10 step complete guide for starting a consulting business from scratch.
Pick Your Business Location
Not all businesses need a physical location. But if you do, location is very important.
Here’s what you need to know about choosing a location for your new business.
Assess what’s important to you
When you start thinking about a physical location, assess what you must have, what you’d like to have, what you won’t tolerate, and how much you want to pay.
You must know these things when you evaluate your location options. And, remember that you will typically sign a long term lease (at least 1 year and often longer). So this is not the type of mistake that’s easy to correct immediately.
What’s the target market for your business?
If you plan a formal, upscale business, then your location should be consistent with that style and the target market. If you plan a casual cafe, be sure you don't open it in a pricey neighborhood filled with expensive restaurants.
Understand the demographics of your employees and customers
As we pointed out above, the style of your business will typically drive the location of the business. That’s because it makes little sense to open a business in an area that has few prospective customers.
And, consider your employees. What skills do you need and are those people available with those talents in the location you plan to open? This is one reason many larger businesses have been moving their headquarters from the suburbs to urban areas in bigger cities - they're having a tough time finding employees who live or are willing to travel to the suburbs.
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Assess foot traffic if your business depends on walk-ins
For most retail businesses, foot traffic is critical. If your business is hidden in a corner where few people are likely to be, you’ll struggle to find customers. This can happen even in popular shopping malls. On the other hand, if you have a discrete business that requires confidentiality, you don’t want to be in a place where hundreds of people can see who visits your physical location.
When you've scouted a few location options, take the time to monitor the traffic outside a potential location at different times of the day and on different days of the week. This will help you to make sure the volume of people meets your needs and goals.
Parking and accessibility
Some locations are great because there's a ton of vehicle or foot traffic, but busy streets can present their own unique problems. If your business is on a busy street, how easy is it for cars to get in and out of the parking lot? Is the facility accessible to people with disabilities?
If you receive deliveries, will your suppliers be able to easily and efficiently get materials to your business without interrupting traffic or your customers? And if you receive many packages via couriers, will they be able to get in and out quickly?
Importantly, be sure that you understand the limitations for deliveries and access, as well as equipment. For example, is the heating and cooling system usable 24 hours per day or turned off at 7 pm and you must pay extra to use it between 7 pm and 9 am? Are doors locked at certain times or do you have 24 hours access to your business?
And, be sure there's ample convenient parking with good lighting.
Consider your competition
Some businesses love to be located next to a competitor. We frequently see fast food chains near each other. But for other businesses, nearby competitors create unique challenges, So consider whether this is a benefit or a disadvantage for your business.
Evaluate convenience for you and your employees
Consider whether nearby businesses could help you generate foot traffic to your business, and whether their employees would be potential customers. And consider how nearby businesses will impact your team. For example, are there enough places for your employees to eat nearby? Are there day-care centers conveniently located where they can leave their kids?
Assess the history of the specific physical location
Always ask about prior tenants. If you’re opening a car dealership in a space where five prior dealers failed, this should be a red flag. Similarly, if you’re opening a restaurant where three other restaurants failed, this might suggest that the nearby public does not need another restaurant.
Inquire about local building and zoning ordinances
Local ordinances and zoning restrictions can impact your business. So, contact the local building department, explain the type of business you plan to operate, and find out if ordinances or zoning restrictions will make it difficult or impossible for you to locate your business there.
Evaluate the physical building structure
Many older buildings lack basic infrastructure to support modern businesses. Make sure the building has adequate heating and air conditioning, has sufficient electrical power to meet your needs, and appropriate telecommunications equipment (including Internet broadband access). Since most people won’t understand how to evaluate a physical building properly, you should consider hiring an independent engineer who can do this for you and provide an objective evaluation based on your requirements.
Consider utilities and related costs
Rent will be your biggest expense when you find a location. But utilities are not always included in your lease so you should understand how much utilities will cost. Also, ask about security deposit requirements for each utility company - those requirements differ for residential tenants.
Some locations will provide daily, weekly, or monthly janitorial services. But not all do. If you have to provide your own janitorial service, what will it cost? What will business insurance cost in this area? Do you have to pay extra for parking or is parking included and easily accessible?
Coinsider state and local taxes
State taxes are uniform across a state, but municipal taxes differ. Visit state and local government websites to compare tax rates, including income tax, sales tax, property tax, and corporate taxes.
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