Part 8 ~ Acey Gaspard’s Guide to Starting a Small Business – Made Simple
If your business requires significant interaction with customers or clients, then your business location is of great importance. On the other hand, if your business is 100% online and requires no customer or supplier interaction then location doesn’t come into play as it does in the brick-and-mortar world.
James was a wizard at working with computers. He was passionate, and he loved what he did. He decided to open his own computer repair shop.
The problem was that James lived 30 miles from the nearest major city. He was out in the country, and even though he had a good reputation and was good at fixing computers, his business was too far away for most people to bring their computers in for repair.
James thought that because he was so good at repairing computers, people would come to him, even though they’d have to drive for more than an hour and a half round trip to reach him.
He was wrong: people won’t go out of their way unless they absolutely have to. If James had been the only one who could repair their computers, then a few customers would have taken the time to drive out there. But even if James is good and he can capture a tiny part of the market, he’s still missing out on a large volume of business.
Whether you’re buying an existing business or planning to create your own, it’s very important to take time to consider the best location.
Making Location a Priority
Consider a hairstylist business located in a high-traffic shopping mall, and consider the same business located on a county road, five miles from the city. Which location do you think would do better?
With a lot more traffic, you can afford to make more mistakes and correct them, because you could try out new ideas, new promotions, and new selling techniques. With low traffic, you don’t have a lot of room for mistakes; you have to make each sale count.
The main reason people start off or operate their businesses at a less than optimal location is because of the cost. Everything comes with a price.
It may seem like it costs a lot to start off in an excellent location, but it’s worth considering. It’s easier to start off in a good location and build from that point than it is to start off with a poor location and then move once you’re successful.
If you have any choice in the location of your business, choose the best one and cut costs in other, less important areas. You can improve on the issues you initially cut more easily than you can improve your location.
Another issue to consider about the location is that if you build your business in a good location, the value of your business will increase with your success. As you build your business you will also be building an asset.
Make it a priority to choose the right location for the future.
Action Steps to Choosing the Best Location for Your Business
- Evaluate if the business you want to be in or want to have is dependent on “walk-in traffic.” If so, then a better location, even if it is more expensive, maybe more worth your while.
- Calculate how much more money is required to pay for the better location. Calculate whether the expected sales or profits will be enough to justify the more expensive location.
Important Points to Choose the Best Location for Your Business
- A high-traffic location is best for businesses that thrive on walk-in sales.
- A costly location “pays for itself” if it ensures higher returns/sales.
- You can cut on other areas of your business to afford a more expensive location.
- Even if a location is more expensive, it’s resale value will increase as your business becomes more successful.