Location Awareness: Property Tips for Entrepreneurs
Eric Kranz – At some point in every entrepreneurs journey, the question of “where” is going to arise. Where are my customers, where are my suppliers, where are my partners…where am I? For this post, we will focus on the latter, and often most important, of those questions. Location, location, location has been hammered into the mind of the entrepreneur since the dawn of the market based economy. We’d like to give you a few tips as you begin the search for that perfect piece of property.
The first, and most important step, is determining your needs. Obviously this includes size of the space and property features (air conditioning, parking, appearance, etc.) but more importantly, what function will your space serve? When starting your business, managing overhead is paramount, and signing a two year lease on a Main St. property is a great way to cripple your ability to manage costs. Ask yourself the following; do you even need a publicly accessible brick and mortar location? Generally speaking, a desirable, publicly accessible location is going to be expensive whether leasing or buying. Ask yourself the following: Do you get drop in customers? Are your items/services browse-able? If the answer is no, do you benefit from having a location in a heavily trafficked (read: expensive) area? How do you get your clients? If you’ll get 80% of your clients via direct sales, marketing and referrals, and the remaining 20% of walk-ins don’t generate revenue to cover the high rent district…why look in the high rent district? Having a highly visible property is only effective as a marketing tool if increasing general awareness is important to your endeavor, so make sure you ask yourself if you’re really getting the benefit out of that Main St. address or if you’re signing on the dotted line for less financially responsible reasons. There is no shortage of warehouse and b-level office spaces available in Southeast Indiana. While not glamorous, these spaces offer fantastic jumping off points for many non-retail endeavors.
Once you’ve determined your needs, it’s time to start looking. This is exciting, overwhelming and your eventual decision will have a very real lasting impact on your ability to thrive as a start-up. Remember the following to help avoid any potential pitfalls:
- Don’t Settle!
- Too often, an entrepreneur will fall in love with the first space they see. They build their plan around that singular location and refuse to look elsewhere because they’ve “found the perfect spot!” Maybe so, however until you look at other options you can never really be sure. Always visit at least half dozen properties before beginning any negotiations. Not only will this help you pick the right one, it will also give you a feel for the current market. Maybe your “perfect property” is overpriced. Worse, maybe it is drastically underpriced, in which case you need to find out why before signing.
- The businesses needs come first
- Everyone wants a multi-thousand square foot location with great architecture and a great view in a great neighborhood, but as mentioned above…do you need it? Start with the needs of your business, with success you can always grow into your wants.
- No such thing as too much information
- Visit your local Small Business Development Center before making any decisions. We can provide a wealth of information that can help in the hunt for the right location. Demographic data, traffic patterns, population characteristics and surrounding businesses are just some of the important information we can provide.
Once you have determined what it is you need and have settled on a location, it’s time to do location specific research. Even if you are working with an agent, make sure you do your own due diligence. There are a number of ways to find out more information on the space. First, contact the previous tenants/owners. Find out why they left. If they failed, why? Is it something you may be susceptible to? Can you mitigate those issues? Also, find out about utility rates and any maintenance that has recently been done. If renting, ask how responsive the building owner was to general needs and maintenance. If the building has had high turnover, try to contact as many tenants as you can. The owner should be willing to provide you with that information, if not, the neighbors, Chamber of Commerce and local government are your friend. If you are buying a property, research the history of that property. Many counties have parcel information (including previous owners, sales dates and sale prices) online. Visit your local counties web site or the county recorder to get access to this information. Additionally, there is a wealth of pertinent information at Beacon, a local government geographic information system.
Remember; don’t dive into a location without doing your homework. Always negotiate, and not just on price. Terms are far more important than price, especially for emerging businesses. The ability to maintain flexibility and minimize overhead should always be front of mind. Think through every option, in some cases it may make sense to pay slightly more for a shorter term lease. If you have a number of possible locations (and you see the area has high vacancy rates), work to get your rental agreement to as close to monthly as possible. Where you locate your operation is an important decision that will significantly impact how you do business, make sure you treat it as such.
Eric Kranz is a Business Advisor for the Southeast Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Eric can be reached at email@example.com.