How to Assess the Potential of a Location for Your Business

By Admin | Mentoring

Nov 29

Choosing the right location for your business is one of the common struggles of starting up. It is an aspect of business that entrepreneurs should always take into consideration. In fact, it is key to successful business operations and overall growth. That is why it is important to know the things you should look for when searching for  a perfect spot for your business. Here are some tips on how you can assess the potential of a location, from Mr. Joel Bartolome, National Business Development Head of Generika Drugstore.

 

1. Know the Considerations

Businesses, most specially the service-oriented ones, succeed based on 2 major factors: management and location. However, when you are still starting the business, location is something you need to put a big priority on.  Before buying or renting a space, you need to have a checklist of the considerations for the right location of your store; depending, of course on the type of business you have. The following are the considerations when finding the right location:

a.) Target Market – Your location must be close to your target consumers. You must know who they are; what they do; and most especially, where they often stay.

Knowing your market allows you to situate your business near them. Marketing the business becomes easier and cost efficient, since your target consumers are just right on the same area where you have established your business. With this, you are assured to have regular customers who will be coming over and over again to your store, without putting so much effort in your marketing.

b.) Trade Area or Commercial Activity – There must be a high level of businesses in the area that will draw shoppers. At the same time, there must be competitors around, and there should also be other businesses that may complement your product/service. Consider the foot traffic. This is a critical aspect for your business because this will give you an overview of the possible outcome of your business operation in the area – whether it will become a hit or not.

You can also use the situation of your competition within the location  as a case study on how your business will turn out (establishing it within the same area).  If their business is doing well, then most likely yours too will do the same.

c.) Rent – Your rent must must be affordable enough to sustain your operations; lease period must be long enough for you to recover your investment.

Remember, rental can eat up your budget. That is why it is important that you consider first the feasibility of your business in the area, before getting the spot. You might end up regretting your choice later on. If you are still starting the business, better to rent than buying the property. That way you are able to manage your initial cost of investment.

d.) Visibility and Accessibility – Your establishment must be situated in a visible spot where it and seen by your target market.

Location will make or break your sales. It is one of the most important ingredient in your success. That is why visibility and accessibility of your location is key to drawing customers and traffic into your store. Always think of the passersby who can be your potential customers. Positioning your store in a visible and busy area will attract customers without having to exert too much in marketing.

 

2. Seek Advice from Site Consultants

Unfortunately, there are no existing websites that provide listings of business locations. That is why it is important that entrepreneurs should always be on the look-out for  potential space for their business. You need to do an actual ocular inspection in the areas you want to establish your business on. Although this can be quite a hassle, but at least you get to have a lot of options and see them for yourself.

However, you may opt to ask for advice from site consultants. They are mostly real estate brokers who have an eye for good locations and network. Even big businesses like Jollibee, Puregold, Phoenix Petroleum, etc use Site Consultants to locate sites for them.

 

3. Know What to Avoid

If there is a checklist for a perfect location for the business, there is also one for the things you need to avoid.

You must be careful when purchasing or renting space for your business. It is always good to do a site check of your potential location before getting it. Don’t just consider the visibility of the location or the foot traffic, think also of the safety of the area. Always do a background check on the location, and ask about the previous tenants (businesses) before signing up a lease agreement with the lessor.  Know why the former occupants closed down or left — you might realize, something is off/wrong with the place.

Verify with the Barangay Office or City/Municipal Registry of Deeds or City Engineer’s Office to make sure the place, the legal documents and ownership is unquestionable. Check the site if it is not built at street level; it may be an indication that it is prone to flooding. Watermarks in the ceiling may be an indication of leaky roofs, while cracks on old building walls may be signs that it is not well maintained. High crime rate around the vicinity may be an indicator that the place is not safe for business, and you might opt to just look for another location instead. Normally, when a site is at low rate, it may indicate that there could be some defects or regulatory issues in the establishment.

 

About the Mentor

mentoring-monday_blog_joel-bartolome-01

Joel G. Bartolome is the National Business Development Head of Generika Drugstore (A member of the Ayala Health Group).

He has a solid 20 years of experience in Sales, Marketing and Distribution Management in the fast moving consumer goods, food and agriculture sectors covering the Philippines and nearby SEA countries. He has held leadership positions in companies like Monsanto Philippines, Biostadt Philippines and Nestle Philippines. He has also handled professorial roles at the Ateneo de Naga University and at De La Salle Lipa.

Joel earned his Masters in Business Administration – Regis Program (Gold Medal Awardee) at the Ateneo de Manila University, where he also earned his AB Management Economics.

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