Choosing A Business Location
Having a quality product is only part of the equation for fledgling businesses. Starting a new business requires a lot of research, planning and surviving on a tight budget. In many cases, choosing a business location is one of the most important decisions you ever make as an owner. This is especially true for retail and food service, which rely heavily on their brick-and-mortar storefronts. The location you choose is your primary vehicle for advertising and branding.
- Assess the location and do your homework. First and foremost, you need to know if the location is zoned for your type of business. After that you’ll want to find out the kind of traffic the area attracts, which can be helped by using online location analysis tools. Analyze the demographics of people that live nearby or frequent the area, taking into account age, income, lifestyles, etc. Find out traffic movement patterns and the most popular modes of transportation (walking, driving, public transportation). How accessible is it for your target customers (as well as qualified employees)? Is it a good area for walking? If you’re in a city where public transportation is popular, is there service to that area? If your customers will be driving, will parking limitations be a deterrent? Population density will also need to be calculated to see if you can meet your sales goals.
- Choose good neighbors. What else draws people to the area? This could include businesses, parks, hospitals, traffic hubs, etc. Obviously you want to choose neighbors that would also patronize your business.
- Cozy up to your competition. Despite what you may think, it can be a great advantage to be near competitors with similar businesses. This shows confidence and drives up competition and customer traffic. For example, clothing stores gain a big advantage when located near each other because of the tendency of shoppers to spend several hours browsing multiple stores. However, you must choose wisely to ensure the location will encourage crossover customers. A small business might not want to set up next to a popular chain store selling the same product. Chances are that customers will remain loyal to the store they already know and might not be willing to take the dive with a new business with higher prices.
- Assess the physical building. You need to be practical about the availability of proper utilities (lighting, heating and cooling, plumbing, ventilation) and space (retail, office, storage or workroom space). Will you need public restrooms? When looking at the layout, consider how customers will inhabit the space. Will it be accessible for deliveries? Is there room to expand? If you have to expand and your business is located in a crowded neighborhood, your business might need relocate entirely.
- Get to know your landlord. Chances are, you won’t have the funds to buy your location. Extensive interviews with the landlord and reviews of the lease terms are very necessary because it’s a big commitment. The cost of moving could hurt your bottom-line and seriously disrupt the your flow of customers.
- Get the right help. Consult with your real estate professional to get to know your area. Staying in touch with current trends in the area is essential to their job, which can be a great help when researching your customer base, their habits, where they go, product preferences, etc. An attorney can be instrumental to helping you understand the terms and negotiate your lease. You also might want to enlist the help of a business plan coach/consultant or contact your local small business development center.
- Balance the costs. Choosing an ideal location that comes with a heavy rent cost might not be worth it. If you will need extra money for renovations or advertising for a remote location, it will need to be balanced in the budget. If the neighborhood has a high crime rate, the cost of insurance could be prohibitive. Underestimating costs is one of the most common mistakes new business owners make.
Navigating a start-up business can be extremely difficult because it requires a lot of daunting decisions and planning for the unknown. An important part of fortifying your business will be purchasing the proper insurance. Please contact H&K Insurance for help understanding what coverage your growing business needs to be protected.
