What you should know about opening another business in a new state
Coordinating the logistics of opening another branch of your business in a new state comes with a large task list. But it’s a great problem to have. Whether you’ve identified a new market for your particular product or industry, or just have a gut feeling, moving to a new area could open up a lot of opportunities. But getting started in a new state definitely presents challenges and requires some due diligence and, potentially, some creative problem solving.
In this article we’ll cover:
- Professional licensure
- Local, state, and federal permits
- Physical location details
- Business infrastructure and technology systems
- Finding and managing employees
Once you have determined that a new location is a good fit for your business, the first task is to research the licensing requirements in the new state. Every state has different laws about business licensure, and they can also vary by profession. If your business requires an industry-specific professional license like those required for electricians, lawyers, therapists, etc., be sure to contact the professional organization’s governing agency and gather all necessary information about meeting the regulations required for licensure in the new state. Obtaining licensure in a new state might be quick and easy, or you could need additional time and resources to meet the requirements. It depends on the license.
Local, state, and federal permits
If you don’t need a professional license, you can start with a business permit and the requirements thereof. You can expect to need a combination of permits from local, state, and federal agencies. Most states will require a sales tax license (also referred to as a reseller’s license, vendor’s license, resale certificate, etc.). You should start by checking the state’s website to determine whether your industry is regulated in the state, by whom, and how to meet the requirements.
For example, if you want to open a restaurant with an outdoor bar and you sell merchandise, you may need a general business license, a tax registration, a health department permit, a liquor license, a reseller’s license, and a zoning and land-use permit.
Local Chamber of Commerce departments can be a wealth of resources for a budding business. In addition to filing for your local business license on the Chamber of Commerce website, you may also be able to file a Trade Name Registration and file it with the Department of Revenue online. You should also be able to access the Secretary of State’s website to file Articles of Incorporation, Limited Liability Company, or Limited Partnership.
If you plan to have employees in your new venture, you’ll also need to open the appropriate accounts for federal and state income tax payroll withholdings. And don’t forget about accounts for depositing your matching funds for FICA, unemployment, worker’s comp, and Medicare. Many states offer “starter kits” for small businesses with all of the necessary information spelled out step by step.
Physical location details
Will you be building, buying, or leasing a business space? The answers to those questions determine the steps you’ll have to take to accomplish your goals. Even if you plan to keep it simple and lease an existing space, you’ll need to have a lease contract with a building landlord. And if you need to make any changes to the building (interior or exterior), you may require local building permits and inspections from various local and state agencies.
Does your building offer appropriate parking for customers and employees? This may be covered in your lease, or you may need to satisfy the demands of the governing board such as the city council. What about building security? Will you have a security system installed? If so, does it require a permit or inspection? You’ll want to find out.
Matt Hamm, president and owner of Computer Repair Doctor, has extensive experience opening new locations across state lines. He knows that doing the exact same thing in two different states can look very different depending on local and state regulations.
“We’ve learned that every city/state/landlord has its own requirements for building permits as well. We’ve done store renovations where no permits were required, and others where we had to get inspectors for five different city departments to approve our work,” Hamm explains. Even though the projects were nearly identical in scope, they had very different regulations.
Business infrastructure and technology systems
There are marked advantages to using the same system and provider for your technology systems like the point of sale (POS), security systems, and internet and telephone carrier. It’s not always possible, but the fewer contracts, contacts, and statements you have to manage across locations, the better. Depending on the solutions you’re currently using, it may make more sense to change all locations in order to achieve continuity of service.
This is specifically true for payment processing. If your current provider doesn’t have the scale and scope to help you simplify operations across your locations, you may want to consider switching to a more robust provider. Knowing the ins and outs of the technology in use across locations can save you valuable time and energy when problems occur. You’ll likely have troubleshooting ideas and experience to leverage and a preferred customer representative to reach out to for support.
Finding and managing employees
Getting the right employees and keeping them on board is an ongoing process for most business owners and can be one of the most challenging aspects of operating a business. Doing so from afar is even more challenging.
One strategy is to send existing employees to the new market. It is particularly useful if you have an experienced store manager who can relocate either permanently or until the new business is established, and/or a new trustworthy manager can be found. This will help the new business implement the same business culture and practices that are already working in your existing business.
If that is not a feasible plan, it’s smart to advertise and train employees in the new location well in advance of your grand opening. Advertising job openings in local newspaper listings is a good idea, and you should consider opening an account with an online job and resume site.
Depending on your size and number of locations, it’s a good idea to maintain an operations employee who has the responsibility to oversee all the locations and ensure homogenous operations/policies/culture between sites. If your business can’t sustain a dedicated person for this role, it may end up being your responsibility as the business owner. It’s still a good idea to have a head manager at each location who can be responsible for important tasks that you may not be on hand to deal with yourself.
Hamm also recommends digital solutions to help oversee business operations remotely. “We have Nest Cameras in all our stores so that we can see/listen in remotely at any time to have eyes and ears. We also have a digital panel that maintains all of our repair jobs and has a full dashboard so we can track workflow. We can see every new job that comes in and track how many jobs are in the repair queue. We can see daily sales, and we can see details of how many customers pay cash, how much cash is in the register, and how much is in the safe. We can also digitally track all of our inventory and monitor inventory shrinkage. Without this oversight, it’d be impossible to monitor a store’s performance and impossible to manage it remotely,” Hamm explains.
Using data to monitor operations is a great idea for any business. It’s especially useful for business owners who can’t be physically present, as is the case when you own multiple business locations.
Marketing your new business
If you do marketing for your existing business, you likely have some good ideas for reaching a new market. One important difference is that you’ll want to market your new business well ahead of opening day. Let the community know you’re coming. Generate some excitement and anticipation before you announce an opening day event. Your website and social media properties are going to be crucial if you want to reach new customers. Here are some marketing tips for your new business:
- Social media campaigns – Use a geotargeted Facebook campaign to advertise and promote new store/grand opening event to those in the area. Offer incentives (coupons/specials/discounts) to people for sharing your message or website on social media.
- Enhance your website—Ensure site visitors know that a new location is opening. Consider a temporary banner on your website, or a “grand opening” themed home page image. Canva has a good solution that is user friendly.
- Grand opening events – Invite surrounding neighbors, use signage, and distribute flyers and printed door hangers to get the word out about your grand opening. It’s also a good idea to have external signage advertising the event and a special feature like a hot dog stand or prize drawing to attract additional attention.
- Direct mail campaigns—Send an announcement to people living in the area surrounding your new location. USPS Every Door Direct Mail solution makes this easy and allows businesses an affordable option to have their marketing materials delivered to select ZIP codes. Consider including a coupon or promotion in the mailing to draw even more interest.
Vantiv is a leader in the payment processing industry, ranked as the number one credit and debit transactions and merchant acquirer in the U.S. We’re experts in multi-location payments and even offer onboarding and employee training to help you get everything up and running smoothly. Contact us for more information about how we can make payments a snap across all your locations.