Aspiring retailers, take note: What you sell may not be as important as where you sell it. Choosing the right location is often crucial to creating a successful store, because customers won’t stop or come inside unless they feel comfortable in the neighborhood. Here are four tips to help you pick the perfect site.
- Determine whether the area’s demographics fit your ideal customer’s profile. Gourmet cheesecake for $5 a slice may be all the rage in Manhattan, but if your business is based in a working-class neighborhood will anyone bite? Before committing to a location, check out the area’s publicly available demographic information (residents’ ages, annual income, living situation, and more) to make sure you’re targeting the right crowd. Check the United States Census’ American FactFinder to track down demographic details for the zip code of your choice.
- Think about how well a location fits your company’s desired image. When considering available spaces, focus on how you’d feel upon entering the shop as a customer. If you’re opening an upscale restaurant, will customers be turned off by the McDonald’s across the street? If you’re touting adventure travel, will a dark, cramped space send customers the wrong message?
- Look at the size of the potential market. It may be cheaper to open a shop in a Boston suburb than next to Faneuil Hall downtown, but how many potential customers will you miss by basing your business so far away from the action? Depending on how many customers you’re equipped to handle, that may not be a problem — but be sure to analyze the size of your potential market in determining whether a location seems like a good value for the money. Spend some time visiting neighboring businesses to see how well they’re doing. If three local pizza shops have shut down in the past year, it’s probably not a good spot to start tossing dough.
- Don’t sign a lease (or buy a building) that you can’t afford. Although it’s important to start your business in a desirable location, don’t agree to more than you can handle. If you won’t have much cash flow after covering your start-up expenses, you may not be able to afford high rent (or mortgage payments) for long — and you could be forced to close your doors within a year. Be conservative when planning your budget and realize that it could take time to start making sales. Find a space that you’ll be able to afford even if you get off to a rocky start.