When you’re opening a new business or expanding an existing one, there are a lot of decisions to make, but perhaps none is more important than choosing the right location. A bad location could mean the difference between success and failure and a mediocre location could mean you’re leaving thousands—or even millions—of dollars on the table every week.
Although most business owners recognize that location is important, businesses continue to fail in large part because of their location. So, let’s dig deeper. Why exactly is your location so vital to your success? Here are several reasons that further elevate the importance of a good site selection process:
You could make wrong assumptions.
It’s easy to do a little bit of homework on your competitors and the high-level demographics of an area and assume that a certain area wants and needs your business, but retail site selection can uncover so much that your “gut feel” simply cannot. It’s true that site selection is a combination of science (e.g. models and artificial intelligence site selection) and art (e.g. experience and intuition). However, a detailed demographic profile of the area surrounding a site is essential so you can see if it matches with your target customers. Similarly, it’s important to do your research on factors like the economic base of the area, the available workforce nearby, and the retail demand gaps in the trade area.
The disadvantages of a bad location can be tough to overcome.
You might have the best food and staff at your restaurant, but if your location isn’t easy to find or is in an area where your target patrons don’t spend much time, there’s little you can do about it. Certain parts of a business can be improved. A poor location isn’t one of them.
Your location isn’t just about YOUR customers.
In the retail and restaurant business, there’s a good chance you’ll be in some sort of shopping center with other businesses. As you select a location, you must do more than research your target customers in that area. You need to consider your co-tenants (and their customers) as well.
Skipping your homework could lead to unfortunate surprises.
As part of your process, you must find out what zoning restrictions or other municipality rules might impact your ability to do things like advertise or renovate. Don’t forget about development plans. Picture discovering after you’ve opened that a major street expansion project is about to begin in front of your store, closing the road for the next year.
The small things matter.
Most retail and restaurant businesses go to painstaking lengths to get their products, service, marketing, and branding just right, but site challenges could undo all that effort. As you evaluate sites, it’s important to look at traffic patterns as well as things like the ease with which drivers can get into the parking lot, the availability of parking, and the ability to hang signage in visible areas.
Too often, businesses do things backward by deciding to open several new locations without giving much thought to locations that are ripe for their business concept. Site selection is a process that deserves as much attention as the other essential parts of opening or expanding a business. It’s easy to let your heart and gut guide you, but the best site selection process is the one that is driven by the data. Doing a thorough job analyzing retail sites up front is time and money well spent. In the end, that investment will help you find locations that maximize your profitability and ensure your long-term success.