Second location not going so well?
“I opened a second location but things aren’t going well and I don’t know why.. My first location was SO successful”
Okay. Real talk: I wish I could say that most entrepreneurs who open a second location (or a second business) go on to have two million-dollar-money-makers..
But unfortunately, in my experience, that rarely happens.
What’s far more common is that Location 1 (or Business 1) finances the second location every single month for wayyyyyy too long (we’re talking years).. The excitement wears off, the numbers don’t improve, and the cash bleed from Location 2 chips away at the stability and profitability of Location 1 until there’s no cushion left.
At some point, owners are forced into impossible decisions: shut down Location 2 (sell off whatever assets possible and close the doors) and hope the reputational damage isn’t fatal…or get real and make the very tough calls needed to turn the second location into a profitable operation.
And let me be blunt: the longer this goes on, the more cash, energy, and credibility you burn through. That slow leak puts your once-thriving first location into crisis. And if Location 2 (or Business 2) can’t sustain itself, I’m sorry to say you don't have a business - you have a really expensive hobby.
So, let’s talk about the tough calls that I need you to make if you want the best chance of ensuring your second location (or second business) works out:
Set a timeline for profitability - and stick to it.
As in, decide today how long you’re willing to let Location 1 subsidize Location 2 and tell someone you trust to hold you accountable to this timeline.
e.g., “If Location 2 is not breaking even in 8 months, we’re pulling the plug.”
Do a brutally honest quarterly cash flow projection.
Not the rose-coloured-glasses version.. The actual one where you account for seasonality in revenue and look back to the previous months' bank / credit card statements for your rent, payroll, marketing, insurance, equipment and taxes owing balances.
Then get honest. Ask - is it even possible for me to make this second business profitable?
Get ruthless with KPIs.
Use industry benchmarks to decide what financial success looks like for Location 2: revenue per employee, profit margin, client acquisition costs, dollars towards debt per month, etc etc etc.
Make a plan to operationalize what your KPIs are telling you: aka if your revenue per employee is low, what’s your action plan to increase it?
And if those KPIs don’t move in the right direction over the coming months, you know what you have to do…
Friend: if your second location (or second business) came to mind while reading this, don’t ignore it. But here’s the good news: this doesn’t have to be your story.
I’ve also seen owners turn things around fast when they set a clear profitability timeline, run the real cash flow projections, and get ruthless with KPIs.
The path forward becomes crystal clear - whether that’s restructuring to get Location 2 in the black or making the tough calls to protect Location 1.
And when you do this work, the outcome is powerful:
Your first location stays strong, profitable, and protected
Either (1) your second location (or business) becomes a sustainable, cash-flow positive business that no longer threatens the existence of Location 1 OR (2) you exit the second location knowing you made the absolutely best decision for your future.
You don’t have to figure this out alone. Supporting clients with these types of big, juicy profit-first problems is exactly what we love to do inside our Management Consulting practice. Book a call and let us do the heavy lifting - the numbers, the projections, the staffing plan - so you can focus on actually running your business. http://bit.ly/4ncJHPe
Because let’s be honest - you’re busy, and you don’t need to be the one building cash flow projections, setting profitability timelines, or mapping out restructuring scenarios. That’s our job. We sit down with you, get clear on your unique situation, and then handle the heavy lifting so you can focus on running the business.
Aka you hand us the issue (“Location 2 is still in the red after 11 months of operations and I don’t know how to fix it”) and we get to work.
Here’s what we’ll do for you:
Build a realistic cash flow projection so you know exactly how long you can float Location 2 before it must stand on its own
Set a profitability timeline with clear milestones and KPIs - no more “wait and see” stuff
Take a close look at expenses (especially payroll) and design a staffing structure that matches revenue, not wishful thinking
Identify the operational issues holding back efficiency and build systems that actually work across two locations
Give you the decision-ready data so you can choose whether to double down on Location 2 or cut your losses - before the choice is made for you
You’ll get our team (me, a CPA) and Elanne (Operations + Change Lead) driving this alongside you - running the numbers, tightening the operations, and guiding the tough calls so you’re not doing it alone.
So if that second location came to mind immediately while reading this newsletter - let’s talk.
Book a call to discuss how we can help you make the right decisions so you can protect your first location’s profits and either get that second location in the black fast or exit on your own terms.
LINK TO BOOK: http://bit.ly/4ncJHPe