Choosing the Best Location for Your Business
June 19th 2023
Any company that serves customers face-to-face should take extra care when selecting a location for its operations. This is especially critical for newer businesses that don’t already have a large customer base.
To find a great location based on what your business is like today, versus where you hope to be five years from now, you’ll want to weigh several factors.
Type of business
Where you ultimately decide to set up shop should first depend on the type of business you’re running. Your industry will, to a large degree, determine the type of space you need. For example, the space needs of a manufacturing operation are very different from a retail shop or an executive coach.
Other considerations include:
- What are the zoning regulations for your area?
- Do you have employees who need a workspace?
- Do you need a parking lot?
- Do you have large equipment?
- Will you have delivery trucks that need access for orders?
- Do you rely on foot traffic to attract customers?
The answers to these and other questions should help you get a sense of the size and general type of space you need.
If you’re just starting out and have a small team, it will be most economical for you to work from home, so as not to have to pay a landlord for additional space or to set up a remote team, where everyone you work with is responsible for finding their own workspace. However, that doesn’t work if you run a salon or restaurant, for example.
Size of your budget
Another important consideration is how much you can afford to spend on space alone. Because on top of your monthly rent, you may also need to pay for improvements if the space is not currently ideal for your team, as well as the cost to move any of your equipment and files from where they are now, and other expenses such as utilities and taxes, depending on the terms of your lease.
As you look at your financial history or your projections for the coming year, how much of your incoming revenue can you afford to allocate for rent? If you look at standard expenses for your industry, is that amount higher or lower than what others in your line of work are paying? Try not to overspend, especially early on, or you may hamper your business’ growth.
Where your customers are located
Once you know the type of space you’re looking for, such as a warehouse, street-facing storefront, or co-working space, as well as how much you can spend, it’s time to think about where your customers will be coming from. You want to be near where the majority of the demand for your products or services is originating. (This is why many pizza shops consider the size of the population within a certain radius of the proposed address.)
Are your best clients in the downtown area? If so, is it important that you be easily accessible?
Or do your clients not visit your business in person? If so, then where your operations are based may not matter to them at all.
Do you need to be close to your suppliers? If you’re running a restaurant where perishable food is a factor, you may want to map out how far your vendors will have to travel to reach you.
Are your customers so loyal that they’ll follow you wherever you move? That is frequently the case with personal service providers, such as therapists and hair stylists. Then maybe you don’t need to be in the most expensive part of town.
The one thing you want to avoid is moving to a new location that is more difficult for customers to access. Your best patrons may love your product, but if they have to contend with constant traffic jams or they can’t find a parking spot easily, they may look for a company that is easier to do business with.
Where is your competition?
Although you don’t want to make business decisions defensively, based on what your competitors are doing, you also don’t want to pick a place where existing businesses are well-established. Despite the fact that Burger King apparently used to locate its new restaurants near existing McDonald’s buildings, this probably doesn’t make sense for you, unless you’re a car dealer.
Generally, you want to set yourself apart from your competitors. Locating your business in a part of town that is not already served by a competitor is frequently a smarter move. Going head-to-head against well-entrenched businesses can be damaging to both companies.
Better to find territory that is just waiting for a business like yours to move in.
What is aligned with your brand
Believe it or not, how your brand is perceived should affect where you opt to locate your business.
If your selling point is convenience, make sure your shop is easy to get to. If your reputation is based on luxury or a high-end experience, where your business is situated should reinforce that; you may have to pay more to be in an upscale building or part of town. Or if sustainability or all-natural claims are closely linked with your company, perhaps you should be on the outskirts of town, closer to nature.
Before choosing a location, confirm that what you choose reinforces and doesn’t detract from your brand image.
Ease of parking
Many buyers make decisions based on parking availability. If they can’t park quickly and easily, or inexpensively, some people won’t make the effort to do business with you. The same could also be said of employees, who don’t want to have to pay several dollars a day to be able to come to work.
Granted, this is less of an issue in large cities, where proximity to a subway stop may be more relevant, but in suburbs and more rural areas, make sure you have use of a parking lot.
Your buyers and employees also want to feel safe when they come in. Sure, the rent on a space in a less popular neighborhood may be dirt cheap, but if you scrimp on your rent, you may also find it more difficult to entice customers in. It may also be more challenging to find employees willing to risk their personal safety to come to work. This is especially true if you’re open after dark.
Your chosen location can enhance and support your brand image, or it can discourage customers from doing business with you. The challenge is finding a space that is affordable and helps attract buyers.