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Business was booming. You were working 40+ hours per week and booked out for four weeks.  You figured it was a great time to open a second office location.  You anticipated that the second location would go through the same growing pains as the first but at an accelerated rate.  After all, you’d already made every mistake possible, and you knew what should be avoided or done differently.  It would only be a matter of time before the second location was doing as well as the first.

Unfortunately, that is not what happened, and you have no idea why.

Here are the top 5 reasons why a 2nd location underperforms

1. Selecting a poor choice for a second location

McDonald’s does not just randomly select where a McDonald’s location.  An enormous amount of research using demographic data details the precise location for a franchise.  For example, is your 2nd location too close to your first location, resulting in both locations sharing potential revenue rather than allowing the second location to expand into a new market?

2. An employee is not an owner

You can’t be in 2 places at once.  It is rare to find an employee with the same drive and dedication as an owner. Typically an employee’s closure ratio is lower than an owner’s closure ratio. That decline will require an increase in the advertising and marketing budget to provide additional customers since a greater percentage of potential hearing aid customers will not be sold.

3. Restricted cash flow

When you started your business, you could handle fluctuations in cash flow.  Leaner weeks might require you to pay yourself a bit less, but you knew you could make up the difference when business was stronger.  The second location will have a staff.  Employees expect payment on a regular basis.  If you haven’t already, establish a ready line of equity.

4. Loss of the referral network

You located your 2ndoffice far enough from your first office so that there was no overlap in the market.  Unfortunately, that meant that your current referral source viewed the 2ndlocation as too far to send their patients. You’ll now need to build a new referral network from the ground up.

5. Underestimated the local competition

Inadequate assessment of the competition in a secondary market is often the primary reason that a second location will fail.  Perhaps your primary location was located on the outskirts of a more populated area. A 20-minute drive in any direction can change the demographics of a neighborhood dramatically.  An audiology practice is no longer competing against other small practice owners, ENT’s and hospitals.  Your brick and mortar competition has expanded to box stores, franchises within a national store, local pharmacies and national chain stores.

What to do next

  • Step One Don’t do anything drastic.
  • Step Two Audit the second location.
  • Step Three Establish practice goals for the second location
  • Step Four Assess the viability of achieving the goals.

If the goals are achievable, a plan can be created and implemented to reach the goals that you’ve established.  If the goals are unreachable options should be discussed.  Change the location or change the staff or both. Worst case, the location can be shuttered.

A second location can be successful, but it requires extensive planning.  You will need to understand the demographics of a new market and that you can’t be in two places at once.  In all likelihood, you’re also underutilizing an essential management tool, your office software.  Whatever system you’re currently using to maintain your patient database should be capable of helping you to monitor the goals you have set for the practice including closure ratio, number of new appointments needed, number of recalls needed, return rate, average selling price, and so on.

If you are considering adding a second location or already have a second location that is underperforming call us, being the CEO of a small office with one additional employee is manageable.  Being the CEO of a company with multiple locations that may require different marketing plans and oversight of 2 or 3 additional employees is much more challenging.  We can provide the guidance you’ll need before, during and after you decide it’s time for your business to expand.