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How to Select the Best Location for Your Business

Pre-Qualify for a Business Loan

When opening a new business, picking the optimal location can be one of the most important decisions you make. The general area and specific site of the store, whether it be a restaurant, retail establishment, or services provider (or any other type of company for that matter), will have a tremendous impact on the success of your business. You will therefore want to consider several factors before making a decision. While there are numerous components that will go into your decision, below are a few important factors to consider when trying to identify the ideal location for your business.

    ALL MARKETS ARE NOT CREATED EQUAL - WHAT TO CONSIDER
    Consider things like the population density, day vs. night foot traffic, average age, ethnic distribution and income levels for your target location

  • Community Characteristics
    Prior to deciding where to place your business, do some research on the area of interest's population density and demographics to determine whether the community will be able to support your business. If you can determine that the area has a high consumer demand for your product or service, you can feel confident in moving forward with securing a location.
  • Visibility
    The more your business is exposed to the market, the better. So choosing a location that is in a high traffic area and is highly visible will be advantageous. Visibility is a form of advertising. For example, putting your business near a highway that your target audience would frequently be traveling down or on the intersection of two major roads. If consumers see your store every time they drive to and from work, they're more likely to know your business and visit your store.
  • Foot Traffic
    Foot traffic refers to the number of individuals who will pass by or enter your business establishment. As foot traffic increases, so should the number of customers you serve. For this reason, it is beneficial to be located in an area where foot traffic has proven to be high, such as a mall or shopping center with a large grocery store, where thousands of people will be passing by daily. Also important, what time of day will the majority of the foot traffic take place? Would it be primarily in the morning and afternoon or would it be mostly at night? Would the foot traffic be predominately office workers, consumers visiting to shop, or vacationers?
  • Accessibility
    If your business requires that customers come to your location to make purchases, your customers need to be able to effortlessly locate and access your store. That starts with being in a convenient part of town for your consumers, perhaps on a main road or in close proximity to other popular businesses. Going a little deeper, different types of businesses will have different needs, so consider whether your small business will need a large amount of parking space, a drive-thru, or an area where suppliers can deliver shipments with ease and efficiency. Factors such as these should be taken into account when trying to decide what location will be the most convenient for your customers and ultimately, the most successful for you.
  • Surrounding Businesses
    Neighboring businesses can either help or hurt your business' success, so it is important to take a close look at the businesses that will be in close proximity to yours. Ideally, you would prefer those surrounding businesses to have a similar target market and to be proven successful. Their loyal customer base will bring consumers to the area, and as a result, into your store. Additionally, it is also important to look into where your competing businesses are located and where they could potentially be located, as you don't want to be positioned too close to your competition. Lastly, if your business will heavily rely on the foot traffic from the large department stores or grocery stores nearby, you should consider if your business will be able to succeed should the larger stores lose business or shut down.
  • Cost
    Finding a location where your rent is affordable is one of the most important aspects to consider, but be sure to also look into the costs of renovation expenses. Renovation expenses can include interior and exterior remodeling, plumbing and electrical upgrades, and the cost of building the features of your particular business. If you will be working with a small business lender to obtain a small business loan for your venture, the lender will usually require you to put together a business plan showing your planned expenses, including renovation and start-up costs over the next few years prior to issuing you a small business loan. You can use this business plan as a tool to stay within your budget while searching for a location. You may want to see if you are a good candidate for small business financing by obtaining you bQualTM score and financing education report (www.bQual.com).
  • Room for Expansion
    As your business grows, you may find yourself needing additional space to accommodate the increase in business. While browsing potential locations, consider whether there is an opportunity to expand in the future. Look for locations that have additional rentable space or adjacent locations that may be available should you need it.
  • Many Franchises Provide Site Location Assistance
    If you are opening a new location for a franchised business, the franchisor can be an excellent resource to consult when trying to determine an ideal location because they already know what criteria leads the brand to be successful. Often, the brand will have specific criteria for your location that needs to be met such as population density, parking parameters, square footage of the location, etc. Both you and the franchisor will have to agree on a location before you can move forward with leasing.
  • The Type of Business You're Opening
    Depending on the type of business that you are opening, the type of location that is most ideal will vary. For example, some businesses, like gas stations and motels, are more successful being located directly off of a major highway. Other businesses, such as repair shops and dry cleaners, tend to get more business when located in a shopping center where foot traffic is high. If your business will be selling most of your products/services online or your business will travel to your customers, then your physical location will be less important, and you can save money by finding a location with cheaper rent.

The location of your business can be make-or-break for your company, so be sure to do your research, determine what location characteristics are most important for your business, and set yourself up for success.

If you need financing for your new business, be it full financing, working capital or even interim construction/build-out financing, please contact us at 800-277-3158 or contact us here.