Location, location, location. We’ve all heard these words, but have you carefully considered them while you’ve been working on the launch of your start-up?
In today’s modern business landscape, location has taken on a new meaning as well.
Whereas before it had everything to do with your address, whether you were in retail and had a location with high foot traffic, or an office with the right street address, today location is broader than that.
Simply put, there are two key factors to consider:
- Where are your customers?
- How will they find you?
These two questions are incredibly important, because they will inform every decision you make as you set up your new premises.
For example, if your clientele is international, either purchasing products that you ship to them, or accessing a service that you offer online (such as marketing, consulting, design work and so on), then customers are never going to come to your premises. This completely changes your needs. A warehouse might be important, or excellent Internet connectivity. What isn’t important are fancy offices or the best street address.
Consider the case of Dial a Nerd, a technology services provider that catered to the home user market. As Dial a Nerd grew, the owners decided to invest in fancy stores at shopping centres with high foot traffic (the higher the foot traffic, the higher your rent).
However, the business was built on technicians going to their customers’ homes. Dial a Nerd’s most valuable real estate was the billboards and street-pole advertising they invested in. No one came to their stores. When they closed them and moved into basement office space, the business saved thousands of dollars each month, and enjoyed significant growth as a result.
Here are 4 key questions to consider as you decide where your business will be located:
1. What type of premises do you need?
Using Dial a Nerd as our example, what type of premises do you need? Are you a retail business, or business to business? Will customers come to you, or will you always go to them?
These are critical things to consider when choosing premises.
Next, what overheads can you afford? There are many co-working and serviced office spaces available today for the business to business environment. As a start-up in particular, a month-by-month lease that doesn’t lock you into a set space for a set rental agreement will give you the flexibility you need to grow – and to keep your initial costs down.
If you do need a retail space or your own offices however, there are a number of key factors to consider.
2. Where are your customers?
In retail, you want to capture ‘foot traffic’, which is the number of people that will walk past your store each day. Which retail centre you choose and where your store is located in that centre will determine how much foot traffic you receive.
Key questions to consider:
- Where does your target market shop? Do some research around their spending habits and where stores similar to your own are located.
- Where are your competitors? This can be as simple as ensuring your food store is in the food court, to choosing a neighbourhood or shopping mall known for your type of offering.
- How much space do you need? Will a pop-up store work to begin with, or perhaps a food truck, or do you require premises immediately?
If you are a B2B business, many of the same rules apply. There is a reason why technology parks exist for example, or why New York is known as the financial services hub, and tech start-ups gravitate towards Silicon Valley. You need to be where your customers are able to find you.
To choose a great location, research where your customers are, where your competitors are and where people go for your services. And then find the most cost-effective way to be there too.
3. How will your customers find you?
Location plays a role in this of course, particularly for retail stores, but so does signage and advertising. If you’ve moved into a community, are there fliers announcing that you’re there and your doors are open?
Have you joined local community groups, your local chamber of commerce, networking groups and community social media groups?
Key questions to consider:
- Is your signage easy to read and does it clearly show customers what you’re offering?
- Have you found innovative ways to let people know where you are and what you do?
- Have you budgeted for some entry-level marketing exposure, either on social media, in community newspapers or radio, through pamphlets and so on?
4. What can you afford to spend on your location?
In some cases, investing in retail space or office space is unavoidable. If this is the case, you need to find the balance between good premises and affordability.
Spending too much can cripple your cash flow. Similarly, if you’re in a poor area you can deter customers from coming to you.
Key questions to consider:
- How long will a lease lock you in for? If you have seasonal business, can you afford the rent when things are slow?
- Have you compared rentals in the area, particularly between different office parks, management firms, leasing agents and retail malls?
- Have you factored in utilities and other costs that aren’t covered by your lease?
- What shopfitting or outfitting is required before you can start operating from the space? Does your landlord give you an operating expense allowance for shop outfitting?
Top tip: run your numbers carefully. If you can’t afford your location, you either need to look elsewhere, or you need to find other areas to cut costs.
Mistakes to avoid
Finding the right premises – at the right price point – can have a significant impact on your start-up’s ability to grow.
Avoid these key mistakes to get the most from your location.
Don’t avoid your competitors
Many business owners think they need to be where their competitors are not. The reality is that when you’re close to a competitor, it actually makes you easier to find for customers looking for your products or services.
Sure, you’ll need to convince them to spend their money with you, instead of your competition, but at least they’ll know you exist.
Don’t get too fancy
Fancy logos and names that look and sound good but don’t actually tell your customer anything about you are counterproductive. Your customers need to understand what you do and what you’re offering them at a glance.
Don’t over-invest in your premises
Many businesses – whether in retail or B2B, invest in much larger square footage than they actually need. Keep things as lean as possible and get inventive with your space.