Delays in getting a start-up business loan proved to be a blessing in disguise for Lucindia Nobles when she started The Better Way Boutique in College Park, Maryland. She had planned to locate her upscale designer clothing consignment shop in a strip center, and she visited the site often as her business planning and loan processing dragged on for almost a year. During the delays, she began to notice the lack of traffic in the center and the many empty parking spaces.
"My banker finally looked at the site and said, `There's not enough traffic for your business to work,' ' Nobles recalls.
Her search for another location led her to Baltimore Avenue, a main street in downtown College Park near the University of Maryland. "It was alive with shoppers,' she says. "This is a much better site for us.'
Location is one of the most important choices a new business owner must make. Retailers like Nobles know they need to be around traffic and customers, but other factors related to location aren't as apparent. Some examples of these less obvious factors include:
- A bakery leased a building whose loading docks were not truck height, so bread racks couldn't roll into the back of delivery trucks.
- A manufacturer leased a warehouse before realizing the loading doors were 10 feet too short for the company's needs.
Such factors can make even a high-traffic, low-cost location a bad deal for your company.
"You need to consider many issues before you look for a site,' says Alan Kraus, a senior business consultant at the Temple University Small Business Development Center in Philadelphia. The type of business will determine location needs, he says. A clothing store needs a high-traffic area, while a business consultant who works with clients on location can work from home.
Jan Norman is a freelance writer who specializes in small-business issues. She can be reached at jnsmallbiz@aol.com
Driven To Success
Many new business owners want to locate near the people most likely to buy their products or services. That was a consideration for James Farley in locating his store, Rosebay Fine Gifts & Etc., in an established tourist area in Port Orange, Florida.
The shop is in a waterfront restaurant on the main highway. "We get a lot of tourist traffic,' Farley says. "The drawback is the cars are driving past at 55 miles per hour.' The restaurant's large billboard, which mentions Farley's gift shop, helps attract these travelers, he says.
Speeding cars aren't the only traffic issue a new business owner must consider. Nobles wanted large numbers of shoppers walking--not driving--around the neighborhood. Small retailers, dependent on such foot traffic, are better off in local shopping centers, such as those that surround grocery stores, than in retail malls anchored by department stores.
Traffic patterns can be more important than volume, according to commercial real estate broker John Khami of Morris & Berke in Southfield, Michigan. "A bagel shop is a good example,' he says. "Bagels are a morning purchase, so the shop wants to be on the side of the street on which traffic is going to work.'
"Do a simple traffic survey yourself," consultant Kraus suggests. "Spend some time at a location to see who comes there, whether they walk from shop to shop or just run in and out of the anchor store.'
In fact, never lease or buy a site without visiting it. "You have to walk the site; get a feel for it,' Khami says. "Drive around the neighborhood. Are there one- or two-car garages? Are there basketball hoops and bikes? Are the trees mature? What kinds of cars do the residents drive?'
At Close Range
Being close to customers is more important to some businesses than others, says real estate broker Jerry Neitlich of In/House Corporate Real Estate Advisors in Irvine, California. Some manufacturers want to be close to their vendors, he says; labor-intensive businesses want to be close to their employees' homes; and companies with sales forces often locate near freeways or airports to maximize their salespeople's productivity.
Counting Costs
One of the most important site- selection criteria for new businesses is affordability. Many start-ups just look at the base rental rate, not realizing the other expenses, such as common area maintenance and interior improvements, Neitlich says.
Kraus advises researching the costs beyond the space itself. Labor rates, for example, can be higher in a major city than in the surrounding suburbs, and utility rates and taxes vary from town to town.
Part of a location's true cost is whether the lease and building work for your business, Neitlich says. Regardless of the type of business, the right location can improve your start-up business's chances for success if it meets all the business's needs, not just price.
What To Look For
When evaluating business locations, compare them against this checklist of features. The importance of each item will vary with the type of business. Proximity to customer base
- Affordable rent (watch for hidden costs)
- Proximity to suppliers
- Proximity to employees
- Availability of parking
- Ease of entrance and exit
- Functionality of space for specific business needs
- Utility costs
- Proximity to transportation
- Visibility of location
- Appearance of area, building or shopping center
- Flexibility of site for growth
- Zoning regulations
- City's future plans for the area
Contact Sources
The Better Way Boutique, 7319 Baltimore Ave., Ste. B, College Park, MD 20740, (301) 277-7130
In/House Corporate Real Estate Advisors, (714) 442-0922, jerryn@inhousecorp.com
Morris & Berke, 4000 Town Ctr., #680, Southfield, MI 48075, (248) 262-8000
Rosebay Fine Gifts & Etc., 5993 S. Ridgewood Ave., Port Orange, FL 20740, (904) 427-0706
Temple University Small Business DevelopmentCenter, 1510 Cecil B. Moore Ave., Philadelphia, PA 19121, (215) 204-7282
This story appears in the February 1998 issue of Startups. Subscribe »
