Just as your product or service and your employees are crucial to your
business's success, so is your location. Where you want to set up shop is
a decision that should be made early. And when making that decision, you
should select your site based on the type of goods or services to be sold
and your target market, rather than on personal convenience.
If your business is retail, you will want a location that provides a
lot of local traffic, both pedestrian and vehicular. You will also want to
consider parking availability, public transportation, the compatibility of
neighboring businesses and the building itself. If you are renting, try to
talk to former tenants and ask why they moved. Talk to other shopkeepers
in the area and learn as much as you can about the area and its customers.
Be careful if you see several unoccupied buildings for rent. It could mean
the area is undergoing an economic downturn, or a redevelopment
Manufacturing and service businesses have different needs. They must
be close to their suppliers and customers, accessible to transportation, in
compliance with local zoning regulations and have space for future
No matter what business you are in, there are certain basic
considerations that must be taken into account. To begin with, the style,
construction and overall exterior appearance of your building play a vital
role in the development of your company image. And inside, be sure your
layout is open and simple and facilitates the flow of people, supplies and
merchandise. In addition, don't neglect to check the plumbing, air
conditioning and sanitary facilities and whether the building meets fire
and earthquake codes.
Before you sign a lease, you should have your lawyer and insurance
agent review it. Both you and they will want to know:
A final consideration in choosing a location is whether you should
rent or buy the facility you are considering. Your decision should be
based on these factors:
- How the rent is determined
- Is the rent high or low compared to other rents in the area
- Who is responsible for alterations--the tenant or landlord
- Who owns any improvements made by the tenant
- The amount of insurance held by the landlord and the degree of coverage
required of the tenant
- Lease renewal provisions
- The tenant's right to sublet
- Options for expansion
- Property use restrictions (zoning).
Before embarking on a search for the perfect location, you should
outline your needs, present and future, and then find a site that meets
those needs. If you need assistance, a business real estate broker can
often be helpful in finding the right location. In addition, your local
chamber of commerce can answer any questions you may have about the
- Are your requirements going to change rapidly over the next few years?
If they are, you should probably think about renting.
- Is capital in short supply? Can you use your available money better if
it is not tied up in a building? What return can you expect from your
funds if they are invested elsewhere? If your capital is tight, renting
may be preferable.
- Can you secure a favorable lease from the building owner with an option
- How will renting or purchasing affect your financial picture?
- Will the building be easy to resell?
- What kind of tax forgiveness and other kinds of assistance are available
from the state or the local community?
Reprinted from the United States Small Business Administration
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