Do You Know How to Pick The Right Location for Your Business?
Let’s be honest: Some of the stuff you learn in college or in your MBA program never really seems to apply in real-world marketing or advertising. But there’s one stand-by from Marketing 101 that will always be as important in reality as it is in the classroom, and that’s the marketing mix, otherwise known as the ‘4 Ps’ of marketing: Product, price, place, and promotion.
In this article, we’re going to talk briefly about an often under-discussed ‘P’ ‘ Place. Or to put it more accurately, business site selection. Just how important to your marketing ? and to your overall business success ? is the location where you place your business?
The answer: Mightily important. For every success story that’s offered about a business that managed to do well despite a seemingly bad location, we have this response: That?s wonderful, but we bet that within 10 minutes of that success story business there are there are at least 20 examples of other businesses that didn?t fare so well, even though they thought they were located in the same area.
In other words, businesses who succeed in spite of a bad or indifferent location are the exception, not the rule.
Also, consider this: How do we know that the exceptional business was indeed poorly located? It may be that the owners did their data homework and discovered that all appearances to the contrary, said location was actually quite viable. Which brings us to the overall point of effective real estate site selection: When it comes to locating your business, you can?t make decisions that are based solely on the appearance of things ? you need to make them based on cold, hard data.
Location matters. If you’re selling tomatoes and carrots, you’re going to have a hard time moving your product if you set up shop at the apples and pears marketplace ? no matter how awesome your tomatoes and carrots are – because you’ll be selling them in a location that’s unlikely to attract your best customers.
Let’s take a look at the five common mistakes of real estate site selection:
Making a selection based on ?gut instinct?, not data.
You’re pretty smart, which means that your instincts are probably well-honed. Listen to them ? but listen after you’ve taken in all the data. Instincts are not infallible. There are millions of entrepreneurs and C-suite types who have anecdotes about how their instincts proved to be at least partially incorrect when it came to picking a business location ? and in many cases this over-reliance on gut instinct cost them plenty.
Giving too much validity to conventional wisdom about an area.
So you’re opening up an upper-end accessory boutique and you’ve decided to locate it in a posh shopping center. ‘Oh yeah, great location!? everyone says when you share the news, reassuringly. You must be making a good choice, right?
Well, maybe, if you considered conventional wisdom only in the context of the larger data picture. Because conventional wisdom, like your gut instinct, often gets it wrong. If you’re doubtful, think about this: How many times have you driven by a new location for a major business and thought ‘This isn’t a great neighborhood, I wonder why Home Depot is opening up here? only to see that Home Depot still alive and kicking 15 years later. Clearly, Home Depot knew something that you didn’t know about that location. because they did their research instead of relying on conventional wisdom.
Assuming that a strong product or savvy marketing will carry the day.
Sometimes business owners are aware that they are selecting a location that’s less than viable, but they figure that they can overcome it by offering a superior product and promoting it like crazy. In some cases, they might be right, but not always. If you?re doubtful, think about your own experiences as a consumer. How many times have you continued to shop a grocery store you didn’t really like or taken your clothes to a so-so dry cleaner, just because the locations were convenient to your home or office?
Making a decision solely based on rent.
Assuming that a location is ‘good’ because the rent is higher or because it’s repped by a platinum realtor or leasing agent can get you into trouble. Remember, just because a location is high dollar doesn’t mean that your best customers are in abundance in that location. In similar fashion, it also doesn’t make sense to pick a location just because the rent is lower. If your data tells you that the higher-priced location A is your best choice, and Location B not so much, the rent you save on Location B may pale in comparison to the profits you stand to realize in the long run if you go with the data-driven location.
Opening up a new business? We’d love to hear everything about it. Contact MindEcology if you’re ready to talk a little site selection.