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Small Business
Location, location, location!
October 7, 1998: 7:17 p.m. ET

Choice of starting location can mean life or death for a young retail business
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NEW YORK (CNNfn) - The choice of a store location has a profound effect on the entire business life of a retail operation, and while a bad choice may all but guarantee failure, a good choice can go a long way toward ensuring success.
     According to "Choosing a Retail Location," a publication recently released by the Small Business Administration, owner-managers need to choose a city first when finding the ideal location -- a basic but often-overlooked step for those hoping to sell a unique or specialized range of merchandise that may be better received in one region than another.
     The SBA encouraged business owners to consider not only the local competition and current population of a potential home city, but its potential population trends, implying that a successful business must not only thrive in the moment, but grow in the near future.
     After a city has been chosen, pinpointing the specific site is particularly important. Traffic, parking, local competition and cost are so basic to a retail location's success that they almost go without saying, and so every business owner will have to investigate each prospective site for these factors to his or her own satisfaction.
     Since small stores depend on larger stores for much of their walk-in traffic, the agency recommended that sellers of non-convenience goods find a site near an already-established retail center.
     "An excellent site … is next to a department store or between two large department stores where traffic flows between them," the SBA said. "Another good site is one between a major parking area and a department store."
     Even if the chosen site is in a shopping complex surrounded by dozens of other stores, the SBA cautioned business owners to seek out a location that complements what they're selling.
     "For example," the agency advised, "A pet store should not be located immediately adjacent to a restaurant, dress shop, or salon. You would want to locate a gift shop near places like department stores, theaters, restaurants -- in short, any place where lines of patrons may form, giving potential customers several minutes to look in the gift shop's display windows."
     The SBA also cautioned would-be retailers not to locate too far from potential shoppers, citing a study that showed that nearly 80 percent of a department store's customers lived within 5 miles of the store, while another 16 percent lived between 5 and 10 miles away.
    
Interview prospective neighbors

     Business owners should also speak with the current and previous tenants of a prospective location, the SBA said, not only to help determine the site's strengths and weaknesses but also to paint a portrait of the landlord.
     Many landlords can make the difference between success and failure, and so it is important to find one that can work with a young business' needs. A sympathetic landlord can provide a business with support, while an unhelpful one can ignore required maintenance, restrict promotional frontage or even rent adjacent spaces to incompatible or directly competing businesses.
     Other possible sources of help and information are the local chamber of commerce, which - in larger towns - usually has a division devoted to giving free assistance to budding business owners in finding locations, the SBA said. Consultants, local business schools, and other local business people also can provide different types of advice.
     Finally, the SBA advised would-be business owners to take their time and not rush into any decisions because "selection of a retail location requires time and careful consideration. It should not be done in haste just to coincide, say, with a loan approval. . . . A few months' delay is only a minor setback compared to the massive -- often fatal- - problems that occur from operating a retail business in a poor location." Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.