One of the most dangerous times in the life of a small retail business is when the owner needs to relocate. Often this is because the business is growing and the existing facility is no longer suitable. This is a nice problem to have, but choosing the wrong new location can kill the growing company.
Too often, business owners make assumptions about the new location without taking time to do the necessary research to evaluate their decision. There are many important issues that should be considered when choosing a new location.
One of the first concerns is whether you can really afford the new space. You may expect sales to increase when you relocate, but is the rent or mortgage payment so high that it offsets the benefit of higher sales?
Look at other possible increases in cost such as maintenance, utilities, insurance and property tax. However, if the new location has high visibility, your overall advertising costs may decrease. You need to develop a cash flow projection for the new location to look at financial feasibility.
Don’t assume there are plenty of customers in the area where you plan to locate without actually looking at the numbers. Consider how large an area from which you will be able to draw customers. Then take time to research the area to find out the actual population and the make-up of the population so you can evaluate the location’s potential.
In addition to knowing the population of an area, be sure to research the growth that is taking place, in terms of both residential population and number of business establishments. Look for new construction of subdivisions, office buildings, shopping centers, etc. Obtain available statistics on growth trends for the area.
Evaluate the amount of traffic in the area, in terms of both vehicles and pedestrians. Be sure to look at the vehicular traffic count for traveling in both directions. Determine which side of the street may be more beneficial for your type of business. Evaluate your customers’ habits and determine whether your location should be more convenient for people traveling to work, from work, or to run errands and shop.
Also remember that although traffic is desirable, traffic congestion during certain times of the day may make your planned location difficult to access. Observe the vehicle activity in the area to look for potential problems caused by congestion, one-way streets, dead-end streets, traffic lights and weird intersections.
Consider whether or not the building is really right for your business. You may have to do a lot of expensive renovations to make the building attractive, safe, and convenient. You may also find that the building is situated too far away from the road or too close.
There may be zoning issues associated with the new location that should be discovered and dealt with before committing to the location. There may be restrictions concerning the size and type of signage you can use, which will affect visibility. Depending on the type of business, your facility may have to be inspected and approved by one or more government organizations prior to opening.
Don’t forget to look at parking issues. Not only should there be plenty of parking for your customers, but it also should be convenient and safe. Customers tend to want to park very close to your facility. They may be concerned about remote and poorly lit parking areas. The parking lot should also be well-maintained and well-marked.
Consider the effect other businesses near your new location may have.
Is there a lot of competition nearby? Could that hurt or help your business? Will the other businesses nearby complement your business? Will they attract a large number of the type of customers you need?
These are only some of the important issues to consider when choosing a new location for your retail business. You need to conduct your own in-depth research to evaluate the issues that apply to your situation as you make the critical decision of where to locate.
Connie Edwards is a business consultant with the University of Georgia’s Small Business Development Center. Contact her at 651-3200.