A Bad Location Will Still Sink You
We’ve all had this experience: We see a store or restaurant we’d hoped to visit, but before we commit to going into the building, we’re struck by an uneasy feeling. Maybe the neighborhood’s a little sketchy, perhaps the parking is nonexistent, or the property just seems run-down.
Whatever the reason, we make the snap decision to go elsewhere. And the business we opted against? It never knew it missed a potential sale.
How many times can a franchisee afford that kind of loss? Not many.
Even companies with big-draw names face the need to select great locations. Otherwise, they’ll quickly find themselves scrambling to make ends meet and pay the bills. Rather than put your own business in a tenuous position, you must know your market, your business, and your customer. Only then can you confidently choose a site.
Variables at Play During Location Selection
Although most businesspeople and entrepreneurs are aware that location is an essential factor, they can still succumb to the lure of a “good deal.” However, just because you get dirt cheap rent doesn’t mean you’re saving anything; at the end of the day, you’re at the mercy of your location. While you don’t want to overpay, underpaying is just as risky. Instead, opt for a locale that allows you to meet your projected monthly costs.
Want to maximize your opportunity for franchise viability? Start by understanding what kind of traffic you hope to gain based on your target demographics. For instance, if your restaurant relies on heavy foot traffic, you’ll want to be in a walking-friendly place such as a town center or an easily traversed neighborhood. Similarly, if you expect customers to drive to your retail location, your parking should be well lit, maintained, and on accessible roadways. If you’re wooing families, being across from malls and entertainment centers is ideal.
In addition, you can weigh a few factors when selecting your locations:
1. Understand your customers’ specific needs. It’s not enough to know a few key data points regarding your primary customers. You owe it to them — and yourself — to walk a mile in their shoes. What do they need to make their experience with your franchise seamless and positive? If you’re not sure, find people who fit your demographics, and ask them direct questions. You might discover that although you assumed your target audience would drive to your doors, they prefer to use public transportation and look for establishments based on the bus schedule.
2. Get a handle on your competition. Yes, you’re hoping to best your competitors, but don’t forget that they probably did their homework on location. If they’re not in a specific area, ask yourself why. Can the market support two competing companies in one area? Perhaps if they’re on a four-corner Manhattan intersection, but it’s not likely if they’re in a rural Wyoming village. Find out what competitors already know about a location you’re unaware of, and use that knowledge constructively to determine where to set up shop.
3. Work with your franchisor. One of the biggest advantages of having a franchise is getting help from the franchisor. Franchisors may help with location evaluation; some even offer consultations to maximize your chances of picking wisely. Even if your franchisor isn’t hands-on with you in terms of location decisions, you can usually get some form of guidance on preferred business square footage, parking expectations, and more. Be sure to talk to fellow franchisees, if applicable, to glean further advice.
4. Exhibit more than a modicum of patience. It takes time to unearth the best site for any business, franchise or not. Plan on making many site visits; the process can extend for weeks or months. Assess traffic counts, monitor the history of other businesses in and around the same location, and ask questions. Due diligence will pay off.
Franchising success isn’t a matter of luck. It’s a matter of maximizing the probability of profitability, and selecting the right location figures prominently into that equation. Give the process the seriousness it deserves, and you’ll start on solid footing from day one.
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