Location Matters

Twenty-five cent lemonade stands have cornered the market in beverage sales in neighborhoods across America. Lemonade stand “franchisers” have figured out that cute kids on sunny days with cool beverages in convenient corner locations can bring in pretty decent revenue. Unfortunately for them, their market is limited…to those within walking distance of the lemonade stand and those who happen to be driving through the neighborhood. Deciding where to run a business can be a pretty daunting task.
There are six areas in which a businessperson can choose to operate his business, and the final decision will have a great impact on its success. Among locations from which to choose are central business districts (CBD), neighborhood locations, malls and shopping centers, near competitors, outlying areas, and home offices. Considering what the “type” of business is, the target market and the area surrounding the prospective location are all factors that will assist in determining where the best place to operate will be.
Central Business Districts are located in the heart of a city, and are usually referred to as “downtown” in America (Wikipedia, 2006). One advantage to operating a business in a CBD is exposure, due to being surrounded by an assortment of retailers and services, allowing people who are not necessarily a target market to become aware of the business. However, disadvantages such as saturation, traffic and costs of purchasing a space could outweigh advantages, depending on the type of business (Leposky, 2005).

Neighborhood locations offer a more intimate setting for a business’s customer base. Away from the hustle and bustle of CBD’s, neighborhood locations generally offer lower rental rates, more support from neighboring businesses and assist in adding vitality to surrounding neighborhoods . Malls and shopping centers offer locations which are usually equipped with fixtures, on-site maintenance, and assistance with marketing. Conversely, these locations often charge steeply for space. For some businesses, such as McDonalds and Burger King, operating near competitors has proven success.
This type of local provides choice for consumers, and the opportunity to shine for the business…but lack of performance could win business for the competitor. Conveniently, operating in an outlying area allows rest in the matter of competition. However, “inconvenience” also has the opportunity to slow business. Home-based operations are becoming more and more popular these days.
Advantages such as low overhead, more time with family and, of course, no commute are among the factors leading to the growing transition from business office to home office (Pratt, 2006). But operating from home sometimes projects un-professionalism, constant interruptions and the inconvenience of friends and family assuming that you are always available.
Setting up shop just “anywhere” is not as easy as it seems. There is a strategy to choosing a location, and a business owner’s final decision could make or break his business. Each one of the locations offer benefits as well as challenges, but ultimately, the saying “location, location, location” holds true… success will not find the business whose location is amiss.
References:
Choosing a Business Location. (2005) Ampersand Communications: Leposky, G. March 2007. www.members.aol.com/amprsnd/location.html
Definition of Central Business District. (2006) Wikimedia, Inc.: Wikipedia Writing Staff. March 2007. www.wikipedia.org/wiki/Central_business_district
The Impact of Location on Net Income: A Comparison of Home based and Non-Home based Sole Proprietors. (May 2006) SBA Office of Advocacy: Pratt, J. March 2007. www.sba.gov/advo/research/rs275.pdf