You may find your business could be doing better if you choose the correct location. This could be due to low footfall, high competition, or zoning laws that limit your hours of operation. This technicality can hurt your business even if everything else is perfect.
When you factor in lost deposits, the cost of professional movers, and other disruptions, moving to a new location can have a high switching cost. It’s crucial to choose the right place from the start. This increases your chances of making sales and reduces the likelihood of moving later (unless you decide to expand).
The step-by-step guide to the business location
Many factors influence this critical decision, some specific to a particular niche, industry, or geography. There is no single business location strategy to find the ideal address.
Here are some important considerations when selecting a location to start a business.
Your operation’s size and type
Before committing to long-term leasing, consider short-term rentals or pop-up shop locations if you’re selling a product that has yet to be tested in a new market. You can try the site for factors such as foot traffic or demand.
Look at your existing stores and the times that they perform best to create a realistic profile.
The history of the location
Avoid places with a high turnover of lessees. If other businesses have yet to profit in this location, your business may also struggle. It is particularly true if the failed companies are in your niche or vertical.
Customer demographics
You must know your customers well to succeed in business.
- Rents may be higher if you are catering to younger customers.
- Consider selling furniture in areas that are near new developments or established neighborhoods.
No guidelines are set in stone, as each entrepreneur will have to weigh the factors of their business location according to their needs. Selecting a place that reflects your target audience’s preferences is essential.
Walking traffic and foot traffic
There is a higher demand for parking in areas most frequented by people. If you own a bar, restaurant, or shop, paying a premium to gain access is worth it.
For professionals, such as financial planners or repair shops that require an appointment, customers usually arrive with a specific purpose. You may want to focus on something other than foot traffic. Look for a place where your business can be easily accessed and noticed (with nearby parking or public transport).
Competition and proximity
It is best to be the only player in town. Many businesses choose to locate far away from their nearest competitors to minimize sales loss.
Have you ever noticed that Starbucks cafes always cluster together? Mattress stores, furniture outlets, and similar businesses are all in the same category. It’s not by chance.
Businesses often gather together to take advantage of “spillover traffic.” Even mathematical proofs 1 in game theory show why clusters can be the best business location strategy, even for small players.
There are pros and cons to being the only business in town. Rent may be cheaper on the outside, but you might miss out on traffic from nearby restaurants and stores. How will lower overheads affect revenue? What’s right for your business?
Location accessibility
Accessibility can take many forms.
- You have enough parking space for patrons with disabilities at your location.
- Delivery trucks have access to service roads and docks.
- If you are operating at night, there is enough lighting.
- Public transport is readily available to get you there.
The accessibility analysis should take into account your own needs as well as the employees’. Like your clients, your employees may need to commute and park their cars or bicycle.
Zoning ordinances, restrictions, and regulations
For a good reason, nightclubs and restaurants are only located in some regions of the city. Local ordinances and laws governing zoning place restrictions on the locations of these businesses.
You may be subject to additional restrictions depending on the type of business that you operate. Speak with the zoning office in your city before signing a lease.
The infrastructure of the building
You are not responsible for lousy wiring or faulty plumbing as a tenant. The landlord will likely handle these issues. Imagine moving into a building with poor cellular reception. You may rent an office in a commercial building which closes at six o’clock, even though you have a business that runs until nine p.m. You want to avoid these types of unpleasant surprises.
Be sure the location is suitable for your business. You should talk to previous tenants or neighbors to better understand the company you are about to enter.
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