Retail: Finding a Location

Filed in archive Operations on March 21, 2007

Today I start a series on finding a retail location for your small business.

Unlike a business-to-business (B2B) firm that can reach out to potential customers by hiring sales people a retail business has roots.

Retail businesses have to wait for the customer to come to them whereas a B2B can drive the business forward. Therefore location of a retail business is one of the most strategic decisions that will correlate directly to the success of your retail business.

Prime Location Creates Success

The job of marketing is to get your message in front of your best customer. In retail it is all about location, location, location.

It is crucial for a retail business to be located within or very near the market that it intends to serve. Otherwise it will need to spend a lot more money on advertising and marketing to generate store traffic.

Achieve a Balance Between Location and Advertising

Finding a prime location can be a challenge. If you do find that prime location it will be much more expensive than one that may be hidden away at the end of a dead end culdesac. In some way there will always be a trade off or compromise you will have to make in choosing a location for your business.

Great locations garner higher rental rates which means you will have to produce a higher level of profits or more sales per square foot when compared to a less desirable location.
It is one thing to boost your sales figures on a spreadsheet to offset the higher rent but quite another to actually be able to deliver on that each and every month.

Be cautious in just assuming that you will be able to increase sales to offset the higher costs. Prove it to yourself. Run different financial projections and include a different amounts for rent to see what the impact will be on your profitability and how much more in revenues you would have to generate to be profitable.