How important is my business location?

Business location for Flower Room Retail Shop
Realtors have a saying that probably everyone in the Western hemisphere has heard: “Location, Location, Location!”

Typically, that saying applies only to home ownership because the proximity to schools, shopping, and work is extremely important when one is choosing a place to live.

However, if location is merely important, or nice to have, for homeowners, it’s life and death to some businesses.

It’s somewhat true that if you are a manufacturer you don’t have to have a prime location because you don’t sell directly to end users. If you are running a B2B business that isn’t mainstream, like offering rewards programs to the employees of the client companies who hire you – your location probably doesn’t matter. But for most other businesses, your location is key to your success!

Don’t make the mistake of thinking that location is only important to retail and restaurant businesses. Almost every business will benefit from being visible and being in a high traffic area.

In fact, some businesses have great ideas, products and services and should be making money, but are tucked away in shopping centers where no one can find them or see them and they are losing money. If they were to move to a more visible location, they would see an increase in sales.

It doesn’t matter what type of business you have, you need to think long and hard about your location.

For instance, why are Goodyear and Firestone franchises on main roads and highly visible when there are hundreds of service garages tucked away in industrial districts? Do they serve wildly different clientele? Who, in your opinion, makes more money?

The answers are obvious. Goodyear and Firestone outsell other independent garages by huge margins. Look at Maaco. They are not the best body shop in the world by any stretch of the imagination. Yet they consistently outsell the best body shops in town – because of their locations.

Think about Guitar Center, Pep Boys, Attorneys, Office Depot, Warehouse Clubs, Accountants/Tax Services, Gyms, Mattress and Furniture Stores, and Urgent Medical Care – these serve specific markets, or needs, so why would they be placed out in the open in high traffic locations?

Your Business Location Is Your Marketing

Most business owners don’t realize the importance of location. Location cannot be overemphasized because your location should be thought of as part of your marketing budget. Quite literally, your location is your marketing.

Retail stores have learned to take advantage of their location by adding various types of signage to their storefront. This enhances the value of the location. As the awareness of the business grows in the community, the businesses sales increase.

A smart business owner, who understands the power of marketing, will then take the growing profits from the location and reinvest them in either outdoor advertising that points to the location, or online advertising to build a community around their brand.

Regardless of the type of business you have (pool builder, garage door company, copier sales), you can maximize your sales if you are in a highly visible location.

Caveat Emptor

There is one caveat to the location issue however. If the profit on what you sell is very small, or you sell very little each month, then you can’t afford an expensive location, regardless of the foot traffic and visibility.

These locations require small fortunes to be invested each month in order to keep the location. For instance, there is an open air mall here in Peachtree Corners, Georgia called the Forum. The lease on the smallest units start at $12,000 per month.

ADAC ( Atlanta Decorative Arts Center) is another expensive location. If you sell to interior decorators, it’s a great place to be because they regularly frequent the place, but the lease is an astronomical $20,000+ per month. Imagine selling a product that averages $50 profit on each sale. You would have to sell 400 units a month in order to just cover your lease. 400 doesn’t seem like a lot until you try to sell that much. That’s a consistent 13.3 sales a day if you are open 7 days a week. There just aren’t that many interior decorators with work in Atlanta to cover that much of an expense.

Parting Thoughts

All in all, your location is extremely important to your success in business. It could just be the most important factor. So, you have to look at your location cost as coming from your marketing budget.

Each businesses marketing budget is different. Some businesses only appropriate 2 – 5% of profit to their marketing budget. Other businesses designate 20% or more – sometimes a lot more.

But, even though you can now look at your lease (overhead) cost as an increase in your marketing budget, it has to make good financial sense. If you would have to sell a ridiculous amount of product to cover the location cost, move on. There is always another great location or two within a couple miles in any direction.

About Michael Miller

Michael Miller is the owner of Mindwhirl.com, a sales and marketing coaching and training company in Atlanta, Georgia.

Michael’s mission is helping small business owners understand, and organize their marketing so they can make money and grow.

Mindwhirl helps business owners plan and implement effective, profitable marketing campaigns and sales programs.

If you need more sales, we know how to get leads and grow businesses. Call us today at (404) 858-3105, or email me at mmiller@mindwhirl.com.

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  1. […] Mining this talent pool is just a matter of being in the right spot. If your business is physically associated with major household brands, their reputation will rub off on your own. In other words, find the most successful part of the city and show the world that you belong there. […]