CHAPTER 7-DETERMINING THE RIGHT LOCATION

Crucial Factors to Consider When Choosing Your Business

Location
It is important to choose the right location to start your business. These
tips will help you determine how to choose a location that will make the
most of your business, and keep it successful.
Choosing the right location is a major factor in building
your business.

The location of your company can make or break your

success, so it is important to find the right place to start.

It takes a significant amount of time, effort, and planning

to transform a small-town business into a booming
company, but a good location will give you a great head
start.

The location of your company can make or break your

success, so it is important to find the right place to start.

It takes a significant amount of time, effort, and planning

to transform a small-town business into a booming
company, but a good location will give you a great head
start.

These tips on finding a good business location will help

determine the right place for you.

Recognize the Source of Demand for Your Business

It is essential to find out the audience your products
appeal to when determining your business location.
In order to have a general idea of who your target
consumers are, pay attention to the types of groups that
are attracted to your business.

When running a fast-food business, for example, you may

find that most of your consumers are families and college
students. If this is the case, choose locations in areas
where these consumers are highly populated, such as
suburbs (for the families) and campuses (for the college
students.)

Steer Clear of the Competition

Avoid locations where you may be caught in competition
(if you own an ice cream shop, don't set up your business
right next to Friendly's.) Your business is not large enough
to compete yet - you need to work on growing it before
thinking about being competitive.

Instead, set up your ice cream shop in a highly populated

place where it could be useful to consumers. For example,
you might set up your ice cream next to a steak house.
After a good meal at the restaurant, people will want to
come to your business for dessert!

Talk to Your Neighbors

Think about all of the factors that drive your business
before you choose the location. Talk to local grocery stores
and retailers near your potential location, and figure out
what areas their consumers come from.

If the number of consumers at these local stores is not as

many as you hope to receive for your business, you may
want to consider moving to another location.
Stay Close to Big Brands
Choose a location where you can have big brands as your
neighbors. These brands are successful because they
made a wise choice in choosing their location, so you can
learn a lot from them.

They may have paid expensive location selection

consultants to find a business location, but you'll get the
benefits of that effort for free.

Every business owner must figure out how location will (or

won't) contribute to the success of the business -- and choose a
spot accordingly. Though there are many issues to consider
when you're looking for space to house your business, make sure
you ask yourself these four important questions:

● Is location important for the success of your business?

● What type of location is best for your business?
● How much rent can you afford?
● Is your proposed location appropriate for what you plan to
do there?

Is Location Important for the Success of Your Business?

For some businesses, the classic advice "location, location,

location" is right on the mark -- location can mean the difference
between feast or famine. But for other enterprises, location may
be much less important than finding affordable rental space. In
fact, location is almost irrelevant for some businesses: service
businesses that do all their work at their customers' locations
(such as roofers and plumbers) and businesses that have little
contact with the public (such as mail-order companies, Internet-
based businesses, and wholesalers). If these types of companies
can pass on rent savings to their customers and their profit
margin, picking a low-cost spot in an out-of-the-way area might
be an advantage.

What Type of Location Is Best for Your Business?

The key to picking a profitable location is determining the factors

that will increase customer volume for your business. Ask
yourself questions such as:

● Will customers come on foot?

● Will customers drive and, if so, where will they park?
● Will more customers come if you locate near other similar
businesses?
● Will the reputation of the neighborhood or even of a
particular building help draw customers?
Keep in mind that different types of businesses attract customers
in different ways. One key distinction is foot traffic versus
automobile traffic. For example, if you're opening an urban coffee
shop, you may assume your customer volume will be highest if
there's lots of pedestrian traffic nearby during the hours you plan
to be open. On the other hand, for an auto repair shop, the
choicest locale is a well-traveled street where the shop will be
seen by many drivers who can easily pull into the lot.
Also consider whether it would benefit your business to be
around similar businesses that are already drawing the type of
customers that you want. A women's clothing store, for example,
would no doubt profit from being near other clothing shops,
since many people shopping for clothes tend to spend at least a
few hours in a particular area.

Ultimately, the perfect location for any business is a very

individual matter. Spend some time figuring out the habits of the
customers you want to attract, and then choose a location that
fits.

How Much Rent Can You Afford?

Chances are that you'll rent rather than buy a space for your
business. Most small start-ups don't have the funds to purchase
real estate, and it's usually not a good idea to saddle your
business with high interest payments in any case.

One obvious and important concern when looking for commercial

space to lease is finding a place that you can afford. When you
projected your financials (as part of your business plan), you
should have estimated how much rent your business would be
financially able to pay each month, given its projected revenues
and its other expenses.

How to Determine the Average Rent in Your Area

Brokers and agents are great sources of information on rental

costs in various neighborhoods. They'll generally give you an
average figure for the cost of commercial space per square foot
per year in a given area. Once you have this figure, you can
compare it to the costs of other spaces you're considering.

If you haven't done so already, research the average rental costs

in your area to make sure the amount you budgeted for rent
makes sense, given the cost of commercial space in your area
and how important location is for your business. For example, if
you determined that location is very important to your business,
make sure your budget will allow you to rent good space given
the average cost of space in your area. If not, you may have to
rework your business plan.

Is Your Proposed Location Appropriate for What You Plan to

Do There?

When choosing business space, the biggest consideration is

sometimes not where it is but what it is. The building facilities
need to be appropriate for (or adaptable to) your business. For
example, if you're planning to open a coffeehouse, you need a
place with at least minimal kitchen facilities. Unless you can
convince the landlord to put in the needed equipment --
plumbing, electrical work, and the rest -- it's highly unlikely that
laying out the cash to do it yourself will be worth it. In short, if a
building lacks something major that is essential to your business
operation, you should probably look for something else.

Communications Wiring

Another consideration that's important for many businesses

these days is having modern phone and other data lines
available to the business. When you're considering a specific
space, ask the agent or the landlord for information about
communications wiring, such as whether the space is connected
to a fiber optic network or is wired for DSL or a T1 line (high-
volume Internet connections). Also, find out to whom the
landlord has sold the rights to the risers (wire conduits) in the
building. A commercial landlord cannot enter into exclusive
contracts with a single telecommunications provider such as MCI
or AT&T. However, to bring in another provider of your choosing
could be expensive.

Electricity and Air Conditioning

Besides high-tech communications wiring, don't overlook plain-

old electrical power as an important consideration in choosing a
business space. Make sure that any space you're looking at has
enough power for your needs, both in terms of the number of
outlets in your space and the capacity of the circuits. If you'll be
running machinery or other electricity-hungry equipment, find out
from the landlord how much juice the circuits can handle and
whether a generator is available during power outages. Also, if
you'll keep sensitive computer equipment at your office, ask the
landlord how many hours of air conditioning are included in the
terms of your lease, and negotiate longer hours if necessary.

Parking

Adequate parking is another common need for many businesses.

If a significant percentage of your customers will come by car
and there isn't enough parking at your chosen spot, it's probably
best to look elsewhere. In fact, the city planning or zoning board
might not allow you to operate in a space that doesn't have
adequate parking.

Zoning Rules

Finally, the location that you choose needs to be legally

acceptable for whatever you plan to do there. A certain spot may
be good for business, but if it's not zoned for what you plan to
do, you're asking for trouble.

You should never sign a lease without being sure you'll be

permitted to operate your business in that space. Your city
planning or zoning board determines what activities are
permissible in a given location. If your zoning board has a
problem with any of your business activities, and it's not willing
to work out a way to accommodate your business, you may have
to find another space.

Choosing a business location is one of the most important

aspects of starting a small business. Especially if you're running a
small retail or restaurant operation, finding the right location
means everything. It can dictate foot traffic, business atmosphere
and long-term success for your small business.
Finding the right location means understanding the right qualities
to look for in a potential space. Analyzing your area, reading
about potential customer demographics, and considering where
competitors are located are all important aspects to finding and
choosing the right location.
It's also important to consider your needs as a business owner
before deciding on a location. If you're not running a retail or
restaurant-type business and therefore won't need to rely on foot
traffic, it's important to consider access for other business needs.
This can mean supply deliveries, client meetings, and warehouse
or major storage space for your business. By analyzing your
options and defining your needs, you're well on your way to
finding the right business space for you.

Why your business's location is important

If you run a business that is outward-facing in any way, which

means dealing with clients or customers, you need to thoroughly
consider how your location will contribute to your business.

Your location should be inviting and refined, depending on the

type of business you're running. It should create a positive
association for clients and customers so they think highly of your
business.

There are some important steps to take when considering any

new business location. There is more to identifying the right
location than just finding an available structure for your business
to occupy. How you go about choosing your business's location
will define your organization.

Consider these steps first before examining other factors:

● Do your research. Researching the right business location

means understanding local zoning laws, plotting competitors'
locations, and maintaining a keen awareness of what
properties are available (or may become available soon).
You should also research your target market and other
benefits or restrictions from local or state entities. 

● Consider taxes. Consider the state and local tax

implications of your prospective location. Depending on your
business type and location, it may be more lucrative to seek
 out a location outside a certain zone or municipality to get a
tax benefit. 
● Ask about government incentives. There are incentives
on both a federal and state level for small businesses in
certain industries. By choosing the right location, you may
qualify for certain incentives that could apply to your
business.
● Ask about government incentives. There are incentives
on both a federal and state level for small businesses in
certain industries. By choosing the right location, you may
qualify for certain incentives that could apply to your
business.

● Factors to consider as you look for a business location

● By analyzing your business, what's available to you in your
general area, and what types of features you find important,
you can find the right location for your business. Of course,
oftentimes the most important factor is affordability. It's
critical to assess your options and work with a local bank
while you're trying to find the right location for your business.
● Beyond affordability and loan terms, however, there are
other factors and questions to assess in finding the right
business location.
● How important is location to your business?
● This may seem like an obvious question, but consider how
location will impact your business. A retail store's location
varies widely compared to a central office's headquarters.
Consider your customers and clients, as well as your
employees, when deciding the impact location can have on
your business. You want to choose a location that makes the
most sense for everyone.
● Will your business receive ongoing shipments of
goods?
● If you're working in the industrial sector, or you're running a
business that receives large supplies of goods, pick a
location with warehouse storage space and easy delivery
options for clients and customers. A business that
specializes in shipping and holding goods needs certain
structural amenities, like loading docks.
● Will you conduct meetings at your business site?
● Again, consider how your clients and customers will see your
location. If you meet with customers and clients regularly,
you need an accessible location. It also needs to have
reception areas, waiting rooms and conference rooms so
you can meet with multiple clients and customers throughout
the day.
● Will you, your customers or employees need dedicated
parking?
● Consider the size of your company when choosing a
business location. Your employees will likely have to drive to
your location. If that's the case, is parking available?
Similarly, if you're meeting regularly with clients and
customers, you need convenient parking options for them.
Sometimes the most important aspect of a business location
are the parking options that exist around it.
● Who will see and interact with your location?
● Consider who will come to your business on a regular basis.
You need to tailor a location that meets both their needs and
your needs as a business owner.

● How to choose the right business location

● Besides the factors listed above, when it comes time to
choose where your business will be based, there are some
important steps to take to make the right decision.
● You want to analyze all of your options and consider the
perspectives of as many people associated with your
business as possible. Choosing the right business location
means doing as much research as possible.
● Consider these factors, too, as you hunt for the best location
for your business:

● Demographics: Consider your target audience and where

they're located. Research different demographic aspects
about your local area, particularly around where your desired
location is. If you're a business that relies on foot traffic, you
want to position your business as close to where your target
audience is clustered as possible. By knowing this
information, you can also build more facts about disposable
income in your area and how high demand for your product
or service could be. 

● Competition: Consider where your competitors are. You

don't want to move in directly next door or across the street
from a business rival. By knowing where your competitors
are, you can find a business location that allows you to
establish your own base. It can also allow you to better
gauge demand for your product or service compared to other
companies. 

● Building structure: Of course, finding the right business

location is not just about the property, but about
what's on the property. Find a location with a building both
you and your employees like. Consider its perspective from
a potential client or customer. You need a location with a
structure that makes the most sense for your business and
your clients or customers. 
 ● Zoning: Research zoning maps for your local town or city.
This allows you to gauge what business activities are
allowed, according to your local area. If you're a retail store
or restaurant, considering proximity to commercial zoning
can be essential. Nearby residential zoning means you could
have direct access to foot traffic in your area. 
● Other nearby businesses: Similar to considering where
your competition is based, consider what other businesses
are nearby your potential location. This is important,
because those businesses could attract customers that are
in your target demographic. Make a balanced, conscious
decision when considering your neighbors. You want to
collaborate with other businesses to create a prosperous
economic environment. You shouldn't have to settle for
adversarial business relationships. 
● Foot traffic: good foot traffic can be the crown jewel for
certain small businesses. When searching for the right
location, if it's in a highly foot-trafficked area, visit the
location several times throughout the day so you can see
how crowds ebb and flow. Do your best to gauge how your
business could benefit from the level of foot traffic in the
designated area of the potential location. 

Location, location, location. It is all about the location. You may

have the most exceptional product/service on earth, but if you are
located in the middle of nowhere, you won’t make much money.
This is why you must conduct a business location analysis. To help
you, we have carefully selected the most crucial factors to
consider, when choosing a business location for your business.
Proximity to the Market
The closer you are to your customers, the greater the chance that
they will buy from you again. Who is your customer and where are
they located? Are the other manufacturing companies? or are they
an end consumer? You must have answers to these questions,
before choosing a business location!
Rent Price
What’s your rent budget? Making pastries always requires an
excellent city location. However, a more central location means
higher rent. Do you have the resources for expensive
rent? Calculate all expenses from the start, or else you are doomed.
Analyze the Demographics
Demographics are without a doubt, one of the most significant
factors to consider when choosing a business location. It’s
important to be near your target customer group. For example, you
don’t want to sell gaming consoles in an area populated with older
generations. The sells will be higher in an area dense with your
target market.
Infrastructure and Accessibility
Good infrastructure is beneficial to any kind of business. Power and
water supply, good road connections are just a few factors to
consider when choosing your business location.
Lack of enough parking spaces for your employees, or accessibility
for people with disabilities, can be an issue in some locations. A
good location for business, is usually not in busy city area
exclusions apply. Nobody wants their employees to spend hours
getting to work. Therefore, choose a location that won’t cause any
problems with daily routines and tasks.
Distribution Network
If your business is doing manufacturing, you’ll require a good
location for a business start-up. Nobody likes to spend more money
on transportation than they have to. Think twice before choosing a
business location, good proximity to suppliers is key in minimizing
logistics costs.
Enterprise League platform is a super useful tool to find a pool of
suppliers near your location. It’s simple to use. Just set up your
company profile within a minute and get results of the suppliers
around you with a single search.

Competition, to Be Closer or Not to Be?

This business location factor is a double-edged sword. It creates
both an advantage and a disadvantage. For instance, if the location
has a lot of surplus customers because of your competitors, you
might attract them as well– an extra benefit for your business.
However, it can also go in the opposite direction – if both sides sell
the same product, one team will end up losing.
Remote Business Location
Remote location is another flexible solution that can help any
business. Having your business on a B2B platform gives you the
benefit to access and work with any location worldwide. You will no
longer have location as a barrier and you can easily collaborate with
companies from every location and all sectors. Start using the B2B
platform, share business tenders, receive proposals and share
deals.
Conclusion
The closer the products are to your customers, the higher your
market value. From planning future expansions, relocating to
newer offices, or opening new shops in the right location can mean
many things for your business.