The Seed of an Idea – 5 Steps for Building on your Business Idea
PART 3

A business idea has been rolling around in your head . . . in previous articles, we talked about the Business Concept and Defining Your Customers. Today, let's take it a step further with a focus on how they will find you.

STEP 3.  LOCATION, LOCATION, LOCATION

WHERE WILL YOU BE LOCATED?

You’ve decided about your business service or product, and you’ve identified your customer base. WHERE are your customers? How will they find you? How dependent are you that they must find you (versus you finding them)?

Are you relying on a heavy foot traffic into a physical location? Will most of your business be outbound – dependent upon your visiting others? Will your business model support a heavy internet selling component?  Or do you envision your business being built upon all 3 methods of customer traffic?

This is the third question to ponder as you continue to develop your business idea. Here are 3 points of discussion for your consideration as you answer this question about location.

1)    Geographic Location

If you are envisioning a brick-and-mortar business, one that has walk-in traffic, ask this one question before all others:  Where will you locate this business so that you have the optimal chance of being successful? 

If you’re in the North where you can expect plenty of snow and freezing temperatures during Winter, it’s probably not the best area of the country in which to plant palm trees (which prefer the tropical climate year round). 

Is your business better suited to a particular geographic area or population demographic?  If you want to open a teen center, for instance, but you live in a retirement community, you see my point.

Often, the business idea is generic enough to appeal to a wide audience base; if this fits your scenario, then you have some flexibility in choosing your locale. But don’t be lured into the concept that “everyone” will want to buy from me. That’s just not how it works.

Of course, that’s just the beginning. Next you will also have to decide on whether it needs to be downtown, urban or neighborhood-centric.

And let’s not forget the new world: the Internet. Perhaps your business idea is best suited for the World-Wide Web. In this case, your physical location is a moot point. However, the skills and tools you need will be vastly different from a standard brick-and-mortar business.

2)    Physical Space

If you have experience purchasing real estate, you’ve probably heard – and certainly have learned – that location is everything.

When buying a home, you want to ensure you are located in a desirable neighborhood – this creates a higher demand for your “product.”   If you are a commercial business dependent upon walk-in traffic, location will make or break you. Today, we have even more complex business models to include the Internet.

Study how the “big boys” do it – look at Wal-Mart, Sam’s, Lowe’s and grocery stores. Even the ”gas stations-turned-mini-stores” have a template for deciding where – and when – to locate their stores. In my own neighborhood, I observed a gas station close down after a year and build a new facility right across the street. It remains there today with a high-traffic count, all because of how traffic flowed and where the people are located in the adjoining neighborhoods.  So location is critical.

Did you know fast-food restaurants visit supermarkets and measure the number of feet of shelf coverage for particular food items? For example, a pizza place would perhaps measure how much space is allotted to frozen pizzas in a neighborhood grocery store. This information tells them if area residents are readily buying pizzas. 

There are many, many ways to measure the habits of your buying public and where they work and live. Depending on your situation, you may need to allocate part of your budget for some serious market studies.

If you are locating in a public space, do you know how much physical floor space you need? What about the layout of the room(s)?

If you are a retail business, it is vital to know exactly what will be put on the sales floor, which products will take up how much room, where your storage will be, how much “back-office” space is needed, and so on. 

If your business idea is primarily offering personal services, like a doctor, a repair service, or a consultant, you likely have more options. Perhaps you could do just as well in a professional complex where you’ll find mostly office space and little or no front-end retail space. 

You are a visionary now. You have ideas sprouting up . . . so dream big and think 2 years from now, 5 years from now. Do you see yourself still having sufficient room? It’s not the end of the world if you have to relocate. Heck, if you’re relocating because business is booming, more power to you.  But moving is not something you want to do too often. You always lose some customer base when you relocate. And it’s costly to use your advertising budget just to tell people how to find you again.

Lastly, consider your parking requirements. Is there sufficient parking allotted for your anticipated customer traffic and your employees?  I’ve observed strip centers where an anchor business has so much traffic that the smaller guys can’t even get a parking space or two in front of their doors. When you’re not a convenient place to stop, you are not a convenient place to shop; customers will go elsewhere.

Options for outbound sales

If you are in an out-bound sales arena (Tupperware®, Mary Kay®, independent consultant, a real estate salesperson, etc) then you may be able to work from your home and have a highly successful business. 

If you’re a licensed professional (real estate, lawyer, insurance agent and so forth) there may be some restrictions from your state licensing boards that will dictate how you can operate.  Also, what are your local zoning regulations? Can you run a business from your home? Each community has a Planning and Zoning group within their county – or city – government. It’s easy to do some checking, acquire the appropriate licenses and do things within regulation.

Guess what? If you find out you’re prohibited from running this type of business from your home, it is far better to know it now – up front – than 18 months into your business.

3)    Web Traffic

It’s not news that the Internet is a great place from which to do business. This technology has literally opened our doors to the world. It’s also not news that some businesses do better on the web than do others.

So where does yours fit into the picture of world-wide selling? Is it a viable concept? Do your customers have to find you and meet you in person in order to do business? 

For instance, if I am a computer repair facility, it probably is not realistic to assume that a person with a broken computer in Los Angeles is going to ship that system to me in a small town in Florida. He’s probably going to find a local-based business and drop it off there.

Now, if my business model is slightly different and highly specialized, that could be different.  Let’s say instead of repairing computers I now am in the data recovery business and my specialty is recovering data from systems that have been damaged in rain and storms . . . and maybe there are only 3 or 4 of us in the country that are this highly capable.  Do you see how a customer might want to find me and ship his broken system to me? 

In this latter case, having a strong web presence will be important to getting the word out about my capabilities, my specialties.  I might also still need to be in a physical location where people can drop off their equipment – and where I can accept deliveries and manage my shipments, house my employees and my spare parts.

If you are a multi-level marketer (and hey, that’s one of the fastest growing industries around!), or a self-employed professional such as myself, then it makes sense to operate from home and become outbound when necessary.

Maybe your plan is to start small, work from home and then grow into a larger place.  No matter which way you go, the main thing is to know what your plan is and to be able to justify it to your investors and supporters.

So think about your big picture on your business and drill down to how you’re going to interact with customers, employees, and vendors.  Deciding your location is an important component in your overall business concept and business plan.

To your success!
Coach Darlene