Insider Advice on Where to Locate a New Business

Businesses are like revolving doors: constantly opening and closing. There were a number of times I wanted to shop or eat somewhere only to find that the business went under and closed forever. I thought, “Didn’t I just approve that business?”

In my former job in city planning, I reviewed and approved business licenses and zoning applications. After getting to know many new business owners, I never liked hearing the words “going out of business.”

Seeing an empty, vacant store front is not pleasant; it’s actually haunting and eerie knowing that someone invested so much and was not able to succeed. Unfortunately, some owners were unaware of ways to save their business.

One major reason that businesses fail is wrong location. Owning a business is more than an idea, vision or finding a spot with cheap rent. Potential business owners should carefully consider the location as an integral part of entering into entrepreneurship. Where to set up shop is critical in maintaining a successful and profitable business.

Over the years, I have seen businesses come and go in the same location. One day, the building is occupied by a hobby shop. A year later, it becomes a clothing exchange store. Several months later, it is a cigar shop, or it simply remains unoccupied for months waiting for another tenant.

What are the reasons a business fails to survive in a specific location?

Business turnover happens for several reasons such as mismanagement, poor marketing and lack of customers. The main reason, however, is demographics and exposure, both of which are often overlooked. By doing some due diligence, potential owners can find locations that are suitable and appropriate for the demand of the type of services or merchandise offered.

Whether or not you hire professional help, know exactly the right questions to ask. Getting familiar with the potential area will help you decide on a perfect location. Basically, know who your potential customers are before you open the doors.

Start by contacting the local jurisdiction’s economic development department. You will get information on local job statistics, demographics and competitors. The zoning department can assist in providing information on areas that are properly zoned for your type of business. Zoning establishes where certain businesses can be located, including hours of operation, the number of parking spaces allowed, proper lighting and signage requirements, to name a few. For instance, a church may require more parking spaces than a beauty salon.

For buildings with vacant tenant spaces, it is very important to research the type of business that had previously occupied the space. A while back, a friend said he was interested in opening a tattoo shop located near a busy intersection. He said the previous tenant was a tattoo shop and figured it would be a good place to start a business, since the building was fronting a street.

I brought up a few critical points. If the first tattoo shop failed what made him think that putting another tattoo shop in the same location was a good idea? Although the building was near a busy intersection, look at the demographics. The adjacent area was near large half-acre homes in an established community with less walkability and sustainability, where several tenant spaces remained unoccupied.

Another problem was that drivers on the main street could not see the tattoo store front because the building was architectural forward, which means the backside of the shop faced the street. No visible signage was placed on the rear elevation for drivers to know a shop even existed.

How many times have you driven by a restaurant saying, “I bet that place is good because of all the cars in the parking lot.” Visual exposure is extremely important to attracting customers.

Architectural forward works in certain business districts with restaurants, shops and entertainment establishments allowing customers to walk within the site. The rent may be slightly higher per square foot; however, these businesses have more customer traffic.

The bottom line is a customer should be able to see your business from the street. An open and inviting store front would attract more customers. Placing a business on the corner tenant space of a strip mall is an excellent. The more exposure a business has the more successful it will be.


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