A phrase that comes to mind when someone mentions real estate is "location, location, location," but this idea isn't just for residential housing. Finding the perfect retail location for your business may provide an incredible boost to your company's profits. Here's what you need to know if you're looking for a prime spot to open or relocate your business.
Examine Your Customer Base and Locate Accordingly
Marketing your services to an interested demographic is smart because you want to make sure that the people most likely to buy your goods or services are aware of your product. The same wisdom applies when you're looking for a suitable location.
An interview on Entrepreneur.com suggests:
"Get a demographic overview of the area you're looking at-age, income, households, etc."
What does this mean when you're looking for a good business location? Well, imagine you're the owner of a sandwich shop, and you get a lot of customers for lunch when the work crowd comes in for food. Most of your customers are working adults, and they want to get in, out, and on with life.
Finding a location that's near a business park or other commercial business area might make more sense than a sit-down spot on Main Street where most of the shops are geared toward tourists and people who want exotic food or the classic diner experience.
Consider: If you decide to rent/buy in an area that's not close to your customer base, you'll have to spend more on advertising to let customers know about your business.
Find Your Competitors and Set Up Shop
Imagine you own a hardware store, and you want to put your retail store in a location where your customers are likely to pass through on a regular basis. One way to snag a built-in audience is to find your nearest competitor and search for a location that's close by.
Decades ago, a certain section of New York City was lined with bookstores and featured about six blocks in lower Manhattan where more than 35 bookstores stood side-by-each. It's the book district featured in the 1998 film "You've Got Mail" with Tom Hanks and Meg Ryan.
You wouldn't think that an area full of retail stores that all sold the same thing would be profitable for the owners, but the district lured book seekers from all over the region. People knew the book district was where to go for books.
Although the crush of bookstores in the book district is a rarity, it's actually common for businesses to seek out competitors and stake a claim not too far away. For example, you might see an auto parts store on one corner and another auto parts store right down the street.
Ensure There's Enough Parking Space
If your store comes with what looks like an amply sized parking lot, it's still a good idea to get out a calculator and figure out if your eyes are correct.
An interesting article published at the Center for Profitable Agriculture lists some factors worth considering when trying to gauge the best parking lot size. Although the article is geared toward parking lot placement on agricultural land, these concepts are important for any parking lot design.
- What's the size of each parking space?
- Are the driving and turning lanes suitable for large vehicles?
- Is there space for handicap-accessible vehicles?
- Is the surface paved nicely or will it support full-size vehicles?
Further discussion on parking space for businesses at Nolo reveals:
"Parking may be a high priority for several reasons. If public transit is inadequate, people will need to drive to your business. If your business involves selling or servicing large items such as stereo equipment, customers will need nearby parking."
So, the moral of the story is: it's not just the number of customers you host, but the type of items you sell and the presence of added features like public transportation.
How Good Does the Building Need to Look?
In the retail sector, the look of a building is fairly important as far as enticing people to come in and shop. On the other hand, if you don't serve customers onsite and your building is used as an office or as a manufacturing area, the appearance of the building is a secondary concern.
Work with a Commercial Real Estate Agent
Your friend who sells houses isn't the right real estate agent for your commercial business hunt. Find someone in real estate who specializes in commercial spaces, and you'll have a much better chance of finding out about prime locations before they're widely known.
While you might want to drive around town to take a look at properties for sale or rent, commercial real estate opportunities aren't always advertised the old fashioned way with a sign in the window. Get a professional on your side, and you'll benefit from their insider knowledge on location, amenities, and price.
Ask These Questions When Looking at Real Estate
Perhaps you've already found what you believe to be the best location possible. Don't sign a lease without asking all the questions you'd ask during a residential real estate transaction. Costs are often amplified in a commercial building where everything is bigger and more expensive.
You're not just dealing with a few window units for the cooling system. You're looking at a large-scale HVAC system meant for commercial use. Make sure that and other essential systems are in good condition and aren't likely to need repair in the near future.
Questions you need to answer before signing on the dotted line include:
- Is the layout appropriate or will you need to do some renovations?
- Is the building large enough (or too large) for your needs? Can you grow in the space?
- Is the facility zoned properly for your business?
- Are there any repairs that must be completed before you move into the building?
- Are neighborhood crime rates low enough for your clientele?
If you're concerned about safety in the building, it's worth exploring your options for added security. You may need to upgrade the security system or think about hiring a guard.
A Last Thought on Location
Most of these guidelines for choosing a terrific business location are common sense once you learn them. It only makes sense to find a retail location where your customers already live, right? And having the right-sized parking lot is just good business sense. However, there's another feature you'll want to
Another article from Entrepreneur.com offers this advice:
"One of the most expensive ways to generate a new customer is advertising. The best advantage of a great location is that you can use what could have been outside marketing or advertising money to fund internal rewards and referral programs — the least expensive way to get repeat business. Every person who enters your store on the basis of location becomes a potential long-term member of your target audience."
So, as you can see, there are many factors in play that contribute to finding a terrific business location.
Tip: Don't forget to update your personalized shopping bags and other related paraphernalia with your new address.
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