Once you’ve made a decision to start your own business and have your finances in order, the next step is selecting your business location. While an increasing number of employed individuals are working from home (reportedly 25% in 2005), there are plenty of benefits from having an office base, somewhere to return to where you know your ‘work’ hat will always be on. Somewhere separate from your garage where you can store product or files, and most importantly, a welcoming place where clients can visit you and get to know what your business represents. Besides, working from home might have its perks but it might put you in violation of zoning and other laws that regulate residential and business spaces. Familiarize yourself with the laws that influence home businesses, as well as other legal issues such as home-office tax deduction.
Choosing a business location is one of the most important decisions to take as a small business owner. It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more. One common pitfall is when business owners opt for the cheapest place available for rent. This can be harmful in the long-run, costing businesses new business and problems with retaining business — no amount of advertising or marketing can make up for an unfavorable location.
What type of location does your business require? Do you need retail, office space or a warehouse? If you own a trucking company, do you need ample parking space to store trucks and freight? If you’ve decided you’d like to give it a go and invest in a business location, here are 3 factor you might want to consider in your search.
What’s Your Zip Code?
The state in which you decide to open up a business will affect the amount you have to pay up to Uncle Sam. What are the income and sales tax rates for your state? What about property taxes? Could you pay less in taxes by locating your business across a nearby state line? Some states will offer incentives for those seeking to build or rent in struggling localities. For more information on this visit State Business Incentive Database.
On a similar note, the city in which your business is located is just as important. Does your business cater to millennials? You might want to be in areas that are mostly metropolitan, or areas where the large percentage of your demographic resides in.
Foot Traffic, Accessibility and Parking
Is your location accessible to all? Do you need to be visible and/or easily accessible to pedestrian and automobile traffic? Are you in a location that will garner foot traffic? For example, a massage parlor or health food store will do well next to a fitness center or yoga studio — the two business complement each other and one customer is bound to hop on over next door to see what you have to offer them. Taking a look at businesses around you will benefit you twofold. For one, those customers can become your customers. Second, you want to be sure these services add to the quality of the services your customers seek. A business that sells a product or service by interacting with consumers usually needs to be near those buyers — as many of them as possible.
For a fee, you can make use of location analysis tools, such as Locate, Grow and Optimize (http://locatengrow.com) that can provide you information like traffic patterns and lifestyle data of those who come and go in your desired area.
Another thing to factor in is parking because, well, we all love easy parking and especially if it’s free. It makes the trip to a location much more pleasant. If you’re on a busy street how easy it is for cars to get in and out of your parking lot? What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to your business? Small-package couriers need to get in and out quickly; trucking companies need adequate roads and loading docks if you’re going to be receiving freight on pallets.
What does your address say about your company? What do the businesses around you say about your location? Are you targeting a local demographic? If you’re a beauty salon, are you locating your business where there is enough local foot traffic or will you have to amp up your social media and marketing budget to get people into your business? If several types of businesses have occupied your space and closed down within the year, you might want to do some research as to why that has happened — is it the location, parking, the business type?
Rent and Other Unavoidables
Determine the average rent in your area. Agents are a great resource for this, particularly those who work within your area because they are well versed on the subject and will generally give you an average figure for the cost of commercial space per square foot per year in a given area. Once you have this number, you can compare it to the costs of other spaces you’re considering. If you have determined that location is a priority for your business, you may want to revert back to your business plan and make the necessary revisions if you haven’t already done so. In addition to rent, consider the additional utility costs you might incur — some are included in rent while others are not.
Now that you know the most important factors to consider when choosing your business location, write down your priorities, make a plan and execute. There’s a perfect location out there waiting for you to get started.