons, Benjamin (8) and Christopher (6). Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Follow her on Twitter @deborahsweeney and @mycorporation.
