Quick Insight
The hardest location is your second location. When you move from a single location to two or more locations, you introduce a lot of complexity to your company. Adding a new market is like adding a new location but the greater distance creates more complexity.
The hardest location is your second location. When you move from a single location to two or more locations, you introduce a lot of complexity to your company. Employees are no longer in one place, so communication is more complicated. You must think about courier service between locations. You’ll have new travel costs as staff drive between locations. These can be hard to anticipate and estimate.
Tax reporting will require you to track revenues and expenses by location. If you only had one location before and didn’t track by location, you will now need to code revenues and expenses by location. This creates a new layer or dimension in your financial reports. This is very useful for location profitability analysis, so you’re not just creating the accounting complexity for taxes.
Adding a new market is like adding a new location, but the greater distance creates more complexity. Your vendors in current markets may not serve the new market, so you’ll need to work with new vendors. Communication is more complex. Travel time between markets can be long.
One company I know was adding new two new markets and decided it was time to buy a company jet. Some expenses for new locations can be unique and expensive.
- Rob Stephens
Founder of CFO Perspective and the Finance and Strategy Toolkit (FAST)
Further Insight
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