Choosing an effective and profitable physical business location may be one of the most important decisions you’ll make in the initial process of setting up shop. While you can certainly always make a move to a new location at a later date, it can be an extra hassle to change all your collateral and online listings to reflect a move. A better plan is to carefully think out in advance what location is going to be best for you so that you can begin right where you need to be. So how do you go about picking that right spot to hang your shingle?
Obviously, the first consideration is your customers as they are the ones you are catering to. Where are they located and where do they like to go? Even if you don’t have much walk-in business, trade representatives and others may seek you out, and you’ll have an official listing in online directories. Your neighbourhood is a key part of your image- where do you want to say you can be found?
Once you know where your customers are and where you’d ideally like to be, then comes more a more careful analysis and weighing of factors and options. Some considerations that may affect your final decision are:
Trade Area: Is your business unique for the area in which you wish to locate? If you are a yoghurt shop, maybe you don’t want to be on a street with five other yoghurt shops! But maybe you are a restaurant wishing to join an established restaurant row- what extra products and services can you offer to the existing market? Are there businesses in the nearby area that complement your own?
Demographics: Much information can be found about the residents as well as commercial establishments within any given area. This information is critical to be sure you are choosing a spot where you’ll prosper. Sometimes a trendy address does not have a reliable base for the long-term, even though it may be otherwise appealing. Use the available date to discover the socio-economic characteristics of the area- average income, age, lifestyle- and consider whether it is a ‘match’ for your business. Consider whether the resident population will be affected by an economic downturn, and if population growth (or loss) is expected for the area.
Transportation and Visibility: Is your intended site well serviced by public transit? Does it have customer-friendly parking facilities? If it’s a challenge to visit you, people may just go elsewhere! Will you be ‘noticed’ by passing traffic, both foot and vehicular?
When it comes to the site itself, several choices present themselves:
Isolated: Isolated sites are well suited for one-stop stores that offers a full range of goods and services under one roof. Competition is not an issue and occupying a large space provides visibility and access for your customers. The downsides of an isolated site include a lack of surrounding businesses to complement your own and the relutance of customers to travel a great distance for one business alone.
Business Districts: Businesses are located in close proximity, but without neccesarily a long-range plan. Sizes vary from large (Central and Regional Business Districts) to smaller (Neighbourhood Business Districts). CBD’s serve as a centre for regional public transit and have a high pedestrian traffic flow. They may become quickly crowded and turn customers off if there is a lack of convenient parking. Regional Business Districts are similar to a CBD, but have less pedestrians and are less crowded. Neighbourhood Business Districts are smaller and less hectic.
Planned Shopping Centres: In a planned shopping centre, there is generally a balance of business types and the centre becomes a nexus of ‘one stop shopping.’. Parking is usually easy to find and pedestrians are prevalent. It’s also possible in a centre to share incidental and infrastructure costs with other tenants. The tradeoffs in a planned centre are the high competition and domination by large department stores, as well as conditions that may be set by the centre’s management.
Obviously, other considerations matter too, including floor space and the all important cost factor. While location is important, bankrupting yourself for the sake of a great location is ill advised.