Running the business · 3 min read · Published
What we usually see when a company opens its second location
By Chris Greco, Founder and President.
When a company opens its second location, overhead doubles before revenue does, and the P&L cannot say which location is carrying the other. The company is profitable in total and losing money in one place.
Rent, payroll and utilities for the new location start on day one. Revenue ramps for six to eighteen months. Without location-level reporting, the mature store's margin hides the new store's losses until the cash runs short.
Set up location-level P&Ls before the lease is signed. Forecast the ramp on the 13 weeks and on the year. Decide in advance what month two has to look like to keep going, and what happens if it does not.
Where this applies
Chris Greco
Founder and President, CFO Anywhere. CFO for owner-led companies since 2002. Executive MBA, Gies College of Business, University of Illinois.
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