6 basics to fundamental site selection for small businesses
Location, location, location. We’ve all heard the age old phrase before when discussing site selection or real estate business decisions. It’s true, it can absolutely correlate with the underlying success or failure of a particular business. Companies large and small struggle with these decisions daily; generally, due to the overwhelming amount of unorganized data.
As a small business, the importance of these decisions cannot be underestimated due to the fact that failure at a single location can consume your company.
When considering your next location as a small business there are a handful of fundamentals that you should be considering or beginning to understand:
- Who is your target audience? (Customer)
- Where do these individuals live and trade?
- Site and Brand performance drivers. What factors specific to a site or my particular brand help drive performance?
- Who and where are your competitors? (Direct and Indirect)
- Market Optimization. How does this location affect existing or future strategies?
- Sales potential. Create a budget for this particular location based on some of the above factors.
- Customer. First and foremost, you need to have an understanding of who your customer is. This will likely be driven by leveraging data you can capture at existing locations or competitors through merchant providers and loyalty programs.
Trade Areas. Understanding who your customer is drives the secondary critical piece; where is this target audience located and where do they trade. By first understanding where this target audience resides, then viewing where these individuals trade during your peak operating hours, you will start to truly understanding what your “trade area” is. Meaning, how far is your core population of target audience willing to travel to visit your business.
Site Attributes. A third factor to consider are attributes directly associated with an individual location such as visibility, signage, access, square footage, etc. Depending on the type of small business you are in, some of these may be extremely relevant, others will have a less meaningful impact.
Competition. We all have competitors in some form, whether direct or indirect. They should be taken into consideration when examining a potential site. Where do they exist in the current market, how do they perform and how far away are they from the potential location?
Market Optimization. Depending on how many existing locations you have and what your future objectives are, market optimization can play a key role. Regardless, when considering a location, the remainder of the market should be assessed to allow for an understanding of other opportunities that may exist. This will also allow you to consider future expansion opportunities and how this specific site would effect that.
Sales potential. Always create a budget based on your projected sales potential at a location. Depending on the budget you have available, creating a sales forecast can be scientific in nature by using predictive analytics tools or simply leverage some of the existing data discussed above to reasonably extrapolate.
Data continues to become more accessible to businesses around the world, specifically when discussing real estate. This is resulting in the birth of an emerging marketplace called Geo-spatial Business Intelligence (GBI), that has new startups leveraging the accessibility and power of cloud computing. This will be something to keep your eye on if you are in the commercial real estate marketplace or involved in the expansion of any multi-unit organization.
See how SiteZeus can help you solve for site selection and optimization.
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