Selecting a site for your business location is often easier said than done. Ideally, you want to base your location selection on the nature of your enterprise and its chosen target market. This means that you’ll need to look at a site’s demographics, proximity to your competition, and its relationship to your budget.
Let’s explore these ideas a bit more thoroughly. What follows are five tips for selecting your business site location.
5 Tips for Business Location Site Selection
1. Look into the Surrounding Community
When you’re looking for a site for your business, you should consider whether a given community actively seeks new companies. If they are, there may be incentives for you to build your business there. The local economic development agency can tell you about possible incentives for companies to set down roots in particular communities. These incentives might include financial support for tenant improvements, local tax, planning department waivers, and municipal programs that prefer area businesses. This is important information to know as it will inform your decision.
2. Stay Away From Known “Problem” Locations
Not all locations are the same. Sometimes, regardless of what the business is, the location is simply bad for business. Consider, for instance, a location that’s home to a new restaurant every six months. Although each new owner believes they can make the site work, there continues to be consistent turnover. This would indicate that the site rather than the business is the issue. Therefore, it’s essential to get the history of any location you’re considering. Additionally, when comparing two location sites, you should always go with the site that’s likely to maximize sales and not the site with a lower rent.
3. Determine Your Target Customers
When creating a business plan, you must consider your target customers. You should then seek a location that has an abundance of this type of client. Additionally, you should calculate employee commute time to determine whether it’s convenient for your employees to get to work. Therefore, you must estimate the market size in a location you’re considering and look at the customers’ purchasing power. For example, if you’re selling high-end women’s products, you want to choose a location that not only has an abundance of women but that also has women with an income range that would make buying your products feasible. In other words, you wouldn’t sell high-end women’s products in a low-income area.
You will also want to look at the drive time or walking time to the location and note traffic flow and any physical barriers, traffic limitations, or detours.
4. Be Ready to Pay for a Good Business Location
The best location for you will rarely be the one with the lowest price tag. Therefore, you must be realistic and ready to pay for a decent site. After all, a good location will contribute to your business’s success. A poor site will likely result in rapid closure. Unfortunately, good locations aren’t cheap. For this reason, your business plan must have a realistic projection of the costs involved in securing a location that will contribute to your company’s success.
5. Understand your Competition
It’s unlikely that your business will be the only business in town. Therefore you must assess the competition to be certain that there’s enough business to go around. If a given location is already saturated with similar businesses, you should consider a new location. The only way you can compete in a tight market is if you’re offering a product or service that’s sufficiently game-changing to draw enough business so that your operation is viable.
When you identify the competition in a market, it allows you to determine whether your business idea is feasible. A competitive assessment will also provide direction about how a product or service should be positioned. This analysis will tell you if your company can get a competitive edge by providing something that the existing competition doesn’t.
Summary of Business Location
When selecting a site for your business location, you must consider your target market, budget, and competition. This will provide you with the criteria for a good location. A good site will be close to your target customers, distanced from your competition, and within your budget. It should also be a location that hasn’t experienced a lot of turnovers and, if possible, one that offers incentives for you to set up there. However, a good location won’t be cheap, so you should take this into account when building your budget. After all, a bad location can ruin your business, so it’s better to spend a little more to ensure your company’s success.