How Do I Choose a Location for My Store?
Location can play an important role in determining the success or failure of an early-stage business. This is why I recommend spending a significant amount of time planning and analyzing locations to find the right one. With that said, you need to incorporate a strategy in your search.
The first step is to establish a maximum budget for your monthly rent. Theoretically, you should already have a budget in mind as rent is a line item of your financial model that you constructed when you wrote your business plan. It's alright if your budget has changed since then, but make sure you have one in mind. This will help you manage your time effectively and reduce the number of options to consider.
Once you know how much you can afford, you'll need to perform a demographic analysis of the area you're targeting for your store. The results of the analysis should indicate the location and travel patterns of your target audience. For instance, if you're targeting educated consumers between the ages of 25 and 40 who earn between $40,000 and $80,000 per year, mapping software should indicate the location of people with those characteristics. Please note though that demographics are not the only factor to consider. You'll need to also identify high foot-traffic areas as well highways that may draw a lot of attention to your store location.
In addition, keep your competitors in mind when you're looking for the right location. You may notice that it's common to see many banks and coffee shops in the same area. That's by design, as studies have shown that stores located in close proximity to their competitors can benefit from higher-quality foot traffic. But don’t just target competitors, as complementary businesses that share a like-minded audience may also be of value. In fact, it's quite possible that, for example, a Chipotle may have a similar target demographic to your business even if you're selling completely different products and services.
It's also important to know your limitations. There are many consulting firms that specialize in identifying the best location for your business. If that's a cost you can't endure, then utilize as much publicly available information as possible while following an overall strategy.
We hope this helps you start your search for the right location. Let us know how it all works out and if you utilized any other tactics that I haven't mentioned.