5 Ways Most Site Selection Efforts Miss The Mark
Site selection is the process of choosing the ideal real estate location for the purposes of building, buying or leasing an office or retail business facility. Business that often require site selection include both business-to-consumer (B2C) and business-to-business (B2B) concerns. The tricky part, of course, is to take into account as many relevant factors as possible in order to weigh the merits of each candidate location, ultimately ranking them in order of desirability.
Contrary to how many companies approach site selection, it needs to be treated as a “process” rather than just a gut-feeling-based, ad hoc decision.
Specifically, most site selection efforts miss the mark in one or more of the following five ways:
1. Places too much emphasis on luck or circumstance in discovering candidate locations for consideration. Example: A colleague says he knows a guy whose lease is expiring soon and suggests you consider taking it over. The chance of that location being your best choice is close to nil.
2. Takes into account site quality factors such as building appearance but ignores the demographic and psychographic makeup of the people who live in the immediate vicinity (the latter is especially important for companies selling directly to consumers).
3. Fails to take into account potential customer cannabilization of other nearby locations operated by the same company.
4. Is unable to appropriately sub-divide the target trade area into meaningful geographical units. Example: Comparing the merits of entire sections of the city (e.g., upper, east side) may be placing too much emphasis on areas that will not influence future business potential. On the other hand, comparing the areas within a 1/4 mile radius of each candidate location likely underestimates the importance of who lives in the area.
5. Does not adequately combine the various predictive success metrics numerically in a way that allows candidate locations to be scored and ranked in order of desirability. Only by reducing the potential success factors for a new location down to a single score can you easily make decisions about which location holds the most revenue potential for you.
Missing the mark in any of these five ways can mean the difference between choosing a star location with big revenue potential and a going with one that never lives up to your revenue expectations.