Selecting the right location for your business

The three most important factors when investing in real estate are location, location, and location.

Although location is not the only factor to consider when investing in a business, it is certainly up near the top of the list. And if you are a retailer that depends on daily walkup or driveup traffic, it can mean the difference between success and failure. Here are some of the factors you should consider when choosing a location for your business.

How dependent is your product on location?

If you are providing a service that doesn't require any face to face meetings with your customers, such as a mail order service, then your location isn't too important because you are just a phone call, e-mail, or fax away. If you are a retailer or restaurateur for example, you know that location is critical.

In those cases where you know your business location will be important, you should be asking yourself whether you need to be in a high traffic, high visibility location like a shopping mall or the main drag in town. These locations will be very costly and you will have to decide whether it is worth it and whether your business depends on it.

Who are your customers and where will they be coming from?

Is your business serving only the local community or can you draw customers from out of your immediate area? The wider the geographic area you need to draw from, the more it's going to cost you to reach them with your advertising.

If most of your business is local, then visibility and convenience issues are going to be more important. You will want to choose a location with good signage and high exposure to walking and driving traffic. And you will want to ensure that you have adequate parking facilities.

Knowing your customers is a key factor in choosing the right location. If you are opening a business that can only draw its customers from the immediate area, and you are catering to an upscale market, you will not want to locate your business in a middle or low-income neighborhood.

It is important to research the demographics of your intended customers for characteristics such as age, income, educational attainment, number of children, etc. that should determine your choice of a location. Much of this information is available through the Census, which can be viewed at the main library in Pleasant Hill.

Where is your competition?

Many businesses fail because they underestimate the competition. Often, it is not necessarily the quality of that competition, just the mere presence of it. You may think that you can drive your competitors out or at least steal some nf their business by offering a better price or better service, but many businesses can breed an intensely loyal following of customers.

Obviously, the best locations are those where you're the "only game in town", or at least have an exclusive niche market. The size of that market and how close you are to that market is key.

For instance, you may be thinking about opening a Chinese restaurant in a town that doesn't have one. Although you will be able to get business as a result of being in that niche market, you still have to compete with all other forms of food service, from fast food to gourmet restaurants. If the town's population doesn't have the average income to afford eating out much, it may not be able to support the restaurants it already has and you'll be fighting a losing battle right from the start.

Like many business challenges, the choice of location represents a monetary tradeoff. A better location may give you a better chance for success, but it will also cost you more to lease, which will increase your overhead and decrease your profitability. On the other hand, a bad location may cost a lot less, but it won't matter much if you can't get customers to go there.