What to consider when choosing a small business location
Opening a brand new business is an exciting time for hopeful entrepreneurs. There are many rewarding benefits that come with owning one's own business. While the benefits can be tremendous over time, new business owners should keep in mind that reaching these rewards does take a lot of work prior to opening up shop.
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Additionally, choosing the right location will likely heighten the ability to generate revenue sooner than later. There are many reasons why a strategic location matters for a small business, here are a few of the top ones to consider before making a huge financial investment.
Foot trafficFor the business to make money, there has to be a steady stream of foot traffic coming into the business. This is a primary reason why location matters. If the business is situated in an isolated and out of the way locale, less customers are likely to drop by (unless the company is a highly specialized one where the products or services cannot be gotten anywhere else).
Ideally, a small business owner should choose a location where people will not only see the storefront, but find it convenient to drop in; this includes easy access and available parking. The geographical and physical location of a store is one of the most important decisions a shop owner can make.
CompetitionAnother reason why location matters is competitive positioning. If a hardware store already exists in a strip mall, it does not necessarily make much sense for a proprietor to try and establish a new storefront selling the same wares in the same area.
|Too many of one thing? Probably best to find a new location|
The key to successful business is to fulfill a need, and if the local market is already inundated with the competitors and can't support any more of the same, a small business owner will either want to significantly differentiate the business or choose another location.
Economic factorsThe Small Business Administration recommends business owners to determine their needs and evaluate their finances. As a part of selecting a business location, the vicinity's demographics should be studied and understanding the area's economic factors are an essential step.
For instance, an entrepreneur is not going to open a high-end purse shop in a beach or fishing town, however, this kind of shop would be more suited for a mall location or area populated by shoppers looking to spend; a beach shop would not open in a rural mountain town as there is no market need.
Additionally, do the research to see if a similar business existed prior to this point and, if so, find out why it left.
Consider the futureTrying to project the future of the area is also an important consideration. If a business chooses a location in which businesses are shutting down and people moving out of town to look for job opportunities, this may not be the ideal location to set up shop. On the other hand, if a rural area has no competition for a specific type of business, but it is learned a contractor is putting in several housing developments that are selling and the area is projected to be more populated, then this might be a great locale to get a foot in the proverbial door and beat the competition.
Wherever the locale, ideally, the type of business model should be suited to shopper preferences and customer convenience. Competition and local economic factors help determine whether or not the business is a good match for the neighborhood.
Choosing the right location for a business is vital, and in most instances, largely plays a role in the success or failure rate of small businesses.