If you’re opening up a brick-and-mortar business, you’ll want to pick the perfect business location. Click here to find out 8 key factors you should consider before opening up shop.
Learning that 20% of new businesses fail within their first year predominantly due to cashflow problems is a harsh reminder that you need to be cautious with your financial outlays.
One of your biggest ongoing expenses, when you open a bricks-and-mortar location for your business, is the cost of using that space.
Real estate agents have been touting “location, location, location!” for as long as real estate has existed, but there are other factors you need to consider when choosing your business location.
Read on and learn about everything you need to put on your business location research list before you sign that lease.
Crucial Tips for Picking the Best Business Location
You may feel rushed to sign the first good location you find, but take your time! There are several things you need to think about in order for your business to thrive.
1. Who Are Your Customers?
Sit down and make a set of buyer personas for your ideal customers. A buyer persona is a marketing tool where instead of just saying that you want to target millennials in a certain income bracket, you actually think about who your customer is.
Your buyer personas should include their career, living situation, interests, and income. Having a few of these will help you to get a better idea of the type of location your buyer personas want to hang out in.
Now, when you go to see potential business locations, compare those locations to the ones you see your buyer personas in. There are tools that can give you more data about the lifestyle data of the people who spend time in a location.
2. Is It Near Your Home?
This may seem irrelevant, especially if you’ll be driving to your business location (as opposed to taking public transit) every day but it’s something to consider. If you have to commute an hour to and from your business location every day, that’s a lot of time that could be spent more productively.
3. How Much Space Do You Need?
As an optimistic new business owner, it’s easy to fall into the trap of thinking that more space is better. However, that’s a surefire way to find yourself paying a lot more in rent than you need to be right from the start.
You need to how much space is necessary for your business model. Remember, having a small location has its benefits as well. Besides being cheaper to rent, it gives your business the air of exclusivity.
Instead of renting a larger space from the get-go, consider a storage unit alternative with on or off-site storage of additional products. Alternatively, you can add to your current space or expand to a second location once your business takes off.
4. Use Your Competitor’s Behavior as a Guide
Now, we’re not advocating corporate espionage here! But you can look to your competitors for ideas and inspiration. With a better understanding of their target customer and business model, you can strategize how to set yourself apart.
Seeing where your competitors are located also gives you a good idea of whether or not that type of business will succeed in that area.
For example, there’s a reason that independent coffee shops are usually located in a central area. Putting your independent coffee shop in a suburban or rural location would significantly deplete the foot traffic that passes your establishment.
In some industries, like fast food restaurants, it’s a common practice to place locations grouped together. Depending on your industry, you need to determine if it’s better to be near your competitors or isolated from them.
5. Make a Budget Of ALL Your Location Costs
Besides rent, consider all of the other costs that your location will incur. When you’re first starting, you’ll need to renovate the space to match your business. This includes painting, decorating, buying furniture and shelves and more.
Additionally, calculate your full monthly costs for the location. Along with rent, you’ll also need to pay for utilities and insurance at a minimum. Depending on the agreement, you may also be responsible for building maintenance and security.
Keep in mind that cheaper is not always better. It’s important to choose a location that is highly visible and attractive to customers as opposed to the cheapest space you can find. Consider that people choose a gas station or to-go coffee place based on which side of the road it’s on.
You don’t want to make it harder for your customers to come to you.
6. Pick a Location that is Highly Visible
Unless you’re opening a speakeasy, choosing a business location that is highly visible is crucial.
That doesn’t mean you need to be right in your city’s downtown core. You want to ensure that your business can be seen from the road and that it is easy for drivers to locate.
Again, it’s important to take the nature of your business into account and look at the surroundings. If you operate a restaurant, for example, being a short drive from a movie theatre or concert hall will give you visibility and foot traffic with minimal marketing.
7. How Will You Connect to the Outside World?
Ask the previous owner about the IT infrastructure of the building. The last thing you want is to end up in a cable internet dead zone. Confirm with your local telecoms company about the availability of a fiber-optic or high-speed Internet connection.
8. Choose a Location That’s Easy to Get To
Assuming that everyone drives will considerably lower your number of potential customers. You need to choose a business location that is easy for everyone to get to.
You should have parking spots nearby and be close to bus stops or subway stations. Then people don’t have to overcome any inconveniences to visit your location.
Now You’re Ready to Meet Some Realtors
Once you’ve researched each of these tips, you’ll be all ready to pick the perfect business location for your small business. Good luck!
Looking for more help starting your business? Visit our Small Business Forum and bounce ideas or get advice from our community friendly small business owners