What you need to expand to a different city

Tip Sheet

For businesses ready for an expansion to a new city, state or country, the U.S. Small Business Administration suggests a few ways to fully prepare.

Update your marketing plan

Your business is expanding and so is your target market. Update your initial marketing plan based on the new market and its competition. Expanding to a new location might also require an updated sales plan. Don’t forget to add up the additional marketing and sales costs after the changes are made.

Review business finances

Make estimates on costs and revenue for the new location. Carefully examine your balance sheet to ensure you can cover all expansion costs and if you can’t, take steps toward gaining more funds.

Get a license

The legal requirements of an expansion start with registering your business with the necessary government departments and eventually, paying the required taxes. License, permit and zoning rules vary by state and by city, but following these regulations is crucial to legally operating a business. Visit the state’s website to confirm your business is licensed and up to code.

File for foreign qualification

This applies to businesses that are expanding beyond state lines. A foreign qualification notifies the new state that your business is operating there. A Certificate of Authority, a filing fee and, in many states, a Certificate of Good Standing from your company’s home state is required to receive foreign qualification.

Pay the taxes

If the business expanded to a new state, you will have to pay taxes in that state and in your business’ home state. Verify that the new location has a sales tax and if so, become familiar with any tax exemptions for the area.

Franchising?

The two primary routes to expand your business through franchising are buying into a franchise or establishing your own. Buying a franchise costs more upfront, but it is less risky than starting from zero. Some businesses are better suited for franchising than others. If your business produces superior products or services attractive to business owners, has teachable concepts and operations, and is easy to duplicate in new markets, it is a good candidate for franchising.

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