When it comes to starting small business location is everything. Where you locate your business can eventually decide whether the business will survive in the long run or will encounter headwinds forcing you to shut it down or relocate it. This is especially true of retail businesses that largely rely on customer foot traffic. I have seen number of promising business that had to close down because they chose the wrong location.
Large retail businesses have dedicated real estate departments whose job it is to scout locations for expansion. Now, small businesses cannot afford to have a department to focus on real estate, but that doesn’t diminish the attention you have to give in choosing a location for your business.
Several factors go into decision making process about the location. None is as important as looking at the customer traffic in the vicinity. In general, higher customer traffic will lead to higher sales for any retail business. Can you imagine establishing a coffee shop in place where you are lucky to find 3-4 potential customers passing by in an hour?
Along with number of potential customers you also need to spend time understanding the customer demographic in the neighborhood. It would be foolish to set up high-end specialty retail store in a neighborhood where median income is bordering the poverty line.
Competitive situation is another factor that you need to pay attention to. You want to be very careful about setting up a book store in the plaza that already has a large national bookstore chain. Whenever possible, stay away from competing with the big guys head-on because you will never be able to beat them in the level playing field.
Obviously, you have to consider trade-offs between cost and the potential benefit you can get from a particular location. Yes, you can get lot of customer traffic and higher potential sales by establishing a shop in the middle of the mall, but will it be sufficient to pay the extra rent you will have to pay for that location. Without doing proper cost-benefit analysis you may end up at the wrong location.
Read the Fine Print
Another important point to consider when choosing a location is to understand the operating requirements imposed by the landlord. Many malls and shopping plazas require you to operate for specific hours. If you are not prepared to meet those requirements you will need to look into alternate location.
In addition, some landlords will require you to purchase certain type and amount of insurance coverage that can add up to substantial amount if you don’t read the fine print carefully. Make sure you calculate the TOTAL cost of lease that includes not only rent, but also utilities, insurance, outdoor maintenance and other related expenses. If you are not familiar with all operating and legal aspects of choosing a business location you should seek professional help such as as Shop to Let Specialist Completely Retail.
