If you are an entrepreneur, you must have already heard it : what does matter the most for a business is the location ! Of course, your business plan has to be very convincing as well, but the location of your retail business plays a significant role in the success of the company. Before determining a location for the business, it’s good to define very accurately the target market. Then, you’ll be able to make the connection between location and demographic and psycho-graphic characteristics. Take your time to think about it all because location is a multifaceted factor in business planning !
The location hierarchy
What you really want by choosing the right location for your business is to maximize the likelihood of success. It is the matter of selecting the place that best serves the needs of your target. Don’t be afraid to look beyond the place you reside, because you could discover locations that may suit you better out of your comfort zone !
– The region : try to analyze the growth of the particular population that you’re targeting with your business. Obviously you want to make sure the economic situation is steady in this region : easy access to infrastructures, to labor pool, a good average income etc.
– The city : what you want to consider here is the local laws, the regulations and taxes, the prospective workforce, the wage rates as well, and the proximity to suppliers.
– The community : it’s important to understand the characteristics of the community, their attitudes, beliefs and values. Will your product and service fit into this ? Also, you want to be aware of what the competition is doing in this area.
There are a few questions that you must ask yourself to decide what the location of your business will be :
– Is the location easily accessible ?
– Does the area fit the business’s needs ?
– Is the image of the location appropriate regarding the values you want to stand for ?
– Where are located the competitors ?
– Is the assortment of neighboring businesses in your favor ?
– Is there a labor pool of qualified workers available around ?
– To think forward, is there room for growth ?
– Will the total costs for this location fit your budget ?
Build, buy, or lease ?
Also, after deciding about the best location for the business, the entrepreneur has to determine whether to build, buy, or lease a site for the business.
The option to build depends on the financial means of the entrepreneur : if the budget is unlimited, this can be great to build and design the perfect facility that would project a positive image to the customers. It can sound very luxury to do so but you can also see it as an investment that can lower operating costs and increase productivity.
If you can’t afford to build your dream retail shop, you can research if there is an appropriate building in the area you’re willing to set up.
In that configuration, you need to know exactly what the monthly payments would be.
Buying a place can be interesting if you have the feeling that the property may appreciate in value. From another point of view, the entrepreneur could also decide that flexibility and mobility are necessary to maximize the business, staying away from the real estate market. In that case, leasing a facility could be a good solution too. It requires less money first of all and it allows you to allocate your funds to something else. The only things you want to be cautious about is if the rent ends up increasing drastically, or the facility becomes too small or unapproriate at some point and you’re forced to move to a new location. That could result in a loss of costumers for example, so think about it all twice !