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If you’re reading this, you likely perfected a business plan and secured some financing, so now you’re ready to nail down a business location that works.
When you take a walk down the main street of your neighborhood, you’ll see different shops offering their goods and services to the community. For the successful ones, the business locations were likely thoughtfully planned beforehand. For businesses that came and went in a blip, poor location choice could have played a role.
It just so happens that right now is a great time to establish a physical location for your business. Brick-and-mortar stores are making a strong comeback. Forrester, a leading market research firm, predicts that 72% of retail transactions will take place in a physical store by 2024.
So, where do you start? We’ve put together this short guide to help you avoid missteps and identify the best business location possible.
Why is business location important?
Business location can impact the amount of organic foot traffic your store gets. A business location can also factor into a company’s branding and image, increasing your ability to attract new shoppers. In other words, a store’s location can be the reason it takes off. The phrase “location, location, location” is repeated often in real estate for good reason.
How to choose the right business location
Finding the right business location requires careful strategy and research. You have to weigh the appeal of a location against its associated cost, as well as make sure you’re following local laws and ordinances. To find the location that’s truly best for your business, follow the five-step checklist below.
1. Understand the target audience for your business location
Your business likely has an ideal shopper who you’re trying to reach. If you have a trendy clothing brand that designs streetwear for Gen Z, you won’t pick a suburban location. If you sell high-end, artisan-crafted ceramics, then you likely don’t want your business location to be in a run-down strip mall next to a tax preparer’s office. Here are a few questions to ask about your target audience:
- Where does your audience live? It’s crucial to meet your shoppers where they are. Think about the demographics of your target audience and compare that against the neighborhoods or streets that you’re considering.
- Where and how do they prefer to shop? If your business was online-only before, and your customers aren’t concentrated in one location, that might impact your investment in a business location.
- How much will you rely on foot traffic? Maybe your business is already well-known and will be a destination that people come to from other areas. But if it isn’t, then you need to know how much foot traffic a location gets. Visit the location at different times of the day and the week to monitor how often people stroll by.
2. Know the competitive landscape of a potential business location
Explore the communities that you’re considering and see what businesses they already have. They should be businesses that are complementary to yours and not in direct competition. However, a potential plus side to being near competitors is that if those stores draw a lot of people to that area, you may also get a boost in walk-in shoppers who are looking to comparison shop. You just need to make sure your products have clear differentiators from the ones they can get down the block.
- What’s your proximity to the competition? Are you right next door or a few streets over?
- Who’s your competition’s audience? Even if a store sells similar products, maybe their target buyer is different.
- What value does your competition offer? Your product might have a different style, newer features, or better price points.
3. Consider the accessibility of the space
We already talked about foot traffic, but there are other elements to keep in mind when researching the right business location. They mainly boil down to how simple your store is to find, get into, and get out of.
- Is it easy to notice your storefront? Does the business location come with built-in signage that’s clear and prominent? Will you have adequate window space to show off your wares to window-shoppers?
- How accessible is your business location? Would your store be easy for someone with a physical disability to enter? If you sell maternity or postpartum clothes, then maybe you look for a location without stairs or a location with wide doors for pushing a stroller through.
- What’s the parking situation? No one likes hunting for parking. If your business is in a car-dependent location where everyone drives, you don’t want your shoppers circling the block fruitlessly before they give up and speed off to their second choice.
4. Pay close attention to your budget
When choosing a business location, money matters. Whether you’re self-funded or using a business loan, you likely have a set budget that you need to follow to keep your store financially viable. Business owners may think of the monthly rent as the number to pay attention to, but there are many associated costs owners are responsible for in addition to a lease.
- What recurring costs will you have? Account for what monthly utilities like electricity and water might cost. Think about how much you’ll need to pay in state taxes or business insurance each year.
- Do you plan to remodel or renovate the space? Unless the property is turnkey ready, you might want to make upgrades or install new equipment to accommodate your business. Even simple updates like repainting or refinishing the floors can add up.
- How much space do you need? If you plan to host events in your brick-and-mortar, then maybe you allocate part of your budget to finding a business location with ample space. Or maybe you need space for dressing rooms or large inventory.
5. Don’t forget about local laws
Each county or city has special rules that businesses must follow in order to be located there. Pay attention to zoning regulations as they can impact how you’re able to use the space. Before leasing or buying a spot, make sure your business can comply with local ordinances.
- Are you allowed to build out the space and expand? Zoning ordinances can dictate the height and lot size of your business location. It can even impact the type of signage you’re allowed to attach to your storefront.
- Are there noise-level limits? If you plan on hosting community events or doing crowded launches for new products, then you could be stymied by rules about noise level or how late you can have noise.
- Can you serve alcohol? If you’re a wine shop that wants to do free tastings on the weekends to create a buzz, so to speak, learn about laws regarding alcohol consumption.
Choosing the right business location is one of the most important steps to opening your brick-and-mortar store. By taking the time and effort to consider elements like your audience, your competition, and your budget, you can set yourself up for retail success.
Faire offers financing to new brick-and-mortar retailers through our exclusive Open with Faire program. Get up to $20,000 in new inventory and pay 60 days later. Learn more and apply here.
