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Starting a Business

Steps To Finding A Perfect Business Location


In the brick-and-mortar business world, the most important factors for your success are: location, location, location! This really can’t be emphasized enough when it comes to retail shops, restaurants and consumer services. There are several steps you’ll need to take in order to find the perfect place to open up shop.

 

Step 1: Consider Demographics.

You’ll want to take some time to look at the age, income and household demographics of an area you’re considering. You’ll want to know what retailers, industries, schools, hospitals, office parks or other entities are attracting lots of traffic to the area. Take a look at the highway access and foot traffic in the neighborhood. It’s much more difficult to entice people to come to your middle-of-nowhere location than it is to tap passersby.  

 

Step 2: Consider Competition.

You may think it’d be advantageous to be as far from competitors as possible, but experts agree that it’s better to “keep your friends close and your enemies closer.” You want to be as close to your competitor as possible to pick up their foot traffic and take advantage of their marketing efforts. If you’re confident in your products and services, then competition breeds good business. Consider pedestrian malls full of clothing retailers and restaurants. The more stores, the more customers flock to the area, thereby sharing all the wealth.

 

Step 3: Consider Accessibility.

If customers need to come to your business, they’re going to need access that is comfortable. If you’re in the suburbs, you’ll need plenty of parking (including handicap parking) and close proximity to highways or major streets. If you’re in an urban area, you’ll want to be conveniently located near a mass transit stop or hub. No matter where you are, you want people to see your building and be able to get there.

 

Step 4: Consider Opinions.

Are you looking at a trendy, hip area or a place no one wants to go after dark? Are you moving into a storefront that changes hands every couple years or a place where you could really grow your business? Local real estate professionals can give you a second opinion on the area you’ve researched from an insider’s perspective. Free help can often be sought by neighboring retailers, town councils, city development offices and local planning agencies.

 

Step 5: Consider Negotiating.

Many business owners scouting for locations wonder if they should pay more for advertising or more on rent at a busy location. According to Retail Business Consultant Robert Kramer, retailers typically spend 25 percent of their gross margin on location, advertising and sales force. He explains, "Let's say it costs 10% for your sales commissions or hourly salaries. That means you have 15% to divide between rent and advertising -- so you can't pay a high rent and also buy expensive advertising." He also recommends thinking in terms of percentages to decide whether the higher cost of a busier location will pay off. Even when you find a good spot, there is much work to be done. Negotiating a fair lease can be challenging, but a good attorney will look at the terms and property condition to make sure you’re getting a fair shake.

 

 

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Related Articles:
BusinessWeek: Finding The Perfect Location
Entrepreneur: How To Find The Best Location
BusinessWeek: Placing The Value of a Good Location


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