How to Establish a Branch Office
The traditional definition of a branch office is when a parent company decides to expand their business to another, separate location. This location can be in the same state, a separate state or in a foreign country. While branch offices traditionally referred to retail locations of banks, lending institutions or real estate companies, today many people in the business world can refer to the term of "branch office" for almost any industry. The degree of difficulty of establishing a branch office truly depends upon the new location of the office, the industry that you are in and the paperwork and special requirements you must fulfill (if any) with the government that you are located within.
Obviously if you would like to open up a branch office as a financial institution, you will require legal assistance and a strong understanding of the laws and requirements that you regulate your business. However, if you are in an industry that is not regulated and you would like to expand your sole proprietorship, LLC or corporation by opening a branch office, here are a few things that you should consider:
Choose a Location
For most businesses, choosing a location in many ways is the most important decision you can make for establishing a branch office. Ask yourself and your organization why a branch office is needed and which location can suit you or your organization the best. For instance, if you are looking for new customers, you might want to choose a location with a focus on demographics. If you are looking to open up a branch office due to labor reasons, you will probably look for areas of the country or world that can satisfy your labor needs. For instance, many technical companies have a branch office in India where technical labor is plentiful and relatively affordable compared to San Francisco.
Once your business has decided on the reasons that it is choosing to expand to a new branch office and has decided on which general location for the branch office to be planted, then the search for either leasing or buying office space, retail space, warehouse space or manufacturing space can take place.
Leasing or buying commercial property sounds much easier than it sounds in many situations. Make sure you give yourself enough of a time table to find a location that suits your business's needs. Make sure that the site fits all your requirements including cost (which is discussed below) and that there are no conflicts of interest. In addition, choose a date that works for you or your business to move in or to develop the property for your use.
Estimate the Costs of Establishing a Branch Office
It is extremely important that costs in establishing a branch office must be calculated before, during and after the actual branch office is being established. In the planning phase it is important to consider the costs of operating a proposed branch office, how much a possible lease might cost, the cost to decorate or improve the branch office property, equipment costs, new labor costs, new inventory costs, moving fees, legal assistance, etc.
For a small entrepreneur looking to establish a branch office it can take some time to figure out all the costs involved and come up with a budget. For large corporations that are looking to open up a large manufacturing plant, it can be extremely complicated and take a great deal of time and resources to plan.
Costs of establishing a branch office usually change throughout the three phases of establishing a branch office. For instance, in the planning state, you might have budgeted X amount for property and labor costs, once you choose your location and sign a lease, you will have to update your budget and once your new branch office is established you will usually have to update your budget once again to reflect the changing costs and add on other costs that weren't expected.
Opening a New Branch Office
Once your branch office is established, you will have to make sure with your local, state, foreign government, etc that all legal documents are in place, all permits (if applicable) are completed and that any other paperwork is done. Just like opening up your business's first office required lots of time and effort, so does a branch office. For many entrepreneurs that grow their business and establish a branch office it can be more complex and involved than first thought. For instance, new procedures must be put into place for communication with the main office and data and communication systems must be in place so that each office can easily communicate with one another effectively. Each branch office might also have to operate under different rules of law which can add many hurdles to your current policies and procedures and the labor force may even speak different language or have a different culture which may make the new branch office operate completely differently than the parent office.
While establishing a branch office does take lots of time, resources and planning, for businesses that are looking to expand into new markets, establishing a branch office is well worth the effort.