Should You Open a Second Location? Here’s What You Need to Consider 

The question of whether to open a second location is one that many business owners face as they seek to grow their practice or business. For some, it’s a fantastic strategy to capture untapped demand, expand production numbers, and solidify their market presence. But before jumping into such a venture, there are two critical questions that you must answer through a series of other evaluations.

1. Will There Be a Return on Investment (ROI)?

This may sound like an elementary question, but it’s one that needs a solid, data-driven answer. Many entrepreneurs get excited by the potential of a second location without fully considering whether the new site will be profitable in the long run. The added costs of operating multiple locations, such as rent, utilities, staffing, and equipment, can easily eat into potential profits. If these expenses aren’t accounted for with a concrete ROI forecast, you may find yourself managing a second location that struggles to break even.

To avoid this trap, start by conducting a thorough financial forecast. This isn’t just about gauging the potential demand for your services in the new area, though that’s an important factor. You need to dive into every projected expense and revenue stream, ensuring that your new location won’t just bring in more patients or clients but will actually turn a profit after all additional costs are factored in.

Some key questions you should ask yourself include:

• Will demand in the new location justify the added costs?

   

• How much of your expenses will be duplicated in the new facility (staff, software, equipment)?

   

• How will operating two locations affect your cash flow and financial flexibility?

   

2. Would You Achieve a Higher ROI by Maximizing Your Current Location?

Before looking outward, you should also consider if your current facility can be optimized further to meet your business goals. It might be easier and more profitable to invest in the existing location than to start from scratch elsewhere.

Here are some areas to consider:

• Expanding your current space: Could you add more operatories, acquire adjacent office space, or increase capacity without moving to a second location?

   

• Maximizing marketing efforts: Instead of going to the patients, would it be more effective to bring the patients to you? Heavy investment in digital marketing, patient referral programs, or community outreach might yield higher returns without the hassle of managing two locations.

   

• Optimizing operations: Sometimes, streamlining your current workflows or expanding hours can increase production without taking on the overhead of a new facility.

   

Weighing Time, Money, and ROI

While demand might spark the initial conversation about a second location, a financial forecast should be the factor that either seals the deal or encourages you to pause. You must also consider the implications on your time and personal life. Managing multiple locations means more administrative tasks, travel, and divided attention. Can you maintain the same quality of service across both sites, or will one inevitably suffer?

Final Thoughts

There’s a reason why large practices often opt for adding more providers to one location rather than expanding geographically—it’s all about economies of scale. The more patients you can serve under one roof, the more you can spread out your costs and increase profitability. If you do decide to open a second location, the ideal scenario would involve adding a second provider who can handle the new patient demand, ensuring that your time and resources are used most efficiently.

Opening a second location can be a great strategy, but only if the math works in your favor. Answer the right questions before making your decision, and you’ll set yourself up for success.