HOW TO PICK YOUR BUSINESS LOCATION?
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One of the most challenging issues during the investment process is picking up the business location. While companies like Amazon spend thousands of dollars to pick their business locations, how do small & medium sized companies make that decision with limited budgets? With this presentation, I tried to bring some of the important questions to the attention of those companies who struggle to make such a tough decision with a limited budget. I also provided some tools I use to help the investors make a smart business location selection decision. I hope you will enjoy it.
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HOW TO PICK YOUR BUSINESS LOCATION?
- 2. OUTLINE • DENIZ SENYURT BIO • LOCATION, LOCATION, LOCATION • QUESTIONSTO BE ASKED • MYLOCATIONADVISOR LLC
- 3. DENIZ SENYURT • 25YEARS OF EXPERIENCE IN INTERNATIONALTRADE AND INVESTMENT • METU, ANKARA UNIVERSITY, GEORGEWASHINGTON UNIVERSITY • WORKED FOR MINISTRY OF COMMERCE FOR 25YEARS,TRADE ATTACHE INTURKISH CONSULATE IN HOUSTON. • SAVVYTRADE LLC & MY LOCATION ADVISOR LLC • WWW.SAVVYTRADE.COM • WWW.MYLOCATIONADVISOR.COM
- 4. LOCATION LOCATION LOCATION • THE FOUR P’S : PRICE, PRODUCT, PROMOTION AND PLACE • PLACE:THE LOCATION OFYOUR BUSINESS • VIRTUALLY (DROP-SHIPS) OR BRICKAND MORTAR? • FINDINGTHE RIGHT LOCATION FORYOUR BUSINESS CAN MAKE A HUGE IMPACT ON IT’S PERFORMANCE
- 5. QUESTIONSTO BE ASKED • TYPE OF LOCATION :WAREHOUSE, MANUFACTURING PLANT,OFFICE , RETAIL,TEMPORARY PREMISES, POP-UP BUSINESS, SHAREDCOMMERCIALOFFICE, HOME OFFICE • YOU:THE SPACE HASTOWORK FORYOU. • YOUR CUSTOMER: NO CUSTOMER = NO BUSINESS • YOUR EMPLOYEES:ABILITYTO ATTRACT GOOD EMPLOYEESWILLAFFECTED BYYOUR LOCATION • COMPETITION & OTHER BUSINESSES: WHERE ISYOUR COMPETITION?WHAT ISAROUNDYOU? • COST: INCOME & SALESTAXES, PARKING?CANYOU AFFORD? • CONVENIENCE: IS IT EASYTO FIND? IS IT EASYTOACCESS?CLOSENESSTO PORT/AIRPORT/HIGHWAYS • PRESTIGE: DOESA CERTAIN ZIP CODEADDRESSADDSCREDIBILITYTOYOUR BUSINESS? • TRAFFIC: CORNER, STOP SIGN, SIGNAGE, FOOTTRAFFIC • FACILITY REQUIREMENTS: DOYOU HAVE SPECIAL NEEDS I.E. HIGH POWER /WATER CONSUMPTION • ZONING: MAKE SUREYOUR BUSINESS IS ALLOWED BEFOREYOU SIGNA LEASE • LOCATION RISK ANALYSIS: DRY CLEANING,GAS STATION
- 6. CUSTOMER • IDENTIFYYOURTARGET CUSTOMER (RACE, AGE, GENDER, SPENDING,TELL US HOW DOESYOURTYPICALCUSTOMER LOOKS LIKE) • DEMOGRAPHICS : ESRI, CENSUS BUREAU • POPULATIONTRENDS (GROWING SHRINKING) • DAYTIME POPULATION • TRAFFIC COUNTS • HOUSEHOLD INCOME • HOUSEHOLD SIZE • EMPLOYMENT • SPENDING
- 7. EMPLOYEES • YOUR EMPLOYEES: ABILITYTO ATTRACT GOOD EMPLOYEES WILL AFFECTED BYYOUR LOCATION • DEFINEYOUR EMPLOYEES, EDUCATION, SKILLS ETC • FIND OUTWHEREYOUR EMPLOYEES ARE • CANTHEYTRAVEL EASILY? • IFTHE EMPLOYEE STOCK IS LOW, ISTHERE ATRAINING PROGRAM OFFERED BYTHE STATE FOR NEW EMPLOYEES? • WHAT ARETHE AVERAGE WAGES? SOMETIMES CHEAP LOCATION MIGHT NOT MAKE SENSE IFTHERE IS NO EMPLOYEE. DATA RESOURCES • BUREAU OF LABOR • CENSUS BUREAU
- 8. COMPETITION & OTHER BUSINESSES • FIND OUTWHERETHEY ARE LOCATEDANDTHETYPE OF PREMISESTHEY USETO SELL PRODUCTSAND SERVICES. • THERE MIGHT BEA REASONTHATTHEY PICKTHAT LOCATION FIND OUTWHY? • ARE COMPETINGCOMPANIES LOCATED NEARBY? GOOD OR BAD? • FIND OUT ABOUT OTHER BUSINESSES INTHE AREA. OTHER LOCAL BUSINESSES THAT MIGHT COMPLEMENTYOUR BUSINESS' PRODUCTOR SERVICE. OFFICE BUILDINGS & RESTAURANTS,GROCERY STORE & ANCHOR SHOP DATA RESOURCES • CENSUS BUREAU • ESRI • LOCAL LIBRARY • GOOGLE MAPS
- 9. COST OF DOING BUSINESS • TAX: • INCOMETAX:VA =5.75%, DC = 8.50% MD = 5.75%, ALASKA, FLORIDA, NEVADE, SOUTH DAKOTA,TEXAS, WASHINGTON, WYOMING, NEW HAMPSHIREANDTENNESSEE = 0% • SALESTAX :VA =6%, MD =6%,TX=6.25% • LEASE & PURCHASINGCOST: REAL ESTATE PRICES • INCENTIVES: LOCALAND STATE LEVEL • ELECTRICITY • WATER • EMPLOYEEWAGES • TRANSPORTATIONCOST • PARKING (FREEVS PAID) • LEASING COST ( BASE RENT AND COMMONAREACOST) • UTILITIESANDOTHERCOSTS • AIRCONDITIONING:ARETHEYTURNED OFF, DOYOU NEEDTO PAY FORA/C DURINGTHE WEEKEND? • DATA RESOURCE : STATE & COUNTY WEB SITES, LOCAL CHAMBER OF COMMERCES ETC
- 10. CONVENIENCE • IS IT EASYTO FIND? IS IT EASYTOACCESS? CLOSENESSTO PORT / AIRPORT/ HIGHWAYS • HOW ACCESSIBLETHE FACILITYWILL BE FOR EVERYONE:CUSTOMERS, EMPLOYEESAND SUPPLIERS?ADA COMPLIANCE ? MEDICALOFFICE? • WHAT SORT OF DELIVERIESWILLYOU RECEIVE? LOADING DOCK, ROLL UP DOOR, DRIVE IN DOOR? • FOOTTRAFFIC • VEHICLETRAFFIC • CORNER STOREWITH A STOP SIGN • SIGNAGE
- 11. PRESTIGE • DOES A CERTAIN ZIP CODE ADDRESS ADDS CREDIBILITYTOYOUR BUSINESS? • WHAT DOESTHIS ADDRESS SAY ABOUTYOUR COMPANY? • CHECKTHE HISTORY OFTHE SITE? • VISITTHE LOCATION AT DIFFERENT HOURS AND SEE HOW BUSY IT IS & WHAT KIND OF CLIENTELEVISITSTHE PLACE?
- 12. FACILITY REQUIREMENTS • DOYOU HAVE SPECIAL NEEDS I.E. HIGH POWER /WATER CONSUMPTION, AC, ADA COMPLIANCE? • SIZE OFTHE FACILITY: WILL IT BE ENOUGH AFTER 5YEARS, WILLYOU NEED EXPAND? WHAT HAPPENS IFYOU RUN OUT OF SPACE, LEASE OR BUY? • CLEAR SPAN • HEIGHT • DOORS WIDTH & HEIGHT, LOADING DOCK, ROLL-UP GATE, DRIVE IN? • FLOOR LOADING CAPACITY • HVAC CAPACITY
- 13. ZONING • MAKE SUREYOUR BUSINESS IS ALLOWED BEFOREYOU SIGN A LEASE • TALKTO COUNTY ZONING OFFICE AND FIND OUT ABOUTTHE ZONING OFTHE PROPERTY, SEE IFYOUR BUSINESS IS ALLOWED ATTHE LOCATION
- 14. SERVICES WE PROVIDE • MARKET ANALYSIS • FINANCIAL ANALYSIS • VALUATION / UNDERWRITING • LOCATING INVESTMENT ALTERNATIVES • IDENTIFYING INVESTMENT INCENTIVES • ACQUISITION & DISPOSITION SERVICES
Editor's Notes
- There are two important angles to the issue of demographics. First, consider who your customers are and how important their proximity to your location is. For a retailer and some service providers, this is critical; for other types of businesses, it might not be as important. The demographic profile you have of your target market will help you make this decision. Then take a look at the community. If your customer base is local, does a sufficient percentage of that population match your customer profile to support your business? Does the community have a stable economic base that will provide a healthy environment for your business? Be cautious when considering communities that are largely dependent on a particular industry for their economy; a downturn could be bad for business.
- Now think about your work force. What skills do you need, and are people with those talents available? Does the community have the resources to serve their needs? Is there sufficient housing in the appropriate price range? Will your employees find the schools, recreational opportunities, culture, and other aspects of the community satisfactory?
- Are competing companies located nearby? Sometimes that's good, such as in industries where comparison shopping is popular. You may also catch the overflow from existing businesses, particularly if you're located in a restaurant and entertainment area. But if a nearby competitor is only going to make your marketing job tougher, look elsewhere. Take a look at what other businesses and services are in the vicinity from two key perspectives. First, see if you can benefit from nearby businesses--by the customer traffic they generate--because those companies and their employees could become your customers, or because it may be convenient and efficient for you to be their customer. Second, look at how they'll enrich the quality of your company as a workplace. Does the vicinity have an adequate selection of restaurants so your employees have places to go for lunch? Is there a nearby day-care center for employees with children? Are other shops and services you and your employees might want conveniently located?
- Rent composes the major portion of your ongoing facilities expense, but consider extras such as utilities--they're included in some leases but not in others. If they're not included, ask the utility company for a summary of the previous year's usage and billing for the site. Also find out what kind of security deposits the various utility providers require so you can develop an accurate move-in budget; however, you may not need a deposit if you have an established payment record with the company. If you have to provide your own janitorial service, what will it cost? What are insurance rates for the area? Do you have to pay extra for parking? Consider all your location-related expenses, and factor them into your decision.
- Consider how accessible the facility will be for everyone who'll be using it--customers, employees, and suppliers. If you're on a busy street, how easy is it for cars to get in and out of your parking lot? Is the facility accessible to people with disabilities? What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to your business? Small-package couriers need to get in and out quickly; trucking companies need adequate roads and loading docks if you're going to be receiving freight on pallets. For most retail businesses, foot traffic is extremely important. You don't want to be tucked away in a corner where shoppers are likely to bypass you, and even the best retail areas have dead spots. By contrast, if your business requires confidentiality, you may not want to be located in a high-traffic area. Monitor the traffic outside a potential location at different times of the day and on different days of the week to make sure the volume of pedestrian traffic meets your needs.
- What does this address say about your company? Particularly if you're targeting a local market, be sure your location accurately reflects the image you want to project. It's also a good idea to check out the history of the site. Consider how it's evolved over the years. Ask about previous tenants. If you're opening a restaurant where five restaurants have failed, you may be starting off with an insurmountable handicap--either because there's something wrong with the location or because the public will assume your business will go the way of the previous tenants. If several types of businesses have been there and failed, do some research to find out why--you need to confirm whether the problem was with the businesses or the location. That previous occupants have been wildly successful is certainly a good sign, but temper that with information on what type of businesses they were compared to yours.
- Find out if any ordinances or zoning restrictions could affect your business in any way. Check for the specific location you're considering as well as neighboring properties--you probably don't want a liquor store opening up next to your day-care center.
- ACQUISITION AND DISPOSITION SERVICES MyLocationAdvisors Team has extensive experience in acquisition and disposition transactions. Our clients include domestic and foreign investors, owners and operators of all types. We provide “a-to-z” representation to our clients in purchase and sale transactions of the commercial real estate. FINANCIAL ANALYSIS Mylocationadvisor team will run the numbers for you and produceinvestment analysis, comparative lease analysis, lease vs. own analysis, loan amount analysis and target cap rate analysis which will help you make GO/NO Go decisions. LOCATING INVESTMENT ALTERNATIVES MyLocationAdvisor team has the experience and knowledge of locating good investment alternatives for its clients. Working with MyLocationAdvisor Team you will have access to the deals with high cap rates . MARKET ANALYSIS Upon your request, MyLocationAdvisor Team will prepare property specific market analysis reports including location risk analysis and gap analysis that will help you to make intelligent decisions about when, where, and whether to purchase/invest/ develop/lease or not.