8
either a lease agreement or a profit sharing
agreement. They can leverage other space
outside the walls of the facility to grow their
programs or grow their revenues."
Filling your schedule and optimizing space
involves very little risk; however, the risk
factor increases slightly for satellite locations.
"You'll be bringing on more staff and dedicating
marketing dollars to get another location or
satellite location off the ground."
The reward, however, according to Sullivan,
could justify the risk. "You can certainly
generate more revenue than you could
otherwise on your campus or in your own
facility, in your own complex."
The third expansion strategy is the riskiest,
but it has the greatest long-term potential.
Physical expansion requires additional
investment–reinvesting your own capital
or taking on debt.
An expansion or a second location can
expand your market as well as your
programming. "You can think about it from
a standpoint of the radius of influence from
where you draw customers. With a new
location or with a satellite location, you can
start to attract people from that specific
market share or that market segment.
That is a very worthy reason to explore
expanding."
Alternatively, expansion can be used as a
defensive strategy to keep another facility
from moving into your market.
Sullivan says he cannot overstate the
importance of doing your homework.
"Understand what the market demand is, what
the right size and program offerings are, how
you're going to sell it, how you're going to fill
it, and that you can understand the return-
on-investment analysis well before you put a
shovel in the ground for expansion."
