The Right Time for a Second Office Location

I was dating a girl 50 miles away. I lived with my parents in North Miami.

The girl lived with her parents in South Miami.

It was about 100 miles round-trip from my house to hers.

My father asked, “Aren't there any girls around here you can date?”

I suppose there were, but I just ignored the question and kept driving back and forth.

Thankfully, from my father's perspective, the relationship was short-lived.

This little story sheds some light on determining whether opening a second office makes sense.

It's time for a second office when you've dated all the girls in your neighborhood. When you've exhausted all possibilities, then you need a second location.

Let me elaborate:

Your current location serves a market of a certain size. You're able, with census data and court records, to determine the size of the market.

Let's say, hypothetically, that you serve families with combined incomes exceeding $125,000 per year. You can, with census data, determine how many of those families live in the geographic area surrounding your service area. You can also determine the percentage of families in your area that fall into your target income demographic.

You can then determine, using court records and census records, how many divorces there are in your area and, extrapolating from the previous calculation, how many of those divorces are for families in your target demographic.

When you're done with the math (and if you're not a math person, then hire a statistics or sociology Ph.D. candidate from the local university to do it for you—cheap), you'll know how many divorces there are in your geographic area that fall into the income category you service.

I happen to know that there are, in one county near my office, about 80 divorces per year for families with incomes over $125,000 per year. I also know that 80 divorces mean 160 opportunities for the hiring of an attorney (since every divorce has two parties).

So what?

I know that, when we're handling 30% of those opportunities (in this example county, it's 48 cases), then we're approaching the limit of our opportunity to grow that office. That's when it's time to open up a new market. We're maxed out in that county. Why 30%? Why not 50%?

Thirty percent is a number I see cited time and time again when experts talk about market share. It's tough to go beyond that number regardless of what you're selling, so we use it as a guideline. It's pretty reliable for us: we hit 30%, and it's hard to bump it up. Moving from 10% to 20% is relatively easy. Moving from 20% to 30% is also doable. Jumping up from 30% is tough. We've tried it repeatedly. It's expensive, and the needle barely moves.

My suggestion is that you start with one office and work with it until you reach 30% of your target clients. Once you've hit that point, then it's time for a second location. Same math for a third and a fourth location. Wait until you've got 30% before expanding.

Why not hit 7 or 8% and then go ahead and add a new spot in an executive suite? After all, it's cheap and easy to grab an office in a Regus and be up and running in a day.

The reason is that each new location is a hassle. It requires systems, procedures, and oversight, and it requires marketing in a new area. All that distracts from building the practice in the original market.

Staying focused on the original market is efficient, and you'll see exponential growth as a result of your marketing. Once you've captured 10%, you'll find everyone talking about you. That buzz, online and off, makes getting the next 10%, and the next 10%, easier and less expensive.

Starting over again before you achieved critical mass isn't nearly as effective and efficient, and it dilutes your effort.

Stick with the first market until you've exhausted it, and then move forward. Wait until you've really penetrated the market before you spread yourself thin.

There are plenty of girls much closer than 50 miles away, and there are plenty of clients as well. Stay close to home and do the work to build your presence and reputation. You might find that you never need to travel. If you can stay at home with a thriving and lucrative practice, you'll be happy, and so will my dad.


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