5 Questions to Ask Before Choosing a Business Location

By Stefanie Neyland, Small Business Content Developer at BizLaunch.com

Setting up your place of business is one of the most important decisions you’ll ever make as an entrepreneur. A great company in a terrible location doesn’t stand a chance of succeeding, which means you’ll need to carefully consider the location, equipment and general setup of the space and make sure it works for your business and industry.
Determining how and where you should set up shop is largely influenced by the nature of your venture—if it’s service-based you can potentially work from home, but if you’re a retail business, you'll need to have a brick-and-mortar premises. Whatever type of business you’re in, here are five important questions to ask before committing to a new space.
1. Have I done my homework?
When it comes to scouting out a new business location, research is your best friend. This can be as simple as driving around and getting an idea of what businesses operate in the area, or as complicated as looking into demographic data online. Consider speaking to business owners in the area—ask them what the location is like for running a business and whether they would rent space there again.
2. Is this the right location for my clients?
Consider who your customers are and find an area that they frequent to maximize foot traffic. If you’re in retail, foot traffic is especially important as it will account for a large portion of your sales. But if you work out of an office, make sure it’s easy for your clients to find and park. Even little things, such as how easy or difficult it is to access a building from the road, can make or break your business, so look at all factors—from traffic patterns to visibility from the road.
3. Is the rent fair?
You might dream of a downtown loft office, but you’ll pay for that privilege. If budget is a concern, look at areas that are comparable to the market average for commercial real estate. Knowing what that average is will help you negotiate in the event that a property manager is trying to inflate the rent for a space.
4. Can I afford it?
The monthly amount you’ll pay in rent adds to your overhead—as do utilities—so make sure you factor those costs into your breakeven point. If you pride yourself on offering affordable products, realize that you might have to pass the cost of your overheads and salaries on to your customers in order to break even, and more importantly, make a profit.
5. Is it worth it?
Before signing a commercial lease, ask yourself whether you really need to move. If you’re currently operating out of a home office and it’s working for you, an office may be an unnecessary expense. But if expanding into a larger space will help you increase the number of products you can sell, the investment may be worthwhile. Crunch the numbers to see if it’s the best decision for your business.
TIP: Hire a lawyer before signing any documents
Leasing office space isn’t as cut and dry as renting a house. It can be helpful to have a lawyer look over your lease agreements to make sure they’re reasonable.

By Andrew Patricio

August 20, 2014