When it comes to starting your own business, or growing your existing one, entrepreneurs agree that site location is one of the most crucial—and challenging—components for success. Selecting a location requires an extensive amount of research and planning, but luckily resources are available to help guide you through the process.
Here are four pieces of information to cover in order to make the right locale decision for your business:
1. Know Your Demographic
The first thing you need to do is assess your target demographic. The type of customers you are trying to attract will play a role in determining where to place your business. Take this simple example: If you are a high-end steak house, you won’t want to locate your business in a college market.
Network with fellow entrepreneurs who work in the area and talk to real estate professionals, who have the expertise and resources to help you figure out different demographic groups and whether a location is consistent with the brand image you want to maintain.
2. Understand Your Business Model
Truly understand your business model. If a typical model for your business calls for 2,500 square feet of space, stick to that model. While planning for further growth is important, do not lease a 4,000-square-foot facility expecting the same results. Instead look for a building that has the opportunity to expand for more space should you need it.
Take into consideration the ideal model and why it has been successful for others.
3. Recognize Your Site Characteristics
One of the most important factors is your lease cost—and cheaper isn’t always better. It is important to look at the visibility, parking, entrance and exit when picking a location.
Consider the hidden costs. Very few spaces are business-ready, so take into account the costs for renovation and essential building updates for your new potential location.
Sometimes it is worth it to pay a little more for a site that offers all the key metrics that you need, instead of settling for less viability because it saves you a few dollars. There is a reason why drug stores and fast-food companies buy the hard corners and pay big dollars.
Another important item to understand is natural barriers. Features of interstates, rivers, railroad tracks and other surroundings can play a huge role in picking the right location. People tend to avoid driving over or around barriers, so pay attention to how this could affect your traffic flow to your location.
4. Identify Your Competitors
No matter what industry you are in, you will always have competitors. The best way to beat them is to understand them. Do some research, figure out their target demographic and understand their business model to see what you can offer or do differently in order to attract their customers. Decipher if your competition is complementary or competing.
Site selection is not an easy task, and it will set the course for your new business. A distance of half a mile, being on the wrong side of the street or lack of visibility can change your top line sales by as much as 30 to 40 percent.
Do your homework, hire a real estate professional who understands your segment, and do not base your final decision purely on cost.
The key to success starts with the right location.
–with additional information from the Small Business Administration