When you've got a thriving business, one of the toughest decisions to make is when to open that second location. Do you open one close by? Do you try to break into a new market? When is the right time to expand, and how much preparation does it take?
According to the Smdailall Business Association, demand for small business loans, the employment size of startups and proprietors' income are all on the rise in 2013. These are all promising signs for those looking to start or expand their business. But before you begin scaling, there are certain tips you should keep in mind. We chatted with six different entrepreneurs who have all faced different complications when expanding their businesses — so read on to learn from their experiences, and how you can set your company up for success.
CoFoundersLab founder Shahab Kaviani knows all about expansion — with services in 40 markets, including some cities internationally, he has learned many valuable lessons along the way.
"If you're going to expand, think about expanding in concentric circles. For example, we expanded from Maryland to DC, to Philly and then New York. Marketing is expensive, and the best marketing is word of mouth. If you can get people talking about you, they will talk with people in nearby markets; so you should take the marketing synergies into account when expanding."
Image: iStockphoto, Tsuji
It's easy to feel pressure to expand your business when you see others around you multiplying like crazy. But make sure that you're truly ready to take on another location before you dive in. Holley Murchison, founder of Hall Pass Tour, a nationwide series of after-school concerts designed to motivate underserved students, knows all about managing expectations and realistic expansion strategies.
"Don't worry about how fast other companies are growing. We all have different goals, ideas and resources to execute them. Good business isn't a race," she says. "It's the thoughtful production of a high quality product or service."
As the excitement of expansion ramps up, it's easily to let some details slip — but you should never forget that your customers are your business, and you need to keep delivering your product or service. Naama Bloom, founder of Hello Flo told us about the importance of keeping your customers happy, and maintaining transparency in the relationship.
"Your customers are your business. No matter what happens, they need to be prioritized. If you can't fulfill on their expectations, you need to be prepared to communicate with them honestly and with authenticity. You're building what you hope will be a lasting relationship with them. So treat them like you'd wish to be treated. Sometimes that means giving bad news. But if you communicate in a timely and considerate manner they'll stick through it with you."
Once you've started scaling, it's important to simultaneously build your brand and your business. You want to continue building customer loyalty and affinity as you expand to new locations or markets. Kara Goldin, CEO of Hint filled us in on the importance of maintaining a balance while you expand.
"Make sure that you grow your business smartly. Start organically. Try out different strategies and see what sticks with your consumers and sales team. Then double down when you see what works. Make sure that you are balancing push and pull; building the brand and building the business. Too many brands go too big in distribution initially without building brand affinity. They end up collapsing. Some brands build a ton of affinity but never expand. Balance both."
Understand why you're expanding, and make sure it makes sense. "Are you ready to expand to capitalize on relevant, related market opportunities, or are you expanding to fix revenue problems related to a core business that's not working as you intended?" asks Amanda Steinberg, founder of financial media company DailyWorth. "Too often, CEOs expand to generate revenues they expected from their core business. But watch out — you don't want to expand when your core business isn't working."

Dos Toros is a bustling taqueria in New York City that has mastered the art of scaling their business, and also took into account expanding within their existing market. Brothers Leo and Oliver Kremer opened their first location in 2009, and after a raving New York Times review, they were an overnight success. The brothers now boast four locations in Brooklyn and Manhattan, and they show no signs of slowing down. When asked about the difficulty of knowing when to expand, the brothers had some keen insight.
"The key to growth is as you grow, spend more and more time thinking about exactly what your core values are, and why you opened that first place — and make sure that's being infused in each of your new stores," said Oliver. It's easy for fast growth to ruin consistency , so make sure you are vigilant in maintaining the standards you started with. Watch the Kremers in the video above, embedded from American Express OPEN Forum, to see them discuss some of the lessons they learned while expanding their business.
For more key lessons from entrepreneurs, visit OPEN Forum, and join the conversation on Twitter with the hashtag #sharingadvice.
Image courtesy of iStockphoto, Remedios