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Location, Location, Location

  • January 7, 2015
  • Written by

6 Questions Every Business Owner Should Answer

There are a myriad of factors that must be carefully weighed as you go through the process of determining the ideal location for your business. While a number of considerations are often a matter of simple common sense, many people can get easily side tracked or distracted in the start-up phase; either hastily making a knee-jerk decision or failing to take into account some of the slightly less obvious, yet equally critical components of location selection.

Regardless of whether you are launching a restaurant, a consulting practice or a chemical plant, prior to shopping for space, you must have a firm grasp on your list of necessities, niceties and non-negotiables. In addition to knowing your budget and what you can afford right now, it's also imperative that you imagine your future and growth objectives.

Mapping all of this out might seem like a tedious process, but a poor location choice can result in costly consequences that may be difficult, or even impossible, to repair down the road. Answering the following 6 questions will assist you in making more informed decisions as you begin to compare and contrast your options.

1. How important is location for my business?

This really does depend on what exactly your business is. For example, if your company is retail-based, or if manufacturing and/or distribution are crucial aspects of your business model, geographical location is vital to your success. It has been said that in the land of brick and mortar, the three most important decisions you'll ever make are: location, location, location.

On the other hand, if your business is information or service-oriented, particularly if you are primarily in the online space, physical location is less important and you can direct more attention to more personal workspace needs and preferences.

2. Can this location accommodate growth?

Regardless of your industry, outgrowing your space in short order is not a situation you want to find yourself in. It's worth repeating that changing locations is both disruptive and expensive. As far as it is possible, your location selection must take into account your future circumstances, as well as those of the present.

3. Is this location both appealing and accessible?

Savvy business owners will not only anticipate the location needs and wishes of their prospective clients and customers, they will also think of current and future employees, as well as their own personal convenience. If coming to your place of business feels like a burden on any of these fronts, your success is likely to be undermined.

Explore the traffic generators in any neighbourhoods you are considering for space, as many businesses are ideally located near a place where there are already consumers in abundance. Are there other retailers, service providers, health and/or educational facilities that are attracting people to the area? You might also need to be mindful of highway and foot traffic, as well as public transit routes.

4. Where are your competitors located?

Depending on the nature of your business, there can be a benefit to locating your businesses in close proximity to a competitor. Successful companies will have always undertaken demographic research to ensure that they are in an optimal spot to magnetize their ideal customers.

By positioning yourself near a competitor, you may be able to reap the rewards of their advertising and marketing efforts, while also saving yourself the time and expense of research. To illustrate, it is for this reason that you will often find clusters of fast-food restaurants in larger centres.

5. What is the cost-benefit ratio of the location?

While the rent payment or lease amount will be a major determinant in your choice, it is not prudent to adopt a tunnel vision approach to this expense as simply dollars out the door. You must factor in the return on investment that might accompany a location that enhances your visibility, credibility and/or customer experience.

In many situations, particularly retail and service-based business, these additional considerations will almost certainly impact your bottom line in such a way that more than justifies a higher price tag for occupancy. It will serve you well to remember that you do very often get what you pay for.

6. Have you evaluated the additional costs and requirements associated with the location?

While not exhaustive, the following is a list of additional items in no particular order that may also need to be considered prior to your final decision:

  • Appropriate zoning for your type of business
  • Insurance premiumsUtility costs
  • Adequate storage
  • Functional layout
  • Required repairs or renovations
  • Adequate ventilation
  • Supplier accessibility
  • Neighbourhood safety/exterior lighting
  • Parking

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