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Authors: Inc The Staff of Entrepreneur Media

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Demographic information is available to you through a variety of resources. You could do the research yourself by visiting the library or calling the U.S. Census Bureau and gathering a bunch of statistics, then trying to figure out what they mean, but chances are you probably do not have the time or statistical expertise to do that. So why not let other people do it for you—people who know how to gather the data and translate it into information you can understand and use. Contact your state, regional or local economic development agency (see “To the Rescue” on page 258) or commercial real estate companies and use the data they’ve already collected, analyzed and processed.
Foot Traffic
 
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.
Accessibility and Parking
 
Consider how accessible the facility will be for everyone who will 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.
Find out about the days and hours of service and access to locations you’re considering. Are the heating and cooling systems left on or turned off at night and on weekends? If you’re inside an office building, are there periods when exterior doors are locked and, if so, can you have keys? A beautiful office building at a great price is a lousy deal if you plan to work weekends but the building is closed on weekends—or they allow you access, but the air conditioning and heat are turned off so you roast in the summer and freeze in the winter.
Be sure, too, that there’s ample convenient parking for both customers and employees. As with foot traffic, take the time to monitor the facility at various times and days to see how the demand for parking fluctuates. Also, consider safety issues: The parking lot should be well-maintained and adequately lighted.
 
TIP
 
If you are buying an existing business, look at the location as if you were starting from scratch. Ask questions like: Does the site meet your present and future needs? Have there been any changes regarding the location in recent years that could have a positive or negative impact? Will you be taking over the seller’s lease, and can it be renegotiated?
Competition
 
Are competing companies located nearby? Sometimes that’s good, such as in industries where comparison shopping is popular. (That’s why competing retail businesses, such as fast-food restaurants, antique shops and clothing stores, tend to cluster together.) 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.
Proximity to Other Businesses and Services
 
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 will 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?
TO THE RESCUE
 
O
ne of the best sources of information and assistance for startup and expanding businesses is state, regional and local economic development agencies. According to Ted M. Levine, founder and chairman of Development Counsellors International, a consulting firm specializing in economic development and travel marketing, there are nearly 20,000 economic development groups worldwide. Their purpose is to promote economic growth and development in the areas they serve. They accomplish that by encouraging new businesses to locate in their area, and to do that, they’ve gathered all the statistics and information you’ll need to make a decision.
 
 
Levine says economic development agencies will help any new business, regardless of size, in four primary ways:
1. Market demographics
2. Real estate costs and availability; zoning and regulatory issues
3. Work-force demographics
4. Referrals to similar companies and other resources
For the best overview, start with your state agency. The state agency can then guide you to regional and local groups for expanded information.
Image and History of the Site
 
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 has changed and 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 that 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 cer tainly a good sign, but temper that with information on what type of businesses they were.
“There is nothing
so useless as doing
efficiently that which
should not be done
at all.”
—PETER DRUCKER,
MANAGEMENT GURU
 
 
Another historical point you’ll want to know is whether a serious crime, tragedy or other notable event occurred on the property. If so, will the public’s memory reflect on your operation, and is that reflection likely to be positive or negative?
Ordinances
 
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.
The Building’s Infrastructure
 
Many older buildings do not have the necessary infrastructure to support the high-tech needs of contemporary operations. Make sure the building you choose has adequate electrical, air conditioning and telecommunications service to meet your present and future needs. It is a good idea to hire an independent engineer to check this out for you so you are sure to have an objective evaluation.
GROWING PLACES
 
I
ncubators are organizations sponsored by public and private investors that assist startup and young companies in their critical early days with a variety of well-orchestrated business assistance programs. Incubators provide hands-on management assistance, access to financing, shared office services, access to equipment, flexible leases, expandable space and more—all under one roof.
 
 
The time your business can spend in an incubator is limited—typically two years—but it can vary. The idea is to get a fledgling business off the ground, turn it into a sound operation, then let it “leave the nest” to run on its own, making room for another startup venture in the incubator.
 
Incubators generally fall into the following categories: technology, industrial, mixed-use, economic empowerment and industry-specific. For more information about incubators and for help finding one appropriate for your business, contact the National Business Incubation Association (NBIA) at (740) 593-4331. For a list of incubators in your state, send a selfaddressed, stamped envelope indicating the information you want to the NBIA at 20 E. Circle Dr., #37198, Athens, OH 45701-3751 or visit
nbia.org
.
Utilities and Other Costs
 
Rent composes the major portion of your ongoing facilities expense, but it’s not the only thing that’ll eat up your money. 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.
Room for Growth
 
Look at the facility with an eye to the future. If you anticipate growth, be sure the facility you choose can accommodate you. Keep your long-range plan in mind, even when short-term advantages make a location look attractive. A great deal on a place you’re likely to outgrow in a few years probably is not that great of a deal. Similarly, if there is evidence of pending decline in the vicinity, you should consider whether you want to be located there in five years.
 
SAVE
 
To keep costs down, consider sharing space with another company that does not compete with your business—one that might even complement yours. This is known as cobranding, such as when a sandwich chain places a unit in a convenience store. Put your space-sharing agreement in writing, detailing each party’s rights and responsibilities, and give yourself an out if you need it.
What Can You Expect To Pay?
 
Real estate costs vary tremendously based on the type of facility, the region, the specific location and the market. A commercial real estate broker will be able to give you an overview of costs in your area. You may want to look at historical data—how has the rate for your type of facility fluctuated over the years? Also ask for forecasts so you know what to expect in the future. Understanding the overall market will be a tremendous help when you begin negotiating your lease.
BOOK: Start Your Own Business
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