Are you starting a business and looking for a location? How can you be sure that the site you choose will be the most profitable? We are sure that after reading this article you will be up and running in no time!
Starting a small business requires lots of effort.You can start a business anywhere, but some locations are favourable to your firm’s long term prospects. Entrepreneurs should start their business in those cities that have the best business environment and access to resources.For small business start-ups the area should be affordable and stable.
Location plays a major role in attracting funding for your business from investors, and its profitability. So, finding the right location should be at the top of your to-do list, and you must do proper research on it. Two sites may appear the same, but if you look closely, you can find out the money-making differences between them.
When you decide to start a business at a particular location, you have to look at various factors.
Your Goals and Needs
You should estimate how much space you will need when your business scales up in the coming years. Your location should accommodate the growth. Your goal should be to find a location where your sales will go up and costs will go down.
If your brick-and mortar business does well, you can plan to expand by opening in multiple locations.
You can compare prospective locations on three different categories:
1. Access to resources.
2. Business Costs.
3. Business environment.
4. Proximity to customers.
1. Access to resources
If you want to start a manufacturing business, you would like to be as near your raw materials as possible. For example, if you want to make steel utensils, you should locate your unit where steel is easily available. This would save your transport costs. Or, if you have a farming business in mind, it will be prudent to find a spot where the soil is suitable.
Access to human resources can also be an important factor to locate your business. Suppose, you plan to start a semiconductor making business. So, you would want to locate your plant near technical colleges, to easily hire science graduates.
2. Business Costs
Your choice of business location affects your income and your expenses. Costs that can vary significantly by location include government fees and licenses, minimum wages, property values, standard salaries and utilities. You can try to locate your business in a place where there is greater unemployment, because the wages in that area will tend to be low.
Some locations are more expensive than others. You should try to find a location that is within your budget and where the rent is low. Other costs which you should consider are living costs, overheads and utilities.
3. Business environment
How economically stable is the location? In this fragile economy this is extremely important for the success of your business. Certain types of businesses can flourish in unstable markets, while others need a more stable scene.
How much are the people around the location willing to spend money? What products are they willing to spend their money on? These will help you to know whether it is the right target market for your business.
You have economic ties, family and friends in the place where you live, and have knowledge of the area. Maybe, you have experience in a specific type of business, or relationships with local people and businesses. So, the right place to start your business might be near your home.
- Demographic Reports
Before you start, you must first find out whether there is enough population to support your business. You can create demographic projections from the most recent census data, like the income of the people who have moved into your neighbourhood. Also, important to know are the population and employment statistics. You can use sophisticated location analysis tools that include competitive analysis, demographic and lifestyle data, and traffic pattern information.
If your target market is Double Income No Kids ( DINK ) couples, then a retirement community won’t be a good fit.
- Local and State Laws
Your business location determines the regulations, registration, taxes and zoning laws that your business will be subject to. So, you need to think carefully about the state, city and neighbourhood in which to start a business. For example, putting up a big sign is often required to attract customers. So, you should find out whether your landlord or zoning authorities have any objection to it or not, before you decide to move in.
If you want to buy, rent, or build on a physical property to start a business, you must ensure that it conforms to local zoning requirements. States and cities which have less barriers to entry for new businesses are said to possess a favourable business climate. Certain businesses such as construction, which affects public safety, requires various licenses and permits, which can vary from state to state.
- Competitive location
Do you want to be near the competition or far away from it? Have you ever noticed that car or furniture dealers are always clustered around each other? There is a very good reason for that.
With higher priced items like cars, you would want to be close to the competition. When buying high-ticket items, shoppers want to visit multiple shops before they make a purchase, and also don’t want to travel too far. They would want to test-drive cars of different brands, which won’t be practical if the car stores are in different locations.
- Prestige Location
Certain businesses require prominent locations. Maybe you are not pretentious, but can you vouch for your clients? Say, if you want to start a luxury business, it is best to settle for a location in a high street. Because, that is where most of your customers will go for shopping.
- Right Community
You have to find out whether your business is a right fit for the community that lives there. Do your style match with theirs? For example, there is no point in opening an elegant boutique in a casual and poor neighbourhood.
4. Proximity to customers
Where you locate your business depends partly on where your target market is. For example, if you want to open an ice-cream shop, it would be a good idea to locate it near a school. Though, the parents might not approve the idea!
If you own a gift shop, it would make sense for you to be near a tourist area, because that is where most of your customers will be.
For retailers and service providers, the proximity of customers to their location is important. It reduces transportation costs, and helps in providing proper service to customers. The demographic profile that you have made for your target market, will help you to take the right decision.
What is the right location for a retail store?
If you want to open a food or a retail store, the first thing when you start a business, is look for a location.How you will the choose the location is based on the key factors of easy access by customers, store visibility, store positioning and cost that would impact the success of the store. Examine what type of goods you will sell, as some products will require certain types of locations.
Best Locations for a home based business
A home based business is any business which is carried out from the owner’s home. Many new entrepreneurs work from home, without going to traditional offices. If you want to start a retail store from your home, it will be a much cheaper option than renting a place.
Home based businesses provide considerable flexibility, and you can work somewhere, and run the business part-time. Since most people who operate a home business have a family, keeping personal and workspaces separate is important. In some home businesses, families convert the basement or ground floor into a store, and live on the first floor of their house.
Before you start looking for a business space, you need to have clarity on what you need and how much you are able to pay. We are sure that the location ideas that we have presented here, will make your search much easier.
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