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Start-up Advice

Location, Location, Location

We’ve all heard the mantra countless times. The right location can make or break your business.

Nadine Todd

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How important is it to choose the right site?

Over and above all the ways the right site can influence the success or failure of your business, lease agreements are even tougher to break than a marriage. Once you sign on that dotted line it is very difficult to walk away before the lease is up. You need to be 100% sure that the site you choose is the right one and that your business can afford it.

What should a business owner think about before signing the contract?

There are a number of important factors to take into account, but if we break it down, the core factors to consider are target market, where your competitors are situated (and fellow franchisees), rent vs location, size of the store and geographical area. More often than not choosing a location is a compromise between the ideal and what you can afford, and all these factors play a role in how much rent you can pay each month.

What impacts rental costs?

The geographical area, target market, size of a shopping centre, how large the store is and where in the centre it is situated – all these factors influence how much rent the landlord will charge. A store tucked away in the corner of a shopping centre will see far less foot traffic than one at the main entrance. Being situated next to one of the centre’s flagship stores will also ensure high foot traffic.

What happens if the store does not meet expectations?

There are always risks involved when choosing the right location, but it’s important to evaluate what those risks are and include them in an exit clause when signing a lease. If you haven’t got an exit clause and a major change occurs that leaves you dead in the water you have no re-
compense – you are still locked into your lease.

What types of scenarios could be included in exit clauses?

For example, if you are choosing to lease a store in a centre because of a particular anchor store, and that store leaves, you could stipulate that without that particular brand in the centre your lease expires. Another example is store positioning. If the centre does renovations or changes and your position – without you moving – is no longer as desirable as it was, an exit clause can protect you. Finally, how many similar stores are there in the centre? Three coffee shops are fine, four might be too many. Your landlord cares about rent, not how well your store does. If you want to limit competitors in the centre you have to insist on this point.

How many competitors are too many?

That’s an interesting question, because competition isn’t always bad. ‘Accumulative attractiveness’ refers to the grouping of similar stores, but that grouping brings you customers. They might not always come to your store, or buy your product, but they are attracted to the choice that a number of brands grouped together offers. You need to overlay your competitors with the size of your market and its buying power. Even a big market can be too small if there are too many competitors, but if you are isolated are any potential customers going to find you?

What does ‘complementary attractiveness’ refer to?

This is slightly different to accumulative attractiveness. Complementary products allow consumers to get everything they need at one centre. A large mall or a moto city are good examples of this. Moto cities will have a range of different brands that all cater for motorists, and even if some of those brands overlap, the abundance of choice will attract consumers.

What do the terms micro and macro location mean?

A macro location is the shopping centre. The micro location is where you are in that centre. When choosing a location you need to take both into consideration. You need to think about which target market frequents the centre you are considering, how close it is to main roads and freeways, which brands make up the flagship stores and how big the centre is. The micro site’s rent will largely be based on the size and positioning of the store, and the fitments it has in place.

How important is the size of a centre?

Very. You get three types of centres. Convenience centres, large malls, and centres that are in between. Anything that is not either very large or a convenience centre is high-risk. It’s too big to have a big open parking lot and be quick and easy for shoppers, and too small to offer real variety.

What should a tenant pay for a site?

Before you can make a judgement on how expensive rental should be, you need to understand your industry’s optimal ratio. Every industry has one: the trading density you need per square metre to make a profit. The expected performance versus production that dictates how much space you need and what your turnover will be. Again, it’s a case of compromise. Find the best spot for what you can afford. There is no point finding a cheap site, if you don’t get feet through the door. Similarly, you don’t want to pay more rent than you can afford.

How much research should prospective tenants do?

Research is essential. You need to understand your area, target market, competitors, the centres in the area, the size of the store you need, what you can afford to pay, and the percentage of market penetration you expect to get. But, and this is important, when you find a site, don’t wait too long to make a decision. If it’s a good site there will be other prospective tenants waiting for it and if you snooze you will lose.

What red flags should immediately warn a tenant off?

The first is failed tenants. Yes, stores fail, but not everyone is wrong all of the time. If stores keep failing in the same location, there is probably a reason why. Unless you know what that reason is and you are absolutely certain your store will be different (based on facts, not confidence) don’t take the space.

Second, if the centre as a whole has a high number of vacancies, don’t take a lease – even if the rental appears cheaper. There is a reason tenants are leaving or failing. Rather pay more for a good landlord or busier centre. And finally, look out for any potential site killers. A good example is how much money the site will cost you. If you need to refit the store, fix the airconditioning or put money into the store that you won’t recoup, rather look elsewhere.

Is it better to take a store that isn’t first choice or to wait?

Obviously you don’t want to wait too long, but don’t lock yourself into a lease that isn’t right either. In the long run it will cost you money or even hurt your business. You will need to compromise, sure, but compromise doesn’t mean settling for the wrong site. ­­

How important is the micro site if you have found the right centre?

The actual site you choose is more often than not a compromise. You need to balance what you want with what you can afford. However, often for a bit more rent, you get a much better site and generate a far higher turnover. Nando’s in Sandton City recently moved to a better site. The centre is excellent, so any site would be good, but the micro site is still a key factor. For marginally higher rent that store has doubled its turnover.

For more information, contact Stephen Walters on +27 (0)11 712 1739 or visit www.fernridge.co.za

[box style=”gray,info” ]Where You Are Matters More Than What You Pay[/box]

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

Company Posts

3 Companies With Memorable Slogans, And How To Create Your Own

Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.

Jeff Broth

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A good slogan serves many valuable roles in business. First, it reinforces recognition of your brand. After hearing it a few times, your consumer instantly thinks of you when hearing it again. If it’s catchy enough, they may even find themselves saying or singing it in their head, reinforcing your brand even more.

Slogans also share a little bit about your company. For instance, if your slogan is funny, it says you have a sense of humor. If it contains your goal or mission, it tells the consumer what is important to you. Some slogans share the problems the company is trying to solve or the consumer its trying to help, making it easier to identify the target market.

Finally, a slogan sets you apart from your competitors. It differentiates you from all of the other companies who offer similar services to you. And if it’s memorable enough, it puts you ahead of them in your consumer’s minds.

Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.

Company #1: Nike – Just Do It

nike

Though many people use Nike’s ‘Just Do It’ slogan as a reminder that they can do amazing things if they just put their mind to it, its author, Dan Wieden, reports that this line actually has a grim beginning.

In fact, it was an idea he derived from a statement made by Gary Gilmore, a double murderer who, before being executed by a firing squad exclaimed, “Let’s do it!” Still, it has stuck in consumer’s minds and is undoubtedly one of the most memorable slogans of all time.

Related: Registering a Trademark

Company #2: Carlsberg – That Calls for a Carlsberg

Carlsberg

Initially, Carlsberg’s slogan was ‘probably the best beer in the world.’ Many consumers came to know and love this slogan; however, in 2011, the company rebranded and created a new slogan: ‘That Calls for a Carlsberg.” The goal of this new slogan, according to CEO Jorgen Buhl Rasmussen, was to encourage the consumer to do good things and then enjoy a Carlsberg after as a reward for a job well done. Both have stuck in the minds of consumers, albeit with some discrepancy as to which one is most preferred.

Company #3: Apple – Think Different

apple

Apple is a company known for thinking (and creating) outside the lines, so its ‘Think Different’ slogan fits it perfectly. According to Rob Siltanen, creative director and managing partner at the company that helped design this Apple pitch, though there are many accounts of how this slogan was created, its true inventor is Craig Tanimoto. Siltanen says that Tanimoto came up with the idea to use black and white photos of some of the most revolutionary people and events of all time and, atop each one, simply display the words ‘Think Different.’ Catchy, right?

Related: Smart Marketing Ideas For Small Businesses

How to Create Your Own Memorable Slogan

These are just three examples of how creating a memorable slogan can help your company get — and stay — in the minds of your consumer. So, how do you come up with this type of campaign?

One option is to get some of your company’s best talent together and see what slogans you can come up with. Have everyone submit one or two ideas and talk them out. See if any jump out at you and, if not, use them to inspire you to come up with even more possible ideas.

Another alternative is using a slogan generator. This enables you to come up with a simple, memorable slogan using keywords related to your brand. Just go through the list and of results and see which ones stand out. You could even pick your top two or three and let your social media followers vote as to which one you should select.

If you find yourself at a dead end and unable to come up with a memorable slogan, or if you lack the creativity or the time, you can also hire a marketing firm to help. Give them a little insight about your company and see what slogans they create. It may cost you some money to take this route but, as companies like Nike, Carlsberg, and Apple have taught us, a good slogan can really propel your brand.

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Start-up Advice

Dear Family And Friends Of Entrepreneurs…

Young entrepreneurs often struggle to establish their businesses as they are not getting the support they need. Sometimes it is not only the obvious support of financiers and supply change developers which is lacking –but also not having that critical “home-ground support” can negatively affect the success of your venture. How can family and friends support entrepreneurs?

Lusanele Mahlutshana

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Entering the market as a newbie entrepreneur is a brave step, and having your family and friends share in your vision for success is critical.  Once you have convinced them that being an entrepreneur is in fact “a real job” – one that requires a lot more sacrifices and hard work than a salaried worker – you can continue to encourage them to support your journey, to ultimately share in your success.

Get a job

In some communities, being an entrepreneur is not recognised as a profession. Therefore, those who pursue enterprise development are seen as irresponsible or lazy as it is not regarded as ‘real’ employment. Societal pressure to attain certain material possessions thus prevents them from pursuing their true passion.

This kind of resistance discourages a lot of entrepreneurs, making their pursuit for success even more difficult.

Related: How To Deal With Unsupportive Friends And Family

Finding out who your real friends are

Financial support is the most obvious support needed by entrepreneurs due to a lack of capital and start-up funding, as well as irregular payments and long periods of being cashless due to procurement holdups and fluctuation in the market for your product or service. Not everyone will stick with you in these times – and that’s OK. You may end up finding out who your real friends are, and these are the people who will give you emotional and social support to keep you focused and motivated.

“I know a guy….”

Another issue is friends and family looking for discounted prices as they know the owner. This means that they don’t see the value of the product or service, nor do they respect the owner. By asking for products and services for free, or at a reduced price, they end up taking advantage of their relationship with the entrepreneur and do not financially support his/her the business.

Related: How To Immigrate With Your Family By Starting A Business In The UK

So, if you have friends or family who are business owners, set an example by supporting them in the following ways:

  • Be willing to pay the full price of the product or service offered.
  • Be kind when giving negative feedback – make sure it is constructive.
  • Compliment them on good products or service. Share positive reviews on your social media pages.
  • Share and promote their business among other people.
  • Be patient and willing to help them establish their businesses.

Be prepared to listen to their dreams, hopes and frustrations. Sometimes, they just need an ear to vent about a bad day. Support them with a word of encouragement to keep going.

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Start-up Advice

Why Embrace The Struggle?

Entrepreneurial success hinges on your ability to approach challenges with the right mindset.

Gil Sperling

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Self-help and business coaching advice is littered with platitudes, which makes it difficult for entrepreneurs to know what they should take to heart. However, one universal truism that most successful entrepreneurs attribute to their success is their willingness and ability to endure the struggle.

It’s a lesson I learnt first-hand when building our ad-tech and Facebook Marketing Partner business, Popimedia. One of our sternest tests came when we moved into new premises and took on more staff to accommodate our exponential growth. Then, amid new and significant financial commitments, some of our pipeline never materialised.

It was at this time that my son was born, and our family had just moved into a new house. To preserve the business, we were forced into retrenchments and directors didn’t take a salary for a while. And, with a lower head count it became difficult to deliver on client deadlines. Needless to say, my personal and professional level of discomfort was at an all-time high.

We reviewed our operations and streamlined where we could. More importantly, though, the experience taught us a number of invaluable lessons.

Lesson #1: Reframe your context

Our leadership approach, our business mindset and our attitude needed to be drastically reframed.

There is a quote that has always stuck with me, which is: “The antithesis of comfort is struggle.”

Related: 6 Of The Most Profitable Small Businesses In South Africa

I believe a person is moulded by the way they deal with struggle. That’s why I’ve always been inclined to welcome a proverbial punch to the face, and use as a mantra the phrase, “comfortable being uncomfortable”.

Being “uncomfortable” forced Popimedia into rapid innovation – and it was this innovation that led to a sea-change in the business. We learned how to scale, how to improve service levels, how to do what we do better, faster, more efficiently.

As a result, and without increasing our staff complement, our year-on-year growth has topped 100%. What was, at the time, the business’s greatest challenge became its greatest ally, and our biggest lesson.

Lesson #2: Fail fast, and learn from it

Obviously, this approach is not about making life difficult for the sake of personal and professional growth. It’s about understanding what is: expecting it to be difficult and taking a constructive approach towards failure and struggle.

There is one guarantee in business: you will experience failures, and you will struggle.

Central to this is your ability to recognise your failures for what they are, and quickly. This allows for a rejigging of processes, attitudes, operations, and sometimes even objectives.

My personal attitude to failure was reframed by simple sales stats. I came to understand that rejection was inevitable – but when it does happen, it brings with it opportunities. I always ask: “Why don’t you want my product? How is it not meeting your needs?” This way, “failure” is transformed into an opportunity to better understand the market and my clients.

This feedback loop has proved crucial, and allowed us to become what we are.

As an entrepreneur, the pressure never ends and you’ll never ‘arrive’. At Popimedia, we’ve come to embrace every opportunity that takes us out of our comfort zone. Working through failure is the foundation on which the entrepreneurial spirit is forged. It is the willingness to try again following a rejection, or to keep grafting knowing that there’s no guarantee of a pay cheque at the end of the month.

And doing so with the ‘chutzpah’ – the sheer audacity – to endure the hardship through mental toughness and a passion for what you do, becomes your greatest asset, because when you get comfortable, you become complacent… and complacency will work you into irrelevance.

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