Small Business

Derrick Van Mell

• Where do we fit best in our market area?
• Where should we fit in our labor pool?
• How will we fit within the transportation web?

To answer the question about the market area, you will need to know where current customers are, where future customers will come from, the location of top competitors, and major traffic flows. You can answer the labor pool question by knowing where your current employees live, what kind of staff you will recruit in the future, and what conveniences they like, such as child care, proximity to schools, places to eat lunch, and so on. Fitting into the local transportation web will depend on if your customers walk, drive or fly, and on how often suppliers come to your business and if they use vans, trucks or trains.

Related to the location question are the issues about the site itself, its visibility, pedestrian access, vehicular access, local services, utility costs, zoning and so forth. It helps to create a matrix of these criteria and set a weighted scale to help you evaluate sites.

Every location decision intertwines with the other two ingredients of facilities: space use and finance. The size, type and look of your building will be better suited to some locations and sites; you will need a financial analysis that convinces you (and your banker) that building at a particular location will bring you more customers and better staff, and will allow you to operate more efficiently than anywhere else.

Very small businesses can analyze their location needs by putting colored sticky dots of customers, competitors and staff on a street map. The resulting patterns will help give you ideas about the borders of your market area and how you will compete in it. Aerial photos, which you can find on the Web, offer another good perspective.

Larger organizations can use computer programs to map larger databases of customers, graded by different criteria, to create visuals of their market area. These tools can overlay the labor pool and transportation information.

Buildings matter. The goal is to put the right building in the right place at the right time; getting it wrong is costly. So, create the location maps, pin up the aerial photos, outline the matrix of site criteria ? and then take the time to study several good alternatives. Do not rush into a real estate transaction: These are business decisions of the highest importance.

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