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Locating your business in the right place
Location can lead to the success or ruin of your business. Since location
requirements vary by the type of business, it is important to evaluate different
selection criteria. For a merchandising business, choosing the right location
usually involves tradeoffs between customer convenience and the rent expense.
For a manufacturer or wholesaler, access to public transportation, like planes,
trains, and interstate highways, is much more important.
As a retailer, you might ask yourself, "where are my potential customers
relative to my store location?" Consider why there is such a difference in
rent expense between Beverly Hills in California and the small college town of
Athens in Georgia. In Beverly Hills, on streets like Rodeo Drive, thousands of
potential customers with money to spend walk in front of the retail stores every
day. Many of the retailers do not even have to advertise, there are so many
customers with money to spend. In Athens, however, there is mainly a student
population with little or no disposable income, and the retailers must
constantly find ways to entice the students to spend their money. As you search
for a retail location, it is important to remember that your rent expense,
includes not only the cost of space but also the amount of publicity and
promotion you will have to conduct.
If you are a manufacturer or wholesaler, your location needs are entirely
different than a retailer. You do not need direct access to the final purchasers
of your products and services, you only need access to the distribution systems,
like the railways and airports. Low cost space becomes important to your
profitability. Additionally, you might want to be near an area that has plenty
of skilled workers in your line of business. If you are building Jet Airplanes,
there will have to be some "rocket scientists" in the vicinity.
Depending on your line of business, some questions that will need to be
answered in your business plan, include:
- What is the address of your business?
- If your business is merchandising, or retailing, what are the consumer
traffic patterns? How many people walk by your store every day?
- If your business is manufacturing or wholesaling, where is the closest
airport? interstate highway? railway line?
- Are there other similar businesses near this location?
- How many square feet will your business occupy?
- What size vehicles have access to the loading dock?
- Will you lease or own the space?
- How much will remodeling and upgrades cost?
- Are there any zoning restrictions in the area?
- What benefits does this location offer your customers? What benefits does
it offer your business?
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