Choosing a Location and Negotiating a Lease

A big step in your business planning process is deciding where to locate your business. Your location choice can make or break your business. A good location can add customers or put off customers; it can be a financial burden or a manageable expense; it can help promote your business or be an added Marketing task.

Finding a good location is not just a big decision, it can be a difficult challenge as well. Good locations are often unavailable and if available they may be costly. And, if you find the right location, the building itself may need major remodeling or renovations on top of your expected setup costs. Then, the neighbors may object and challenge your tenancy. The town council may ask for seemingly unreasonable actions and requirements to get permits and business licenses. The landlord may be difficult to negotiate with.

Of course, once you get past these hurdles it will be smooth sailing for your business. Welllll...I don't think so. In fact, his may be the easy part. Then comes: the IRS, Planning Commissions, Zoning Departments, Competitor sabotage, Health Department, Fire, Police, solicitors, vandals and taggers, permits, sign ordinances, parking problems, prepaid taxes, insurance, Public Works and Transportation Departments, permits, regulations, EMPLOYEES, and, don't' forget those pesky customers.

Start developing a "Criteria" by which you make your Location Decisions.

• Important
  • Startup Cost
  • Long and Short Term
  • Business District Synergy or Stand Alone
• Own, Lease, Home Based, Mobile
• Showcase or Workplace
• Destination or Customer Accessible
• Regional, Local and Trade area
• Finding a Location
• Evaluate and Assess Locations
• Negotiate Lease and make Commitment

You will have a lot of choices when deciding where to locate. Some of the general options are:

• Buy a building and property
• Buy land and build
• Buy an existing business
• Lease space and have the landlord "build to suit"
• Rent or lease to own
• Lease space as is and renovate and remodel
• Lease space as is and negotiate renovations and remodeling with the landlord
• Sublease space
• Home-based business

Regardless of which choice you make, remember: Everything is negotiable.

You may start your analysis and planning for a location by considering the general type of location that fits your business style and needs.

• Central Business District - people are willing to drive to you and may want to shop for a variety of needs. You may have impulse sales, your business is part of the city life and lifestyle, you need foot and street traffic
• Shopping Centers & Malls - You are an anchor store or a satellite store, you may not be the customers primary reason for the shopping trip, you fill a needed shopping niche, you sell specialty items or have a narrow product focus, you desire foot and street traffic
  • Neighborhood
  • Community
  • Regional
  • Power Center
• Neighborhood - People prefer to drive a short distance, want your product relatively often, the location serves a small geographic area with density of customers
• Near Competition - There is synergy in competition where all competitors can benefit, you have a competitive advantage, you need to be where the action is
• Off the Beaten Track - you have a "destination business" where the customer will seek you out, the customer needs or wants your particular products and services and is willing to travel to you, you want to avoid high rent and permitting concerns, impulse customers are not likely or necessary, you don't need street or foot traffic visibility
• Location is of secondary importance - You need a place to work, you will go to your customers, you will catalog or sell via the WWW, you deliver, customers seldom need to visit your location

Broad Criteria and the Regional Outlook - needs for your business resources

• Proximity to Markets
• Proximity to Raw Materials
• Access to Skilled and Manual Labor/Educated Workforce
• Overall Business Climate
• Wage and Salary Expectations

Local Trends - needs for your marketing considerations and your access to local resources

• Population Base and Trends
• Local Laws and Regulations
• Competition
• Community Compatibility
• Transportation
• Police and Fire Service
• Reputation and Goodwill/Ill will of Location

Once you find a potential location, use the following checklist to evaluate it. It is unlikely that any one location will be perfect, However, each location has positives and negatives. Identify them and assess whether certain criteria have more importance than others.

Finding a location:

• Flyers Flyer1 | Flyer 2
• Mailers Postcard
• Fax
• Drive-by signs
• Newspapers sample 1 | Sample 2
• Magazine Commercial Mag
• Internet
• Commercial Brokers
  • WWW
  • Office Visit
  • Yellow Pages

http://sbacommercial.com/ -- Sherman & Boone Assoc., Commercial Real Estate Division
Loopnet Commercial -- Loopnet
Craig's List Commercial -- Craig's List

http://www.baileyproperties.com -- Bailey Properties
http://www.bizben.com/ -- Bizben.com (formerly Business Exchange)
http://www.santacruz4sale.com/moreframes.html -- Century 21
http://www.santacruzforsale.com -- Realty World
http://www.mls.com/
http://www.loopnet.com/ -- LoopNet

Consider the following: