Finding the right location for your small business
Finding the right location for your small business is a matter of determining what is absolutely crucial and what can be safely compromised. There is a lot riding on this important decision, and with so many factors to consider, it can seem overwhelming.
Don’t be intimidated into making a haphazard choice, though. If you take the process step-by-step, and get expert help along the way, you can find the location that will give your business the best possible chance to succeed.
Set the Parameters
The first step is to honestly assess two basic components of your business plan:
- Who is your target customer?
- How do you want this business to fit into your life?
Your target customer will depend on the product or service you intend to sell. A vintage clothing store will attract a different kind of customer than a designer boutique, for example. Visit businesses that are similar to yours and take a good look at the customers. Are they older? Younger? More affluent? Less affluent? Do more women frequent the business than men, or vice versa? Ask the owners what they’ve learned about their customers – there may be surprises.
Opening a store-front location means you’ll need to be within a reasonable proximity to where your customers live. It’s important to ask yourself how much you’re willing to disrupt your own life in order to be close to your customers, however. A start-up business requires long hours on-site – so you need to ask how much time you’re willing to spend travelling to and from your home. This may seem like a loaded question, but part of the fun of starting a business is getting to make these kinds of decisions for yourself.
Collect the Necessary Data
After developing a clear, detailed picture of your customer and setting boundaries based on your personal needs, the next step is to locate the specific communities that are right for your business. Large corporations hire consultants to do this detective work, but there are a number of free resources that small business owners can use. ZoomProspector.com has a tool that can help you match your business to the right community, while City-Data.com provides detailed demographic profiles of thousands of cities and small towns. Help can also be found through the Small Business Administration and local economic development agencies.
Remember that it’s not just the customer you’ll need to consider here. The available labour force is also important – will you be able to attract the kinds of employees you’ll need? If your commuting radius includes more than one state, you’ll want to compare tax rates; these can vary a great deal and really affect your bottom line. Consulting maps and visiting likely communities can help you to assess transportation options. Will customers willing to travel to your store be able to do so conveniently? How close will you be to key distributors and suppliers? These fact-finding missions will also allow you to gauge the competition. Although it may seem counter-intuitive, it’s often a good idea to be as close as possible to competitors. They’re reaching for the same demographic you are, and a well-established competitor indicates plenty of target customers to go around. Plus, your business can profit from your competitor’s advertising efforts and the customer traffic they’ve generated.
Evaluate the Available Options
Now that you’ve come up with a list of promising communities for your business, it’s time to find out what is available. Using the right real estate agent – someone you can trust and who really knows the market – will be a big help, as will your own common sense and attention to detail. A solid accounting model will help to narrow your choices effectively – shopping malls can provide a visible profile and lots of foot traffic, but will the higher rent fit into your budget? When the time comes, a lawyer can advise you on negotiating the lease to make sure you’re getting the most favourable terms.
There are many factors to consider regarding each available location, and much will depend on the specific nature of your business.
Here are some important general questions to keep in mind:
- Is the area zoned for the type business you want to open?
- Will you be able to establish a good working relationship with the landlord?
- Is the neighbourhood safe?
- Is the facility itself in good condition? Will repair work be necessary?
- Does the facility have the right layout? If you need to expand, will you be able to?
- Will there be enough parking for your customers? Is public transportation nearby?
- Are there any local business organizations that will help with marketing?
A lot of hard work and careful consideration goes into finding the right location for your small business, and it may be tempting to devote your energy to more creative tasks like developing a logo or fine-tuning your product selection. Keep in mind, though, that none of those details will matter if your customers can’t find you or your rent is more than you can afford. Put in the time and the effort now to find the best location and give your business the strong start it deserves.