7 Steps To Choosing A Great Business Location

steps to a great business location

1 – Your Space Requirements

Space is an important aspect of choosing a business location. And the amount of space you need is directly dependent on what kind of operations your business runs. For example, a restaurant will have very different space requirements than from a florist shop. 

A florist can easily operate from a kiosk or a cart. In fact, kiosk and cart locations already are and getting increasingly popular because they cost less but at the same time, have the potential of generating huge amount of business. Even something called a pop-up retail location is getting very popular.

Pop-up retail locations just come up un-announced in a highly visible location such as in a mall and last for a very short period of time. They are usually seasonal businesses such as around the time of Christmas and other festivals. 

These businesses take advantage of the season shopping spree and either close down shop till the next season or transform themselves into another kind of retail location. This kind of tactic is also used to test a product or business. Opening a small kiosk or a booth gives the business an increasingly accurate idea of how you can expect your business product to do when you launch it full-time. Some of the biggest mainstream retailers such as Target and Walmart adopted the concept of pop-up retailing every now and then.

Another advantage of choosing a carte blanche location for a business is that you do not have to get in to extended long-term leases. This helps you lessen your business start up cost.

2 – Demographics Of The Location

The demographics of a location for business will tell you many things. Today, when cities are getting bigger and people look for businesses and services close to where they live, the demographics statistics need to be looked in to in eve greater detail. Looking at the picture for the overall city may not be good enough anymore. You might need to examine the demographics of the area where you are locating your business in detail as well.

There are 2 aspects when it comes to demographics that affect the business.

One demographic is that of the targeted customer base whereas the other is that of your employees. 

When you choose the location for business you will have to see whether there is any particular class or category of people that you are targeting.

Is this category of consumer available in and around your business location? You will also need to figure out where your market is located, is there a population that matches the customer profile and does the community have a stable economy?

Ideally you should look at the business location where the population demographics show that the population is increasing rather than dwindling. You also want a large portion of the populace to be a potential customer. When it comes to business success and the demographics, this is something that you should cover in marketing and business research. We have spoken about that extensively in our previous sections.

We next come to demographics that concern employees. 

Does your business location permit you to find people who are either trained or easily trainable in your business? 

The question is whether you will be able to find employees close to the business location and whether they will have sufficient resources such as housing, schooling and the creation needs to support them. In many areas, the employment level may be high but they may be underpaid or underemployed. If you offer good job prospects, you may find it more easy to staff your business with expert and qualified people.

You can test the presence of potential employees in your business location by posting ad in the newspaper and seeing what kind of response you get.

Demographic information about a business location is available to you through many resources. You can do the research yourself by visiting the local library or you can call the US Census Bureau office and gather statistics that will give you an idea of the consumer base. 

In case you do not have the time or feel you cannot decipher this information to a great effect, you can hire a statistical expert to do this job for you. Statistical experts know where to get relevant data from and also how to processes that data into relevant information that concerns your business consumer database. You can contact your state, regional or local economy development agency or a commercial real estate company and use the data that they have already collected, analyzed and processed.

3 – How Much Consumer Traffic Do You Need

Even if you take up the space for a storefront in a busy shopping mall, you do not want to be put away in a blind space. Almost all shopping areas, including the busiest malls have blind areas which do not have the consumers passing through as a part of their natural sojourn through the shopping area. You do not want to be tucked away in a corner if the success of the sale depends upon the average shopper discovering and finding your business by virtue of visiting the shopping mall.

However, if you have the kind of business product that requires privacy and caters to a select clientele, having a space in the quieter area of a shopping mall may serve your purpose. 

It is a good idea to evaluate the traffic in our business location before you decide where you want to purchase space for the storefront. 

You can monitor the traffic outside the potential business location at different times of the day to make sure that the volume of the consumer traffic meets your business needs.

4 – Accessibility And Parking Space

An extremely important part about the business location is its easy accessibility and the parking space available. Certain locations especially in residential colonies to not allow a business to start if there is not adequate parking space to accommodate your potential customers in the future. You need to consider whether all the people who will be associated with your business that is your customers, employees and suppliers will be able to access your business easily. 

If you are on a busy street will be easy for them to get in and get out and find parking for the vehicles. Is the facility accessible to people with disabilities? In case you need heavy vehicles to come in and out of your business facility to deliver products and raw materials, whether they be able to gain access to your business premise easily. Small business couriers need to get in and out quickly whereas trucking companies need adequate roads and loading docks if you’re going to receive freight with large volume.

Give consideration to the hours of working permissible in the business location. What about the services that are provided in the business location? For example, is the air-conditioning on all the time or is it only functioning through the daylight working hours. 

You might find office space in a beautiful business building but if you find that you need to work after hours you want to ensure that the air-conditioning will be functional during those hours. If you intend to work on weekends, will you have access to the business location or will it we all locked up. If it is going to be locked up are you going to be provided with a key or an access card to go to your office if you require.

Parking is a bigger issue in the consumers mind that some people may think. Always try to ensure that there is convenient and adequate parking space for both consumers and employees. As you monitored the foot traffic, do the same with the parking space at the business location and see how the demand for parking fluctuates during the day. Also consider safety issues regarding the parking such as whether it is well-maintained and adequately lighted or not.

Even when you are buying an existing business, consider the location just as you would if you were starting a business from scratch. Ask yourself whether the business location suits your business purpose. Pay special attention to any changes that have occurred in the business location in the past or potential future changes that could have direct impact on the accessibility and practicality of your business location.

 5 – Presence of Competition In A Business Location

The presence of competing businesses and services play an important role when choosing the business location. Sometimes the presence of competing businesses is greatly appreciated and even boosts your own business. There is something called comparison-shopping that makes similar businesses such as restaurants, clothing stores etc. to flock together in the same location. 

By having different options for the same product available in the same location, location becomes extremely attractive to the customer. The customer knows that by going to just one location he has several choices for the same product. 

Not only does this allow you to attract your customers but also allows you to catch the overflow from customers of other competing businesses as well. It is you who needs to decide whether your business location will benefit from the presence of competitors or not. Accordingly you should choose the business location.

Presence of Other Businesses and Helpful services

Usually, presence of certain other businesses and services close your business location enhance the purpose and practicality of your business presence.

These are the businesses could be related businesses who could supply you with more potential customers. There could be other helpful services in close proximity to your business who you could become a consumer of. Services like eating joints, day care services sector could be a boost and of great convenience for your employees. 

Any business or service that is close to a business location and enhances the quality of your business location is a good thing. Any business or service that you can see yourself using as part of running a business is another advantage.

6 – Image And History

Certain business location and shopping areas have a certain image in people’s mind. Certain shopping malls shopping areas may be considered high-end whereas other shopping areas may be considered as catering to low-end business products.

Before you choose the business location it could be important to understand how the location is perceived in the minds of the consumer.

Also, look into the history of the business site. For example if the site has a history of business failures for the particular business such as a clothing store, you might want to think about starting a similar business there.

There could be a problem with the consumer base in that location or the future consumer might just presume that your business will fail as well owing to the previous history. Being associated with previous failures might lower the perception of quality for your business and business product in the minds of potential consumer resulting in a low response.

If the previous business in a similar location has been wildly successful you still need to research and consider whether it was the business model that succeeded and how much did the location have to do with the success.

Another historical point you’ll want to know about is whether a serious crime, tragedy or any other notable event has occurred on the business site premises. If so, will the public’s memory reflect on your business operation and whether that reflection is going to be positive or negative?

7 – Infrastructure, Utility And Costs

You might also want to ensure that the building that supports your business has all the necessary infrastructure in place.

For example, the start air-conditioning provision meet your business requirement. What about the wiring and telecommunication services. You should look at the potential expansion in the near future and your requirement from the infrastructure to decide whether the building meets those needs are not. It is a good idea to hire an independent engineer to check out these aspects so you have a good evaluation of what kind of services the infrastructure of the business location can support

Utilities and Other Costs for the Business Location

The rent for the business location will be your one major expense. However, different business locations include different utility costs in the rent. 

For example, your business and may include janitorial services and maintenance cost whereas in certain locations you might have to pay for these services separately. Any utility that you require or will be using in your business location that you have to pay for separately will increase the expenditure on the business location. 

In order to get an idea of how much you were going to spend on various utility services, you can ask the utility company for a summary of previous years usage and billing for the site. Look into the kind of security deposits that you will have to make for the business location. Do you have to pay extra for utilities such as parking, maintenance etc.?

Business Location Lease – Final Checklist

Final points to check before signing the business location lease.

You should run through the following points before you sign the business lease agreement.

  1. Is there sufficient electrical power? Are there enough electrical outlets?
  2. Is there enough parking space for customers and employees?
  3. Is there sufficient lighting, heating and air-conditioning?
  4. What Signage can you put?
  5. Is your business in compliance with the city’s building and zoning department?
  6. Will the landlord permit alterations that you deem necessary?
  7. Do you have to return the building to its original condition when you move?
  8. Is there any indication of roof leaks?
  9. Is the occurrence of burglary insurance high in the area? [This varies tremendously.]
  10. Can you secure the building at a low cost against the threat of burglary?
  11. Will the health department approve of your business at this location?
  12. Will the fire department approve of your business at this location?
  13. Have you included a written description of the property in the lease agreement?
  14. Have you attached drawings of the property to the lease document?
  15. Do you have written guidelines for renewal terms?
  16. Do you know when your lease payment begins?
  17. Have you bargained for one to 3 months of the rent?
  18. Do you know your date when you take possession?
  19. Have you listed the owners responsibility for improvements?
  20. Do you pay the property taxes?
  21. Do you pay the insurance?
  22. Do you pay the maintenance fees?
  23. Do you pay the utilities?
  24. Do you pay the sewage fees?
  25. Have you asked your landlord for 5% off on your rent lease?
  26. Have you included penalty clause in case the project is late and you are denied occupancy?
  27. Have you retained the right to obtain your own bids for signage?
  28. Can you leave if the business center is never more than 70% leased?
  29. Has a real estate attorney review the contract?

Since everything is negotiable in a business, the business lease is also subject to negotiations regarding financial terms rent increases, the tenants rights and responsibilities, options for renewal, tenant leasehold improvements and other terms and conditions.

  • While your agent can help you initiate and negotiate the biggest bumps on the lease, it should always be reviewed by an attorney who specializes in real estate.

You should only sign the business is after it has been reviewed and approved by your attorney. Typically, the 1st draft will be drafted by the landlord and or his attorney which you will then get reviewed by your own attorney before you sign it.

  • At the end of the day, it is important to remember that it is your own personal judgment that is going to matter when choosing the ideal business location.

Statistic data and technological elements of the site one thing but you are the one who probably needs to get a balanced picture of the requirements of your business and just the location on its merits. Real estate brokers and economic development agencies can give you plenty of numbers since that is what they do.

  • To get the accurate picture of the business location you should take time to visit the site yourself, talk to people who own or are working in nearby businesses and verify the facts and what they really mean to the potential success of your business.

Negotiate the Business Location Lease

  • The 1st draft of the lease contract is only the beginning. This will almost certainly be written in the best interest of the landlord.

In almost all cases, they will be certain clauses on the lease contract that you will not be agreeable with and certain other clauses that you might want to get included. In a nutshell, the 1st draft of the lease agreement that you are presented with for business location will probably require you to negotiate.

  • You should understand that like everything else in the business, even the lease negotiation for the business space is negotiable with the property landlord.

In fact, you will be surprised as to how much you can get in the concession and extra is simply by asking. When you ask for certain demands you should make sure that they are stable and in keeping with acceptable business practices and current market conditions.

  • A good commercial real estate agent specially one who represents you and not the business landlord can be invaluable during this time.

Not only can help you understand the commercial property business lease but also give you information about the kind of agreement that you should go for based on information he might have about other similar businesses and similar renting agreements. Avoid issuing any ultimatums because they almost always close the doors and if you fail to follow through your next ultimatum will not mean much.

  • In order to save time in negotiation you can consider starting the process of negotiation with something that is very close to your best and final offer.

That way if you cannot mutually agree on the terms, both you and the landlord are free to move on quickly without wasting time. Usually, the longer the negotiations take the more potential there is for things to go wrong.

5 Kinds Of Common Business Commercial Leases

Common kind of commercial leases.

Flat Lease

This is the simplest and the oldest and a lease agreement. It sets a fixed price for a fixed period of time. This simple agreement between the landlord and the business tenant is getting more and mow elusive to find.

Avoid the flat lease if it is for a very short period of time has a series of flat cases can cost you more in the long run than a long-term lease with escalation clauses.

Step Lease

Step lease attempts to cover the landlord’s expected increase in expenses by increasing the rent on an annual basis over the life of the lease agreement. The one problem with the step lease agreements is that they are based on estimates rather than actual cost. There is no way for either party to know in advance that the proposed increases are fair or equitable.

Net Lease

Like a step please agreement, the net lease increases the rent to cover the increase in landlord’s costs but do so at the time when the increase occurs rather than on an estimate. This kind of lease agreement is more equitable than a step lease but it is also less predictable.

Cost of Living Lease

Rather than tying the rent increase to a specific expense, this kind of lease agreement increases the rent of the basis of the rises in the cost of living. Your rent will go up with general inflation. By since your business product and services also likely to increase their price with inflation, it should effectively cover the increases in rent. For this reason the scanned for lease agreement can be very appealing and attractive.

Percentage Lease

This lease agreement allows the landlord to benefit from the success of your business. The rent is based on either a minimum amount or a base amount or percentage of businesses across revenue whichever is higher. Percentage amounts usually range from 3 to 12%. You will be required to furnish the periodic proof of your gross sales which means that you may have to allow the landlord to examine your financial books or sales tax records or provide a copy of the appropriate section of your income tax return. Person leases are common for renting retail space.

Using a Real Estate Agent to Find Commercial Real Estate

Unless you are experienced at finding business locations and dealing with commercial properties, it may be a good idea to use the service of a qualified real estate agent.

Whether you are buying or leasing a commercial property the real estate agent can help you prescreen properties but saves you time and also negotiate on your behalf which can save you money. A commercial real estate agent will help you understand the nuances of renting a commercial property better. When looking to lease a commercial property or to buy one, find a real estate broker who specializes in dealing with commercial properties.

Typically the seller or the landlord pays the agent’s commission which may put questions in the mind regarding the loyalty of the agent.

However, the agent does not get paid unless the deed satisfies both the parties. So that is something that works in your favor.

You may however always choose to get an agent of your own to find you a suitable commercial business location. This is known as tenant or by representation.

It may even be a good idea to hire an attorney to go over the business contract concerning the commercial lease as well as to negotiate with the landlord about certain clauses that you might included in the business lease as well as removing others.

For more information on tenant representation and for help finding someone to assist you with finding commercial business location, contact the Society of Industrial and Office realtors in Washington DC at 202-449-8200 or visit their website at www.SIOR.com.

When choosing a real estate agent to find your commercial property, use the same principles as you would when choosing an accountant or an attorney for business.

  • Ask for reference from your friends and family as well as other business professionals that you might be involved in. Ensure that the agent has knowledge of commercial business properties and even specializes in them.
  • Check out the track record of the agent, professional history and reputation and clarify how the agent will be compensated and by whom.
  • Draw up an agreement with the agent that specifies the job that he is going to perform for you and any other mutual expectations.

Commercial Business Leases

What is a Commercial Business Lease

When looking at a commercial business lease for the 1st time, it is easy to get intimidated. A commercial business lease can be complicated, lengthy, full of complicated language and always written in favor of the landlord.

However, the main point to note is that like most everything else in the business, even the commercial business lease is negotiable.

In order to be able to negotiate the terms on a business lease to your maximum advantage, you must 1st be keenly aware of your own business requirement and what you want out of agreement. You should know how much your business can afford as well as the current services and requirements that you want from the location.

There are 2 main clauses that the commercial business lease should always contain, a bail-out clause and a co-tenancy clause.

The bail-out clause allows you to get out of the lease before the term expires in case your businesses succeed and the sales to not meet the expected figures. This clause allows you the freedom to close your business if it is not successful instead of having to pay money for the entire lease term and cause yourself further financial injury.

The co-tenancy clause states that you can close your business in case of major anchor store closes. In case the business location needs a lot of construction work or development, you can ask the landlord for the construction allowance which is generally $10-$25 per square foot to offset the cost.

You should clearly understand the difference between rentable and usable space as well. Rentable space is what you are paying for and usable space is what you can use which does not usually include hallways, rest rooms, lobbies, elevator shafts, stables and so forth.

You may be expected to pay a portion of maintenance for common areas such as the lobby and washrooms. This is not uncommon but make sure that the charges are fair and the landlord is not making a profit on them.

Also check for clauses that allow the landlord to remodel at the expense of the the tenant without your approval. Insist on having language and clauses in the contract that limit your financial liability.

What Are Leasehold Improvements

Leasehold improvements are non-removable installations either original or the result of the modeling that you make to the facility to accommodate your needs.

Such improvements are typically more substantial when you are taking up new space which may consist of only walls and flooring. Often existing space will include some furniture and fixtures. Get estimates on the improvements you need to make before signing the lease so you know the total move-in cost and can make a fair construction allowance request.

Business Location Worksheet

Use this worksheet to evaluate weakness and strengths of your business.

Try and answer the following questions about the business location as it concerns your particular business and see whether each question is the strength or weakness.

The following worksheet will help you compare the different business locations that you see and help you determine which one is better for your business.

  1. Is the business facility large enough for a business?
  2. Does it meet your layout requirements well?
  3. Does the building need any repairs?
  4. Do you have to make any leasehold improvement?
  5. Do the existing utilities meet your needs all you have to do re-wiring or plumbing work? Is the ventilation adequate?
  6. If the facility easily accessible to your potential clients and customers?
  7. Can you find a number of qualified employees in the area in which the facility is located?
  8. Is the business facility consistent with the image you would like to portray about your business?
  9. Is the facility located in a safe neighborhood with a low crime rate?
  10. Are neighborhood businesses likely to attract customers who will also patronize your business? This is usually called ‘spill-over’ customers.
  11. Are there any competitors located close to the facility?
  12. Can you compete with these competitors successfully?
  13. Can suppliers make deliveries conveniently to your business location?
  14. Can the business location accommodate future business growth?
  15. Are the lease terms and rent acceptable?
  16. Is the facility located in an area zoned for your type of business?

Starting A Business In a Business Incubator

Business Incubators – What they are and how they can help you start a business

Business incubators are organizations that encourage business startups and young companies to start their operation by providing well organized business assistance program.

Business incubators are usually created by both public and private investors. Business incubators provide, access to business financing, shared office services management assistance, access to business equipment, flexible leases, expand the space and many other services required by a young business to start and grow.

The time and duration that the business can spend in an incubator is usually limited. This is so that a young company and the business startup can get the support required to start and grow during its initial stages in a business incubator and then move on when it is ready to set itself up on its own 2 feet without the assistance provided by a business incubator. This gives the chance for another new businesses to find the support and services that require.

The time that a business can spend in a business incubator is usually about 2 years but this can differ. These agreements can also be flexible.

Business Incubators usually fall into the following categories: technology, industrial, mixed-use, economy empowerment and industry-specific.

For more information about incubators and assistance in finding one for your business, you can contact the National Business Incubation Association [NBIA] at 740-593-4331. You can also send a self-addressed and stamped envelope to NBIA at 20 E Cir. DR, #37198, Athens, OH 45701-3751 or visit their website at www.NBIA.org to get the list of incubators in your state.

Using Economic Development Agencies to Find A Business Location

Economy Development Agencies – What are they and how they help business startups.

One of the best sources of information and assistance for business startup as well as expanding the business is the state, regional and local government agencies. There are nearly 20,000 economy development groups worldwide who have the single objective of promoting economic growth and development in the areas that they operate in. They encourage new businesses to locate in the area and help them by giving them all the gathered statistics and information that business needs in order to make a decision.

These economic development agencies will help a business regardless of its size in 4 primary ways:

Market demographics. Real estate costs and availability; zoning and regulatory issues. Workforce demographics. Referral to similar businesses and other resources.

You can start with your local state agency who can then guide you to regional and local groups for more detailed information.

Carte Blanche Business Locations – Carts and Kiosks

Carte Blanche, Kiosks and Carts as Business Locations

Carts and kiosks are a familiar sight mostly in public places such as shopping malls and airports and bus stations. Carts and kiosks have also given a boost to a new kind of business which is known as pop-up business. These businesses are temporally businesses that operate on a seasonal basis.

For example, cakes and candy business might operate for just a few days around New Year’s and Christmas and then disappear for the rest of the year. Renting a space for a cart or kiosk in a shopping mall makes it possible for a business to rent out space for just a few days and not have to take up permanent space.

The biggest advantage of a cart or kiosk is that it is a much more affordable business space in a prime business location than a prominent store.

Carte blanche setup is also very useful in testing a particular product. Before you launch the product in a proper prominent store, you can judge the response of particular location are shopping on my opening up cart or a kiosk store in that place.

As already mentioned, many businesses can find success with a cart and a kiosk in locations other than a busy shopping malls such as airports, stadiums, events grounds etc. The options for a location for a kiosk will depend upon the place that you stay in as well. If there are places which have a heavy foot traffic and attract a lot of people for whatever reason, the location for kiosk is only limited by your imagination and creativity. Popular and busy consumer places will probably already have a long line up of applications. In order to take advantage of one such location you will have to negotiate for space with the property manager.

Days when kiosks and carts in a shopping area used to be as simple as just regular stand are gone. Today the design and the structure of the kiosk can be elaborate an extensive. People said the range of products from the shopping cart and a kiosk. It can simply be candy kiosk do something much more sophisticated like the kiosk for expensive jewelry. Whatever your product is, try to ensure that the design, layout and the functionality for your kiosk suits the product that you are trying to sell.