by Janette Blanco
April 20, 2017
When entrepreneurs are thinking about a specific location for their business, they often underestimate all the research that involves the process of choosing. Here I will give the six most common mistakes entrepreneurs make when choosing a location.
- Prime: Often entrepreneurs choose a location because is a location that is high in demand without going deeper thinking in demand for what? They often say I am going to make it because it is always busy. My question is: Do people that live or go to that area care about what you are providing? I have seen businesses such as ice cream places go out of business in busy areas because there is no pedestrian traffic or because people that live or go to that area do not care about ice cream. It is true you can make your business a destination; however, that is when a second mistake comes into play.
- Money: People tend to fall in love with a location and without making the proper projections, they sign a lease. Before you sign a lease make sure you have made realistic projections to see if it is feasible, take all the components into consideration, be on the conservative side instead of the optimistic side. Coming back to my ice cream example, if people that live work and play in that area are not interested in my product how much do I have to spend to attract customers and more importantly for how long? An area being prime does not necessarily mean it is the right area for you.
- Price: The perfect price for a location is very hard to find. Do not make the mistake of choosing a location only because of price. One more time, go deeper and do your research. Is your inexpensive location convenient for your customers? Is your expensive location convenient for your customers? Do not make assumptions, Collect data and facts.
- Assumptions: In business, assuming is a bad choice. Entrepreneurs can’t assume. They need to be familiar with the tools that are available to determine what location will be the best. More importantly, do not get into a location without looking at what is around you. Anchor stores are great references to see if the area is convenient, however; is not guaranteed that an anchor store will help your sales. Choosing a location based on assumptions is too risky. Entrepreneurs must know what is going on in that area, including future development plans and length. I have often seen businesses be affected by construction if areas are expanding. Go to your local government agency and ask what is going on in your area for at least the next 10 years.
- Pressure: Deciding while feeling pressure from commercial real estate brokers, friends or family, is never a good idea. The typical saying that the space will not last long and that it is a great price for what you are getting is very common, so do not make the mistake of deciding because you are being pressured. Keep in mind it is your money, your risk, and your life. Remember who is taking the risk and do not let people pressure you into a location without doing your due diligence.
- Alone: Entrepreneurs do not have to make choices alone. There are resources such as the Florida SBDC Network, as well as city and county partners, with experts who can help analyze your situation, conduct the proper studies and guide you to make the right choice.
So, before deciding whether that location is the right one for you, do your homework and utilize your local professionals.