hi folks dave waring here again with
fitsmallbusiness.com and today's lesson
of the day in our last video we
continued our series on how to start a
successful business with a look at how
to lease commercial real estate for your
business in today's video we're going to
continue that discussion with a look at
how to choose a location for a retail
store or restaurant so let's get started
when choosing where to open a retail
store or restaurant you should keep in
mind the following area who lives within
a reasonable distance of the location
access is going to the location and easy
drive or walk will drivers be able to
park noticeability
how many people will see the location as
part of their normal activities
local neighborhood what types of
shopping activities are nearby let's
take a look at how you can evaluate each
of these areas can a certain geographic
location support your business I read an
article recently that suggested that you
should consider the area that your
business serves as the distance that
most people drive to get to the grocery
store for example if most people drive
15 minutes to get to a grocery store in
your city you should think of the area
that your business serves as a 15 minute
commute from your location I think this
is a good starting point for thinking
about the geography a potential location
can serve however it does have
limitations firstly it assumes that
people are coming to your place of
business from home instead of from work
which may be further away also the model
doesn't recognize the different types of
shopping and dining experiences while
potential customers might only be
willing to travel 10 minutes to pick up
a pizza they might be willing to drive
45 minutes for a fancy dining experience
when deciding on how big the area your
business serves is think about how far a
person might be willing to travel to buy
from you generally speaking the lower
the dollar amount of the purchase and
the more regularly they make the
purchase the shorter the distance
customers are willing to travel once you
decide on the area that your business
serves you should research the area here
are some questions to answer how many
people live there are the people that
live in the area your target customers
do the people that live in the
area spend money locally for around $20
you can get a report from a company like
EASI demographics which would provide
this information for distances of one
three and five miles from your location
i've included a link where you can learn
more about this in the resources link
below this video another important
question to ask is what does your
competition look like for example if
you're opening a restaurant how many and
how successful are the restaurants with
similar price points and food styles
there are no hard and fast rules as to
what constitutes market saturation
however one barometer would be the
success rate of new restaurants and
whether or not you believe that your
restaurant could be successful without
taking away a big portion of the
business from another restaurant if you
need to demolish a competitor to have
success the area is probably not fertile
ground for starting that type of
business access if customers cannot get
there easily they are less likely to
come what constitutes access in major
cities in downtown areas is different
than suburban areas in a downtown area
you want to look at foot traffic and
proximity to public transportation like
subways and bus stops in suburban areas
it all comes down to the car ideally you
would want your business directly off a
major roadway with good traffic many
state and local municipal governments
survey the traffic on roads and can
provide you with this data in fact the
data can be as granular as sections of
particular roads I've included a sample
from New York State and the resources
link below this video the key number is
the average annual daily traffic or aadt
for short which is the number of
vehicles that typically use the road per
day this can be very helpful in
comparing two locations that both look
like they have similar traffic the data
is however imperfect in many respects it
can be outdated and doesn't tell you the
time of day day of week or type of
traffic that may be using the road what
type of traffic will work best for your
business once people get to your
business will they be able to
another way you can ask this question is
will there be enough parking for
customers and employees during peak
hours which is lunchtime for many
businesses or peak season which is
Christmas time for many businesses a
customer that cannot find parking will
not be able to shop and may not come
back a general rule of thumb for retail
stores is that there should be 5 to 8
parking spaces available for every 1,000
square feet of retail space restaurants
require more parking you should have a
parking spot for every three dining
seats and a restaurant plus a spot for
every employee a restaurant with 36
seats in 8 employees during dinner
service should probably have around 20
parking spots many municipalities also
have minimum parking space requirements
for restaurants in their zoning laws
I've included a link to a discussion
with more on this and the resources link
below this video noticeability will your
store be your business's biggest
advertisement there are two types of
noticeability
the first is proximity your customers
can notice you because they're going to
a nearby location for example if your
store is located in a department store
mall a number of potential shoppers may
be walking around the mall to visit
other stores as these shoppers have
already parked and are in a shopping
mindset there is a high probability that
they will walk into your store as well
for this reason many retail stores like
being in malls with anchor tenants like
large department stores which advertise
heavily and draw people into the mall
the second type of notice ability is
drive by your customer can notice you
because they drive by your store and see
signage or window display in determining
your drive by noticeability
the size and location of your signage
make a huge difference as we discuss in
our video on how to lease commercial
real estate you should ask your landlord
if there are any restrictions on
building a sign and check out your local
zoning ordinances if you can have a big
sign the number of people driving by
your establishment becomes even more
important
local neighborhood do you want to be
located near the competition or far away
from it have you ever noticed that car
dealers tend to be clustered around each
other there's a very good reason why
when shopping for a new car or
high-value ticket items shoppers tend to
visit multiple dealerships before they
make a purchase however just because
they want to visit multiple dealerships
doesn't mean that they want to travel to
find them a potential car buyer might be
inclined to take a test drive in a car
that is not at the top of their tri list
if it's next to a dealer which sells a
brand they like there is also solid
academic game theory behind locating
next to a competitor I've included a
link to a video which explains this in
the resources link below this video for
some businesses like cars furniture
stores and other high-value purchases I
think locating near the competition is a
good idea I also like the idea of
locating near a complimentary business
when there's potential for cooperation
instead of competition for example I
think a vegetarian restaurant might want
to be located near a pet store a casual
dining establishment by a movie theater
and an ice cream shop next to a school
when thinking about your local
neighborhood you should consider the
perceptions of potential visitors if you
operate at night will shoppers feel safe
in the area the level of lighting number
of people around and the area's
reputation will all play a role in how
safe visitors feel that's our video for
today if you have any questions or
comments please feel free to leave them
in the comments sections below that also
wraps up our series on how to start a
successful business so be sure to stay
tuned for our next video where we will
begin a new series on how to run a
successful business for more great
advice on how to start and run a
successful business be sure to visit us
at fitsmallbusiness.com today thanks for
watching