Whether you’re renting or buying, location is key when selecting a property for your business. Where you decide to set up shop can impact both the immediate and long-term success of your business. It’s a process that requires due diligence, patience, and a solid understanding of your business needs.
There are a lot of things to consider before applying for a loan to finance your business space, and to help you get started, we’ve put together a list of key considerations when choosing the best business location for you.
The physical space
When it comes to the perfect business location, first things first – does the actual space meet your needs? If you’re opening a restaurant, you might need more space if you offer dine-in versus carryout only. If you’re searching for an office, does the building provide sufficient power to support computers and other day-to-day equipment?
You also want to carefully assess the condition of the property. Are major repairs imminent? If so, it could cause delays in meeting your target launch date. Ongoing repairs could have repeated negative impacts on your business as well.
Meeting your current business needs is crucial, but you should also consider whether the space is suitable for growth. If you are signing a five-year lease but are projecting to double your revenue in three years, you may end up running out of space for more equipment or employees. Use your business plan to help determine the right amount of space and when you might need to expand.
Proximity to your target market
Another consideration is the proximity to your target market. For example, if you’re opening a retail store that sells urban clothing for teenagers, it might make sense to think about a location inside of a mall, or another area where teenagers typically spend time. You want to be near the people who buy your products or services.
Do your research and make sure you have a good understanding of who your customers are and where they live/work. Being near them can make your business easier to find and may help establish repeat customers.
Additionally, proximity to your target market can potentially impact your marketing costs. If your customers are far away and your business is hard to find, it may require additional advertising to bring them to you. Having a conveniently located business can be good for both you and your customers.
Proximity to competition
Depending on the type of business you operate, there can be advantages and disadvantages to being near competitors. For instance, if you are in an industry with comparative shopping, such as car sales or retail, being near competitors might help bring potential customers in the door. If you own a restaurant, a location near entertainment venues and other establishments might help bring patrons to your business.
Conversely, there are instances when being too close to the competition may not be good for business. If your competitor is well established, offers similar products/services, and has a loyal customer-base – it may be difficult to attract business. You will want to carefully consider if you have a competitive edge or if it may be better to set up elsewhere.
If you choose a business location where there is little or no competition, there are several things to consider. Think about the demographics of the area and if it’s a good fit. If so, it may be a good opportunity to bring something new and desirable to the community. If not, there could be a reason for the lack of competition – the demand simply isn’t there.
People need to be able to get to your business. This will look different depending on your geography and industry.
Does your business rely on heavy foot traffic? If so, finding a location in a densely populated area where there is a lot of activity may be ideal. If you are in an urban area, you might also consider your proximity to public transportation, such as bus or train stops.
If you are in a suburb or rural area, are you located near main streets or highways? Do you have a parking lot? If it’s difficult and time-consuming to get to your business, it could prevent customers from coming.
And remember, these same considerations apply to your employees as well. Just like customers, they too need to get to your business, and probably more frequently. If individuals have multiple employment opportunities to choose from, accessibility may factor into their decision.
Zoning laws and ordinances
Finally, one of the most important considerations when it comes to choosing a business location is local zoning laws and ordinances. These will dictate whether you can legally operate your business in certain areas.
For example, if you operate a manufacturing business, you may not be able to open a new location in a residential area. Zoning laws and ordinances even apply to home-based businesses, so if you plan to operate out of your house, make sure you are compliant with those laws as well.
Zoning laws and ordinances vary depending on location. To learn more about zoning laws and ordinances in your area, we recommend checking with your local city or county resources.
We hope that you found this blog helpful as you begin your search for the perfect business location. During this process, we strongly recommend that you consult with your legal and tax advisors to find the best property for you. Once you are ready, CRF may be able to help connect you to the financing you need to get started.
If you are interested in learning more about the benefits of owning commercial real estate for your business and tips for performing due diligence, you can find more information here.