It’s been the mantra of real estate
agents forever, and it still rings true when discussing the relative values of
any sort of residential or commercial property. But, this focus on location is
an even more important factor when that real estate purchase involves starting
or taking over a business.
are three undeniable reasons why placement matters when considering buying a
1. Location Determines Cost
spot where your new business is located may be the single biggest factor in the
cost of the purchase.
businesses that rely heavily on pedestrian or vehicle traffic, location can
determine eventual success or failure. After all, no matter how great your
business idea, or how beautiful your building, if no customers drop by – it’s not going to last long.
the other hand, you need to ask yourself whether a top location is worth the
higher investment. If your biggest problem is getting the right kind of
customers through the door – a prime placement will solve this for you right
from the outset. But if footfall is not a major issue – why waste money on
overhead costs like taxes, utilities, and maintenance will be affected by
location as well, so you’ll need to think about this before you decide on a property.
2. Location Determines Clientele
many areas, the physical location of a store or other business determines what
sort of customers will frequent it.
example, setting up a clothing shop in an airport virtually guarantees nearly all your
customers will be rushed travelers. If it’s a busy airport, you can expect an
extremely high volume of traffic. But you can’t expect groups of local senior
citizens perusing the racks while taking a rest from their mall walking laps.
there are thousands of shops in Manhattan but there’s only one 5th
Avenue. Leasing space on that street will cost far more than elsewhere in the
city simply because that’s where the wealthiest New Yorkers go to shop.
3. Location Determines Future Opportunities
aspect of a location’s future impact on the business is a little tougher to evaluate
but you should be able to observe what’s going on in the locality and make
logical guesses about business prospects.
by following local trends, keeping an eye on where economic investments are
being made in the local area, and making realistic extrapolations about what
the area you’re considering for your business is going to look like in 5, 10,
or 20 years, you’ll be in a prime position to decide whether or not your
potential property is likely to increase or decrease in value.
also be able to consider plans for future expansion on the property, or an exit
strategy if and when you decide to sell and move on to something else.
affects more than just these three aspects of buying and running a business,
but this should give you a solid foundation as you start reviewing potential
properties and considering where to best locate your new business.
By Rose Hill, online journalist for BusinessesForSale.com, the
market-leading directory of business opportunities from Dynamis. Rose writes
for all titles in the Dynamis stable including PropertySales.com