How to Pick a Great Business Location
When picking real estate, we have all heard the saying, "It is all about location, location, location." This is true whether we are finding a home or scouting a spot for a new business.
Recently, I was talking with an executive at Wawa Inc. about how they choose new store sites. Wawa's business model requires finding sites with high-volume, 24-hour traffic. It is because of their meticulous research, that they have only ever had to close one of their locations.
If you are looking to build a real-world business, especially a brick-and-mortar food or retail shop, there are several big location-specific considerations.
- Demographics - You need to fit in with the local consumers. Are you selling something the local consumers want and at a price-point they can afford? Does your target live or work in the area?
- Foot Traffic - Is the location in a walkable area? Is it a location where people shop or is it a bedroom community/commuter town? Of course, you may have a business in which pedestrian traffic is not a good thing.
- Accessibility and Parking - How easy is it for customers, suppliers, and employees to access the facilities? Are the roads easy for package couriers and trucking companies to reach you?
- Competition - Sometimes having nearby competition is a good thing. It draws consumers in who are comparison shopping. But, sometimes a well-established competitor will only make things harder.
- The Site's History - You need a location to accurately reflect your brand's image. If a site has had five failed businesses, over the last several years, you may be starting with a big disadvantage.
- Ordinances - It is not just the current ordinances or zoning restrictions you need to worry about. It is important to look at the trends over several years. A local government that is ordinance-happy may cause problems down the road.
What are some other considerations when picking a business location?
I’ve witnessed how stores open up then soon close in a matter of months and the factor that greatly contributed to that is the removed link We should grab every business opportunity we could have but we need to take removed link Is my business feasible enough? Is the location suitable for my business? How does the location affect my sales and profit? We really didn’t scout for the location of our business instead we adjust and adapt to the existing needs and demand in our community then turn that into removed link A consideration I could suggest is to find what your community demands, it will be an advantage to you since you know it better than anyone removed link You wouldn’t know that the place where you’ve probably standing may be the best location for your soon business saving yourself from the expense of commercial building you’re trying to get at the removed link
I would like to share my thoughts on this interesting topic. Choosing a location for business is very important. In my point of view as a civil engineer, it will be helpful if you conduct a feasibility study. In my experience dealing with projects and proposed building structure for businesses, a feasibility study is required. It is being presented to the client or shareholders. According to our business engineering course, a feasibility study will tell you whether a proposed project or business should advance to the execution stage. It will determine the practicability and profitability of the proposed project or business and it will uncover its strength, weaknesses, opportunities, and threats.
A feasibility study has five major aspects as follows:
1. Marketing aspect.
In marketing aspect, you have to review the business description, demand and supply projection, market share and competition, pricing, and marketing strategy in a certain project or business location.
2. Technical aspect.
In technical aspect, you have to see your business process, facilities and utilities required, schedule, environmental and climatic requirements, and waste produced and disposal if required.
3. Management aspect.
In management aspect, you have to check how your organizational structure and management scheme affects your business proposal in a particular location.
4. Financial aspect.
You have to ensure that your major assumptions (income) and degree of feasibility match with the proposed business location.
5. Socio-economic aspect.
It is all about socio-economic and environmental impact.
Accordingly, choosing a location for business requires thorough study in order to be successful.
For the most part, I agree that you need a feasibility study for a large project. That said, you also need an owner, board, or shareholders who can look at those kinds of reports critically. About 15 years ago, our local school district was pushing the limits of the student population. So, the Board had commissioned a feasibility study to determine current and future needs. The report came back with a projection of 40 percent growth over 10 years. So, based on that conclusion, the school district build a new school and expanded the high school.
Well, a very short time after the report was issued, the population actually started to decline. Rather than taking a pause on their plans, the Board held the feasibility report up as if it was the Bible and described critics as heretics. So, here we are, roughly 15 years later, and not only has the district not seen the growth projected, we are sitting at 40 year low.
I was one of those heretics criticizing the school board. The feasibility report included data that showed the school district was (in 2003) experiencing a population bubble, and that enrollment would start to decline. Moreover, the actual projection on growth included a massive increase in local development and an exponential increase in birth rates that had no basis in fact. But, rather than questing the report or the methodology, the Board just looked at the conclusion and trusted what they were told.
Even today, they will not acknowledge the decision as a mistake or take any responsibility for the debt and financial stress placed on local taxpayers. Worse yet, since I live in a small area run by a good ole boy political network, no one ever gets voted out of office except those who make waves.
The location of your business is a very important because it can have a huge impact on your actual business. Like you said, demographics are an extremely important factor in choosing your location. For example, if you are going to target the luxury market, it may be wise to choose a location that is close to people with higher earnings and not an area where the people may be struggling to put food on the plate. Depending on the type of business, foot traffic can also be quite important as well. Not having high foot traffic may result in you not being able to make enough revenue each day.
Where I live many businesses have relocated to retail parks, for a few reasons; the rent, and also the footfall. In retail parks there is usually free parking and the footfall is higher, so that is something to consider if you are looking for passing trade. Businesses that don't need passing trade but who still have walk in customers such as a repair shop should be easy to find for example on a High Street.
Another thing to consider is who the neighboring stores are for instance being opposite a nightclub isn't good for say a cake shop, but maybe for a convenience store. Also if there are empty stores in the area that isn't a good idea either because people tend to walk past them. Here, Marks and Spencers is a popular store, and many businesses like to have a store near them as they have guaranteed footfall of a good demographic. Pretty much stores like that and Wholefoods can bump up the price of rents and also increase the value of property in the area.