Opening a new business is risky, but you have a great idea and you know there’s a market that will welcome your store. The location of your new shop will be one of the most important factors in determining your success. Remember the basic 4 P’s of marketing. In its simplest form, your basic mix can be summed up as Place, Product, Price, and Promotion. Each of these will determine how many sales you make, so each is worth careful consideration. But to begin with, let’s talk about “Place.”
Cost per Square Foot Affects Your Pricing
Your store must cover its overheads plus give you a profit. However, you can’t price yourself out of the market, so looking at the price per square foot is important. Calculate how this affects the turnover you need to make in order to keep your head above the water. Compare this to your conservatively estimated sales volume and decide whether your projections match your price point. If you need to raise prices to make your shop space viable, will the market be willing to absorb this? Research your market and your competitors to see how this pans out.
Think About How Much Space You Need
As we’ve seen, price per square foot is a determining factor in choosing your premises. Choosing a store with a lot of floor space pushes up your costs, but choosing a store that’s too small to hold the range of stock you want to carry is also a mistake. Calculate how much space you need and if you’re selling goods rather than a service, consider how frequently you can restock. With regular top-ups, you may be able to get away with a smaller store than you initially thought you would need.
Go Where Your Buyers Are
While you might not be able to afford the glitziest store in your local mall, other rentals are lower and can therefore reduce your risk. However, opening a hair salon in an industrial area, for example, might not be the wisest move.
Consider the areas where your target market is likely to congregate and target these. The same hairdresser, for example, might decide to choose a small suburban shopping center with better success. A hardware store, on the other hand, might well be better off in the industrial area rather than the suburban shopping center. After all, that’s where people with building projects go to find their materials.
Evaluate the character of the area you choose too. For example, an upmarket store in a downmarket area will have a harder time getting customers to drop by. A supermarket in a rural area will need to present a friendlier image than one in an urban area, and so on.
Study Leases Carefully
Most store owners rent their stores, so the terms your prospective landlord sets will help you to see if you’ll be comfortable with the shop space he or she is offering. Apart from the price, you also need to consider the duration of your lease as well as what your landlord is willing to do for you. When visiting a possible location for your shop, make a judgment call on how well the landlord maintains the building. The lease should state that you’re responsible for the interior of your shop and that the building itself is cared for by its owners. How well do they meet this obligation? What may you do with your store, and what may you not do? Are there additional costs? All of this should be laid out in your lease.
Ready to Launch?
Once you have found the right premises for your new business, your work has just begun. There’s shopfitting, stocking up, and your grand opening day to look forward to. Provided you’ve got your marketing mix, including “place” or location, right, you should be set for success. Celebrate the milestone and prepare yourself for the adventure ahead.