Herb Cannon

10. Decide it is really necessary to open a branch office
Many firms are successfully operating nationally or internationally with only one office

9. How much are you willing to invest in your new office
Don't believe the rosy projections that show the office will be profitable in short order. Chances or the new office will be a money loser for at least the first year if not longer. Before you jump in, decide how much money and how much time you were willing to invest before the office turns a profit. Also remember that accrual basis profit does not equal positive cash flow.

8. Is the office as a warm start or a cold start?
My preference for opening a branch office is clearly a warm start. By a warm start, I mean a signed contract not the promise of work. I've seen many branch offices fail because the promised workflow never materialized. Following existing clients to a new location is the safest bet.

7. Keep your fixed costs to a minimum
When you keep your fixed costs for rent equipment leases etc. low it is a lot easier to generate positive cash flow.

Don't believe the rosy projections that show the office will be profitable in short order. -- Herb Cannon

6. Have incentives in place for the branch office manager
The branch office manager should have substantial financial incentives in place. For example a percentage of profits and a bonus for positive cash flow

5. Invest in the technology needed to share work between locations

4. Branch office overhead employees need to be at least 50% chargeable to projects.
By having your overhead employees chargeable to projects it greatly increases the chance of success.

3. Be willing to pay more for rent in return for the flexibility in breaking your lease early.
I'm always willing to trade a higher upfront expense in exchange for the ability to end my payment obligations.

2. Prepare your exit strategy in advance
When opening a branch office it is always a good idea to hope for the best a plan for the worst.

1. Don't throw good money after bad
Once the money is spent it is gone. Don't continue unprofitable branch office operations in an attempt to recoup your investment. Cut your losses and move on to more profitable endeavors.

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