Apparel 2 chap 08

Chapter 8

Locate and Set Up Your
Business
8.1 Choose a Location
8.2 Obtain Space and Design the
Physical Layout
8.3 Purchase Equipment, Supplies,
and Inventory
Entrepreneurship: Ideas in Action 5e
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Lesson 8.1

Choose a Location
Goals
 Identify options for locating a retail business.
 Discuss factors to consider when choosing a
location for a nonretail business.
 Identify the benefits of locating a business
online.
 Describe steps to take in selecting a site.
Chapter 8
Slide 2


Vocabulary





Chapter 8
Slide 3

industrial park
enterprise zones
e-commerce
trade area


Locating a Retail Business
 The right location for your business
depends on:
 the kind of business you plan to operate
 the type of customer you want to reach

 Also consider whether you will have
 inside sales
 outside sales
Chapter 8
Slide 4


Downtown Areas
 Positive features of a downtown
location include:
 easy accessibility
 convenient access for downtown workers

Chapter 8
Slide 5


 Negative features of a downtown
location include:
 higher crime rate
 traffic jams
 a lack of
 free or convenient parking
 customers in the evening

Chapter 8
Slide 6


Neighborhood Shopping
Centers
 consist of 3 to 15 stores
 good for stores selling goods or
services that people need to purchase
frequently
 rent is usually low
 convenient for local shoppers
Chapter 8
Slide 7


Community Shopping Centers
 larger than neighborhood centers
 serve residents from many
neighborhoods
 large anchor stores can increase
customer traffic

Chapter 8
Slide 8


Regional Shopping Centers
 designed to attract customers from an
entire region
 have 40 to 100 stores
 anchored by two or more large
department stores
 focus on apparel
 rents are high
Chapter 8
Slide 9


Super-Regional Shopping
Centers
 largest classification of shopping centers
 more than 100 stores
 anchored by three or more department
stores
 very high rents
 not recommended for new businesses
Chapter 8
Slide 10


Stand-Alone Stores
 may be located just outside of shopping
centers or far from other businesses
 depend on drive-by traffic
 less expensive rent
 advertising is often necessary

Chapter 8
Slide 11


Warehouses





among the cheapest rent
few frills
often charge customers lower prices
heavy advertising required

Chapter 8
Slide 12


What are the main options for locating
a retail business?

Chapter 1
Slide 13


Starting a Virtual or Online
Business
 e-commerce
 buying and selling products or services
over the Internet

Chapter 1
Slide 14


Benefits of Virtual or Online
Businesses
 an immediate presence
 business costs are less
 a global customer base is possible
 time restrictions are not a problem
 can electronically manage information
about customer behavior
Chapter 1
Slide 15


Virtual or Online Business
Precautions
 Buy your own domain (web address).
 Use a creative website design that
appeals to customers.
 Be sure your website has a fast loading
speed.
 Keep your website current.
Chapter 1
Slide 16


What are some benefits of having a
virtual or online business?

Chapter 1
Slide 17


Selecting Your Site
 trade area
 the area from which you expect to attract
customers
 identify the location of
 competitors
 businesses that would attract a similar
customer base but that would not compete
directly with you
Chapter 8
Slide 18


Location Type and Availability
 Determine which type of location is best
for your business.
 Determine what spaces of this type are
available in your trade area.

Chapter 8
Slide 19


Evaluate the Location
 Factors to consider when picking a
location include:
 safety
 attractiveness
 Does the location attract your target
market?
 Is parking adequate?
 Are surrounding businesses thriving?
Chapter 8
Slide 20


What are some of the factors you
should consider when selecting a site
for your business?

Chapter 1
Slide 21


Lesson 8.2

Obtain Space and Design the
Physical Layout
Goals
 Compare purchase and lease options.
 Describe layout considerations for
different types of businesses.

Chapter 8
Slide 22


Vocabulary







Chapter 8
Slide 23

tenant
landlord
gross lease
net lease
percentage lease
visual merchandising

Lease or Buy Space
 Buying advantages include:
 You can receive a tax deduction on the
loan interest for the building.
 The loan payment may be no larger than a
lease payment.

Chapter 8
Slide 24


 Disadvantages of buying include:
 Most entrepreneurs lack the money to
purchase property for their business.
 You are locked into a specific location.
 You are responsible for building
maintenance costs.

Chapter 8
Slide 25


Commercial Leases
 tenant
 the person who pays rent to occupy the
space owned by someone else

 landlord
 the person who owns and rents out the
building or space

Chapter 8
Slide 26


 There are three types of commercial
leases.
 gross lease
 tenant pays monthly rent
 landlord pays property expenses

 net lease
 landlord pays building insurance
 tenant pays rent, taxes, and other expenses

Chapter 8
Slide 27


 percentage lease
 the tenant pays a base monthly rent
 the tenant also pays a percentage of monthly
revenue as rent
 most common for prime retail locations

Chapter 8
Slide 28


 You should always consult with an
attorney before signing a commercial
lease.

Chapter 8
Slide 29


Compare Costs of Doing
Business
 When deciding where to locate your
business you should calculate how
much rent you will pay per customer.
 Rent per customer =
Rent per month ÷ customers per
month

Chapter 8
Slide 30


Chapter 8
Slide 31


Name three kinds of commercial
leases.

Chapter 1
Slide 32


Design the Layout of Your
Business
 Your layout needs to include space for:







Chapter 8
Slide 33

employees
customers
merchandise
equipment
restrooms
stockroom/storage
offices

Create the Floor Plan

Chapter 8
Slide 34


Layout of a Retail Business
 visual merchandising
 the process of combining products,
environments, and spaces into an
appealing display to encourage the sale of
products or services

Chapter 8
Slide 35


 The goal of your layout should be
twofold:
 It should attract customers to your store
and keep them coming back.
 It should meet the needs of your
business.

Chapter 1
Slide 36


 Exits should be clearly marked and easily
accessible.
 Hazardous materials should be safely
stored.
 Equipment and machinery should be
positioned in a way that minimizes the
potential for accidents.

Chapter 8
Slide 37


What are the major considerations for
choosing a layout for a business?

Chapter 1
Slide 38


Lesson 8.3

Purchase Equipment,
Supplies, and Inventory
Goals
 Explain how to find and choose
vendors for your business.
 List factors that determine the needed
level of inventory.

Chapter 8
Slide 39


Vocabulary





Chapter 8
Slide 40

inventory
vendors
quote
reorder point


Obtain Equipment and
Supplies
 inventory
 the products and the materials needed to
make the products that a business sells to
its customers

 When starting a business, order the
minimum quantity you need right now.

Chapter 8
Slide 41


Chapter 8
Slide 42


Identify Suppliers
 vendors
 companies that sell products and services
to businesses

Chapter 8
Slide 43


Evaluate Proposals
 quote
 an estimate for how much you will pay for the
merchandise or service

 Other information to seek when obtaining
quotes includes:




Chapter 8
Slide 44

quality of merchandise
financing terms
quantity discounts
shipping and handling charges

What should you consider when
selecting vendors for your business?

Chapter 1
Slide 45


Purchase Inventory
 For retailing and wholesaling:
 Inventory is a finished product purchased
with the intent of reselling it to customers.

 For manufacturing:
 Inventory includes:
 raw materials
 finished goods

Chapter 8
Slide 46


Purchase Inventory for a
Startup Business
 As it is difficult to forecast actual sales,
a startup business should order just
enough stock to fill its shelves.

Chapter 8
Slide 47


Purchase Inventory for an
Ongoing Business
 reorder point
 a predetermined level of inventory that signals
when new stock should be ordered

 Factors to consider when setting a reorder
point include:
 how long it takes suppliers to get merchandise to
you
 monthly sales of the item
 how important it is for you not to be out of stock
Chapter 8
Slide 48


How do you determine the amount of
inventory to keep in stock?

Chapter 1
Slide 49


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