Practically everyone in business has heard that one of the most critical factors to ensure a profitable business is location, location, location. Before I address profitability factors, let’s get into the fundamental decisions that act as the foundation upon which you build your business, almost literally, from the ground up to transform it from a startup to a thriving success.
As you go deeper into your business plan, the budget for real estate expenses gets very real as you consider location in terms of infrastructure, taxes, utilities, zoning law, environmental regulations and growth potential. These affect not only brick-and-mortar businesses but online ones, as well. For example, where will the inventory go — in your house or apartment? Are there laws about that? Do you have room for inventory? No. Suddenly, commercial real estate also becomes part of the online puzzle.
I recently discovered Business Development Bank of Canada (BDC) has several online articles that guide potential business owners through the necessary hoops of starting a business, including one specifically about choosing a location where you’ll find more about those fundamentals presented above.
Back in the day, I had to learn those ropes as I went along — a bit of trial and error. But I took it one thing at a time and, often, one day at a time. And that’s what it took: time. You may be anxious to get your business going in the perfect spot before everyone else does, but skipping these fundamentals toward establishing the best location helps you avoid costly pitfalls. Take the time you need. Find the right resources to guide you in finance, real estate, legal and other applicable areas. It’s worth it. You’ll see.
Suppliers And Employees
No matter the size of the business, even if you are strictly an online store, your distribution warehouse or office should be located near your suppliers so you can re-stock quickly. With suppliers around the corner, face-to-face meetings with them become an option. This can help strengthen communication and business relations with your supplier.
What is the worksite’s proximity to public transportation? If the location is close to public transit, prospective employees may be more interested in a position with your business over another.
Address Branding
If your business offers products or services outside of a strictly online presence, the importance of location goes beyond your suppliers and employees. Still keeping suppliers and employees in mind, location becomes a big part of your branding. For example, when you hear that a business is in SoHo, New York, or Yorkville, Toronto, immediately a perception of that business comes to mind. The prestige associated with those areas automatically benefits a business located there. Consider your target audience and place yourself in an area that is composed of your target demographic.
Traffic And Retention
You also want to balance your business site between high-traffic visibility and convenient accessibility without overextending one’s finances, thereby “breaking the bank” on your lease or purchase. I suggest considering a location within a developed infrastructure. A sufficiently developed area affords both your employees and your clients the ability to utilize conveniences located nearby, and, in turn, those conveniences potentially become clients and customers. My partner and I deliberately considered the same scenario as we evaluated where to place our financial entity.
Inevitably, potential clients or customers will naturally come across your business as they go throughout their day, increasing the likelihood of unsolicited and organic interactions with your business. Then there’s the matter of repeat business. No matter how good you believe your products or services to be, if your location is either inaccessible or inconveniently situated, the majority of people won’t make an effort to visit.
Competition
Although we covered the perfect address for better consumer perception and visibility in a well-developed, amenity-rich area, let’s not leave out the competition. Don’t forget to do your research. It is unwise to position yourself in a location that has too many businesses similar to your own. However, all is not lost if the competition around your business is inflated, while the location is ideal.
You could consider looking for a building or structure with distinctive and notable historical or aesthetic characteristics unlike those around it to differentiate. I believe contrasted appearance feeds into the competitive advantage and increases the likelihood of profitability for your company. In addition to providing superior services or products, such contrast could be pivotal to your branding, success and, ultimately, your profitability.
If you seriously consider these factors for your company and business, you’ve conquered half the battle toward achieving a thriving, profitable business.