Location Issues To Consider

Take these factors into account when assessing a potential location for your business.

April 7, 2003 7 min read

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Demographics
There are two important angles to the issue of demographics. One is your customers; the other is your employees. First, consider who your customers are and how important their proximity to your location is. For a retailer and some service providers, this is critical; for other types of businesses, it may not be as important. The demographic profile you've developed of your target market will help you make this decision.

Then, take a close look at the community. If your customer base is local, is the population large enough or does a sufficient percentage of that population match your customer profile to support your business? Does the community have a stable economic base that will provide a healthy environment for your business? Be cautious when considering communities that are largely dependent on a particular industry for their economy; a downturn could be a death knell for your company.

Now think about your work force. What skills do you need, and are people with those talents available? Does the community have the resources to serve their needs? Is there sufficient housing in the appropriate price range? Will your employees find the schools, recreational opportunities, culture and other aspects of the community satisfactory?

Especially when the economy is strong and unemployment figures are low, you may be concerned about the availability of good workers. Keep in mind that in many areas, few people may be unemployed, but many may be underemployed. If you're offering attractive jobs at competitive wages, you may find staffing your company easier than you thought. Look beyond the basic employment statistics to find out what the job market is really like. Consider placing a blind test ad (the local economic development agency may do this for you) to see what type of response you'll get in the way of applicants before making a final location decision.

Demographic information is available through a variety of resources. You could do the research yourself by visiting the local library or calling the U.S. Census Bureau and gathering a bunch of statistics and try to figure out what they mean, but chances are you probably don't have the time or statistical expertise to do that. So let other people do it for you-people who know how to gather the data and translate it into information you can understand and use. Contact your state, regional or local economic development agency or commercial real estate companies and use the data they've already collected, analyzed and processed.

Foot Traffic
For most retail businesses, foot traffic is extremely important. You don't want to be tucked away in a corner where shoppers are likely to bypass you, and even the best retail areas have dead spots. By contrast, if your business requires confidentiality, you may not want to be located in a high-traffic area. Monitor the traffic outside a potential location at different times of the day and on different days of the week to make sure the volume of pedestrian traffic meets your needs.

Accessibility And Parking
Consider how accessible the facility will be for everyone who must use it-customers, employees and suppliers. If you're on a busy street, how easy is it for cars to get in and out of your parking lot? Is the facility accessible to people with disabilities? What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to you? Small package couriers need to get in and out quickly; trucking companies need adequate roads and loading docks if you're going to be receiving freight on pallets.

Find out about the days and hours of service and access to locations you're considering. Are the heating and cooling systems left on or turned off at night and on weekends? If you're inside an office building, are there periods when exterior doors are locked and, if so, can you have keys? A beautiful office building at a great price is a lousy deal if you plan to work weekends but the building is closed on Saturdays and Sundays-or they allow you access, but the air conditioning is turned off so you roast in the summer and freeze in the winter.

Be sure, too, that there's ample convenient parking for both customers and employees. As with foot traffic, take the time to monitor the facility at various times and days to see how the demand for parking fluctuates. Also, consider safety issues: The parking lot should be well-maintained and adequately lighted.

Competition
Are competing companies located near your business? Sometimes competition can be good, such as in industries where comparison shopping is popular. (That's why competing retail businesses, such as fast-food restaurants, antique shops and clothing stores tend to cluster together.) You may also catch the overflow from existing businesses, particularly if your company is located in a restaurant and entertainment area. But if a nearby competitor is only going to make your marketing job tougher, look elsewhere.

Proximity To Other Businesses
Take a look at what other businesses and services are in the vicinity from two key perspectives. First, consider whether you can benefit from nearby businesses, either by the customer traffic they generate, or because those companies and their employees could become your customers, or because it may be convenient and efficient for you to be their customer.

Second, think about how they will enrich the quality of your company as a workplace. Is there an adequate selection of restaurants so your employees have places to go for lunch? Is there a nearby day-care center for employees with children? Are other shops and services you and your employees might want conveniently located?

Ordinances
Find out if any ordinances or zoning restrictions could affect your business in any way. Check for the specific location you're considering as well as neighboring properties-you probably don't want a night club opening up next to your day-care center. The Building's Infrastructure Many older buildings do not have the necessary infrastructure to support the high-tech needs of contemporary operations. Be sure the building you're considering has adequate electrical, air conditioning and telecommunications service to meet your business's present and future needs. It's a good idea to hire an independent engineer to check this out for you, so you're sure to have an objective evaluation.

Utilities And Other Costs Rent is certainly the major portion of your ongoing facilities expense, but it's not all. Consider extras such as utilities-they're included in some leases, but not in others. If they're not included, ask the utility company for a summary of the previous year's usage and billing for the site. Also, find out what kind of security deposits the various utility providers require so you can develop an accurate move-in budget; however, you may not need a deposit if you have an established payment record with the company. If you have to provide your own janitorial service, what will it cost? What are insurance rates for the area? Do you have to pay extra for parking? Make sure you consider all your location-related expenses, and factor them into your decision.

Room For Growth
Look at the facility with an eye to the future. It's generally unwise to begin with more space than you need, but if you anticipate growth, be sure the facility you choose can accommodate you.