Say you’re out looking for a site for your new business. On your way home from work, you pass by an intersection that has a new retail centre under construction. The centre is guaranteed to have a high volume of traffic, as it’s down the road from a major mall, directly off the major highways, and easily accessible from the streets. Every car in the neighbourhood has to pass that spot at least once a day.
Let’s assume two major retail anchors, a regional grocer and drug store, have already signed leases. You meet with the landlord, and you find out that except for the one space available, the centre is totally leased by nationally branded retailers and restaurants. The one space left is 12 000 m2, and it’s located on the end cap, ensuring that whoever gets that space will have the best visibility in the entire centre. Best news yet, if you want it, the space is yours. Location, location, location goes through your mind. You’re guaranteed success… aren’t you?
If you’re a retailer or a restaurant, that site might be perfect, if you can afford it. But if you’re in, say, the carpet-cleaning business, the site is likely to be a disaster. Picking the right location depends on the type of business you’re in.
Franchisor Knows Best
Selecting a site for your business requires that you have knowledge of what locations are right and, possibly more important, what locations are wrong for your business. That’s called the site criteria, and it’s worth every cent to get it from prospective franchisors. Well established franchisors have experience, not only in different markets, but also in locations that vary in size, surroundings and customer draws. They should be able to provide you with accurate site criteria as well as the training and other assistance needed to find your site. A franchisor’s ability to provide this kind of information is a key indicator of its competency.
Remember, there are no stock definitions of a great site, because every business requires different types of locations. If your customers will be coming to your place of business, then visibility and ease of accessibility should be foremost in your mind. However, if you’re in a service business that goes to a customer’s home or place of business, then highways, a place to park your vehicles and warehouse space may be most important.
Consider what your location will do for you and what you can afford. If your business plan calls for space that costs R52 per square metre and the available space is R104 per square metre, ask yourself whether the more expensive space will bring in enough additional customers to justify the price. If it won’t, how long will it be before you can no longer afford the rent? If you need 2 000 m2 but get a bargain price for 4 000 m2, is bigger better? Maybe not, whereas at 2 000 m2 your business will look busy, it may look empty (and less appealing) at 4 000 m2.
Some of the basics of site selection include:
How many people or businesses are in your trading area? Are they the right background, age, family size and income for your type of business? Certain companies can provide you with demographic reports telling you who lives and works around your location.
If you’re expecting customers to come to your location, it’s always beneficial to have other businesses nearby to help you draw them. Traffic generators such as malls, office complexes, schools or hospitals may bring you the right traffic. Anchors, like grocery stores, drug stores and department stores may also bring you the traffic you need. If your business is a women’s hair salon and your centre has several women’s clothing stores, that may be a perfect situation. But if your neighbour is a mattress store, will it bring you the appropriate traffic on a regular basis?
Traffic count and accessibility
How much traffic, both by car and by foot, passes by your location? Traffic counts aren’t enough though. If the traffic is going 120 km per hour and can’t get into your centre, then having a high traffic count won’t be very helpful. If foot traffic is high during the day but your business needs an evening clientele, then noon-time foot traffic won’t benefit you. You need to determine not only that traffic exists, but also that it’s accessible and available when you need it.
Some businesses, like quick-service restaurants, often do better in areas where other quick-service restaurants are established. However, if you own a dry cleaning business and there’s a dry cleaner on every corner near your possible location, saturation may be your undoing.
Is the site safe for your customers and your staff? Is the centre run-down and frequented by individuals who will chase your customers away?
Will you be able to hire people in your area? If the pool of potential employees is limited, your pay scales may go through the roof. If you need entry-level, minimum-wage employees and every kid in the neighborhood is driving a BMW or Porsche, will you find enough staff to even stay open?
Visibility, signage and zoning
Will customers be able to see your business and your signs easily?
Finding a great retail or restaurant site is very difficult today, simply because many of the great sites have already been taken. But you can limit your risk by understanding what types of sites work for your business and making certain that the site you select meets your needs.