Steps to Finding the Right Location for Your Small Business

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Steps to Finding the Right Location for Your Small Business

Starting a new business is not easy by any stretch of the imagination. 96 percent of businesses don’t survive to their tenth year. For would be entrepreneurs, this can be a scary prospect.

The reasons for failure can be various. However, sometimes it is as simple as choosing the wrong location for a brick and mortar store. Choosing the right location for your small business is extremely important. It is often one of the determining factors between success and failure. If you are starting a new business, certainly try to put a lot of thought into exactly where you choose to locate. Here are some tips that can help.

Foot Traffic

While you may want to consider things like parking when choosing a location for your business, you should also consider foot traffic. Not everyone gets to where they want to go by car. This is especially the case for large cities or towns with college campuses. Certainly consider the amount of foot traffic a location gets as part of your equation for choosing a location for your small business.

High foot traffic most usually translates to high profit potential. You may even want to consider renting or leasing business space in places that receive high foot traffic like malls, airports, train stations or amusement parks. Those who fly spend over $550 million on airport food each year.

Growth Potential

Purchasing real estate is really making an investment. If you are not careful, you could lose money on the purchase. For small businesses, this holds true even more so. You are investing in a location with the hope that it will provide you with steady business for years into the future.

With this in mind, you should approach the proposition of purchasing real estate for your company like a real estate investor would. You need to look for cities, towns and other locations that are likely to grow in both population and earning potential for the long term. If the opposite happens, you may actually see your customer base shrink in both size and the amount of money they have to spend on your products or services. Not considering this possibility could mean being forced to someday close your doors when the underlying economic forces in that location go south.

Competition

While a certain place may be an excellent location in theory, that may not be the case in practice. One factor you absolutely can’t ignore is the competition that already exists in a given location. This of course goes back to the law of supply and demand. There comes a certain point where a market becomes saturated and demand is fully met.

If you have 15 pizza restaurants that deliver in a moderate sized city, chances are it will be extremely difficult for a 16th pizza delivery place to succeed especially when the other pizza restaurants already have loyal followings. Underestimating competition is one of the top reasons companies go out of business.

Resources

You also have to consider the resources available to you in a certain location. A small business, for example, may need the services of an accountant that provides bookkeeping for small business clients. If one is not available for the remote location you want to invest in, that could be a problem.

Similarly, a restaurant will need to receive constant supplies of food and ingredients to provide customers with meals. While suppliers may travel to many places, certain places may be too far away from their base of operations to make that cost effective. These are the kinds of things you must consider.

Overall, location is almost everything in terms of business. Choosing the wrong location can perhaps be both the biggest mistake you make as a business owner as well as the last mistake you make since you likely won’t survive to relocate your company.