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 OPENING UP A SECOND BRANCH OF YOUR BUSINESS IN ANOTHER CITY

 

 So you’ve already beaten the odds by starting and running a successful business – something that the majority of start-ups in Kenya will statistically never experience. Especially since 26 percent of sub-Saharan Africa SMEs have limited access to financing, as per a 2018 report by the European Investment Bank (EIB), and about half of formal SMEs worldwide don’t have access to formal credit, according to the World Bank.

​​​​​With this notable success under your entrepreneurial belt, it's only natural to begin feeling more confident in your leadership role and consider taking things to the next level by opening up a second location of the business in another city. This type of expansion, however, is often trickier than it seems, and taking the leap too quickly, or without ample forethought, could jeopardise the primary business' success.

 

With stakes this high, it is vital that business owners take the following considerations into account when setting up shop in another city:

 

1.     Can the business run without you?

The most important factor when considering a second business location is whether the business can function successfully without you. If your physical presence is critical to the success of the current business, the first thing you need to do to prepare for your next location, is find someone who you can train up to take this responsibility.

 

2.     Can the business model be duplicated?

Even if the business can run without you, there are other considerations that may be critically tied to its success. For example, is the primary business a success because of its unique location? This could either be because it's situated in a busy hub with lots of foot traffic, or a considerably quiet area with no nearby competition. Either way, it's important to determine what is needed to duplicate this success in another, different location.

 

3.     Is another physical location necessary now?

Keep a realistic view about the costs that were entailed with setting up the primary business and whether you have regained the capital required to do it all over again. If you have what is required, then go for it, but if you're doubtful, perhaps consider the online alternative as a stepping stone.

 

4.     Have you done your market research?

The market segment that you currently target might be significantly different to the market that you will be targeting in a different city, and it's important that you realise how your approach may need to change, and which parts of the business will remain the same.

 

5.     Are you ready to delegate?

Managing a business remotely is just not practically viable, so you'll need to be comfortable with delegating a lot of responsibility to someone else. Generally, business owners opt to head up the new location, which means putting someone else in charge of the primary location. This, however, requires finding the right person whom you trust will act in the best interest of the business – something that will prove critical to ongoing future success.

 

All considered, it is vital to base your decision of opening up a second location on sound business logic, not just the sheer desire for business expansion in order to achieve success.

 

-ENDS-

 

Sources:

https://www.brookings.edu/blog/africa-in-focus/2018/11/30/figures-of-the-week-financing-for-small-and-medium-sized-enterprises-in-sub-saharan-africa/

https://www.worldbank.org/en/topic/smefinance

 

About Business Partners Kenya:

Business Partners Kenya is a specialist risk finance company for formal small and medium enterprises (SMEs) in Kenya. The company actively supports entrepreneurial growth by providing financing, specialist sectoral knowledge and added-value services for viable small and medium businesses. Visit https://www.businesspartners.co.za/bpi for more information.


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