You can use several criteria when you evaluate opportunities, have you ever considered location as one of them? Have you ever wondered why some places open and only a couple of weeks or months later they are closed? Or how two retail stores located almost next to each other manage to work successfully? Running a business was never easy. You may have a drive and passion and be determined to succeed, but that is not enough for a prosperous business. From the latest statistics for 2016, about 78% of small business startups survive the first year and about half of them survive at least five years. Therefore, if you are starting a small business from scratch, extending your business in a new location, or purchasing an existing company or franchise, you need to take few steps back and first do some planning and preparation.
You need to have a clear picture of what you must have and what you would like to have. Your plan should include where your business will be in the next few months to the next few years. Additionally, you need to analyze yourself and your resources. You need to research the market, the competition, etc., etc. An entrepreneur’s life is a constant challenge. There are many moving parts that could have an impact on business success. Hence, location as a parameter might not be the first thing on your mind. You can correct at later stages many mistakes of a startup, but a poor choice of location is impossible to repair!
Understand the location and the surroundings
Sometimes, having a good product or idea is simply not enough. Choosing a good location for your business is a big step, as it will serve as a real-world visual representation of your business. You need to take some time to evaluate potential sites. We should include in this analysis parameters such as:
Demographic
As we mentioned above, you need to have a clear picture of what you would like to have and what kind of business you would like to run. For example, if you are opening a restaurant, is it going to be fancy and formal or casual? Is it going to be low budget or high budget? With this in mind, now you can evaluate neighbourhoods and their demographic profile. For example, you could start with crime rates. Although, a place’s rent might be lower if you locate your store in a part of the town with high crime rates, nobody will want to go there. Customers will avoid you and your employees may not feel safe. Furthermore, opening a fancy restaurant in a poor neighbourhood might not be a good idea.
Foot Trafic
Yes, most businesses will profit if they are located on a road with high traffic but there are also some businesses that require confidentiality and prefer a hidden site.
Accessibility and parking
Yes, most businesses will profit if they are located on a road with high traffic but there are also some businesses that require confidentiality and prefer a hidden site.
Competition
Think about who your competitors are and where they are located. Sometimes it is good to be near them, since you may catch their excess or benefit from their marketing. Why spend a large amount of money on marketing when your competitors have already done that and attracted the target audience? On the other hand, if a nearby competitor is only going to make your marketing job tougher, look elsewhere.
Research
You need to research if there is a need for your product or service in the area. If a need for your offering exists, research any possible competition that may already have a large portion of the market share.
Traffic
If you are opening, for example, a drive-thru, you need to take traffic into consideration when choosing the side of the road. If you are opening a coffee drive-thru, it might be better to be placed on the right side of the road, since there will be higher traffic in the morning when people are going to work in the city. On the other hand, if you are opening a takeaway drive-thru, you might want to locate it on the left side, since most customers will stop by on their way home.
By analyzing potential sites and considering all the above points, you will increase the chance of your business succeeding.
Before making a final decision, visit a potential location at different times of the day and on different days of the week. This will make sure it’s truly the best location for your particular business and it fits your needs and the needs of your customers. Having a good location can be advantageous and have a huge impact on business performance and revenue. Keep in mind that even a good business will struggle in a bad location; it will need to put in a lot of effort to overcome the impact of that bad location.
Take a look at our latest case study: “Finding a perfect location for your business” and find the best locations for opening a new restaurant in New York City.
