Location, Location, Location
Searching out a location for this wonderful business you’ve been enthusiastically planning might seem to be a daunting task. Where do you start? What factors make this location better than that one? Who will help you?
Although I certainly don’t have all the answers, I have been through the drill and I can assure you that if you pursue your search in a calm and organized manner, you will find the location that most benefits your business.
Begin by asking yourself what the space is to be used for. For example, do you need office space, a place to manufacture or assemble products, a distribution consolidation point or a storefront?
With these answers, you can make a proper determination as to whether you need a destination location, a traffic location or maybe something in-between. A destination location is a place that your customer specifically sets out to visit, such as a nail
salon, a doctor’s office, a favorite restaurant or an accountant.
A traffic location is dependent upon heavy pedestrian and perhaps drive-by traffic. Examples might be a women’s apparel boutique, a shoe store, a candy store or a gift shop.
What Other Factors Should Be Considered?
Ease of access and egress. This is particularly important when deliveries or shipments need to be made. Do you need relative access to highways, trains, air and seaports? If yours is a destination or a traffic location, be sure to evaluate your parking needs and access to public transportation. This is important for both your customers and your employees.
Synergy of similar businesses. Synergistic value is most obvious in the retail sector where other apparel, accessory, shoe and similar sorts of stores help build traffic in a given area. While one store might draw 20 customers, two stores might draw 50 and three stores 100. Synergy increases the per-store activity for all stores.
The same growth potential may exist for a manufacturing or distribution facility, a technically-oriented business or a restaurant in proximity to like facilities. Locating your business near others in the industry may also help you to find a workforce and assure you the ease of finding public transportation as well as commercial pickup and a delivery.
Proper zoning. Be sure and check zoning requirements for the location that you choose to make sure that the space you wish to lease or purchase is properly zoned for what you want to do. Sign the lease or purchase papers only after you are approved to do business in that space, or sign it contingent upon obtaining approval.
Price. The rental rates or purchase price on space are always a consideration. In general, a greater rent per square foot usually means more traffic and/or better quality of space. Be sure to account for these costs in the gross margin in your business plan.
Who Can Help Me?
Real estate agent. When searching for space, it is often a good idea to use a commercial real estate agent. Many available properties do not have a sign or ad to identify them. Agents also know about properties about to come on the market before the general public does. They can show you multiple sites so that you can evaluate and choose the best for your needs.
Today’s leases are long and complex. They are frequently slanted to the benefit of the landlord and include many restrictions that may not be to your benefit and, in fact, may actually hinder your operation. However, lease points may be negotiated. It is often easier to negotiate through an intermediary such as the real estate agent.
Real estate attorney. A real estate attorney is also useful. As you read the lease, note where you don’t understand the language, or where you think a point might be renegotiated. Show the lease and your questions to an attorney for help and direction. An attorney is practiced at looking for items you may not realize will be difficult, if not impossible, to comply with.
Landlord. The landlord himself may be of help to you. Landlords often demand a business plan as a condition of approval for obtaining a rental agreement. With a well-crafted plan you increase your odds of success. Since a landlord wants you to succeed, this may increase your leverage with him and help you to negotiate in your favor.
SCORE. Last, but not least, lean on a SCORE counselor to advise and guide you as you search for the best location for your business. Seek help from your nearest SCORE office or online counselor. SCORE counseling is always free and confidential.