If there is one mantra of the real estate world that almost everyone is familiar with it’s: location, location, location! In my residential property management business, I am constantly working to help clients find well-located residential properties that will meet both their living and investing requirements. As you can imagine, this is no easy task as every family and every investor has a different set of criteria they are looking to satisfy. Is it close to a good school? Is it close to public transit and shopping? What about parks and other entertainment? The list goes on.
This experience got me thinking about how location contributes to the success of my business and those of other entrepreneurs. What I think is clear, is that there is no one right location for all entrepreneurial efforts. Each entrepreneur and her business, much like each residential property client, will have a different set of needs and wants that will determine how important location will be to success. A technology start-up and a family-run delicatessen will have vastly different needs and wants and thus will need to make vastly different location decisions.
If you are in the market for the perfect location to house your entrepreneurial venture, there are a number of things to consider before committing to a space. Here are three things that I believe all entrepreneurs should keep in mind:
1) Where is the relevant talent?
Location will play a big role in determining the difficulty and cost of acquiring the right employees. This is particularly true in the early stages of an entrepreneurial venture when the business is unable to entice top talent, with a strong brand or with attractive compensation packages for example, to relocate.
At Buttonwood, we interact with many professionals relocating to Toronto. What I can say with certainty, is that lifestyle is an important component in the decision-making process of top-talent when it comes to where they will choose to work. Thus when locating a business, entrepreneurs looking to onboard new employees should also consider the lifestyle expectations of the type of talent that they will need to recruit, in order to make their businesses successful.
Perhaps the optimal location choice for your business is to locate in your own home or to operate exclusively online. Location choices such as these can be supported through the use of freelance talent. With 55 million freelancers working for themselves (both virtually and in-person) in the U.S. market alone, virtual and home businesses have access to a growing pool of expertise.
We also recommend that virtual and home-based businesses take extra care to build their online presence and domain authority. This will be the primary channel through which customers will interact with your business and thus, you will want to convey a high level of expertise across your website and social media accounts.
2) How do target customers interact with your business?
If your business relies on face-to-face interaction with its customers, then you may require a location with high visibility and lots of foot traffic. This is particularly true for retailers and hospitality based-businesses. Further, your business may also benefit greatly from being in a prestigious location, such as Yorkville here in Toronto. When direct contact with customers is key to your success, location plays a strategic role in driving sales revenue. Perhaps your customers interact with your business online and thus there is no sales related reason to be concerned about location. In this case, location can be strategically chosen to minimize costs.
When helping our business clients find the perfect location, we stress the importance of keeping overhead costs as low as possible. When deciding on an ideal location, entrepreneurs must take care when weighing up the value-add of a physical space relative to its cost.
3) What other businesses could impact the success of your business?
Proximity to other businesses and entrepreneurs can be of great benefit to you and your business. First, being close to key suppliers can help to reduce the costs of getting the supplies and inventory your business may require. Second, being in the vicinity of other successful businesses can create a positive spillover effect. Both the customers and employees of other successful businesses have the potential to add to your customer base both directly (i.e. they may become your customers) and indirectly (i.e. they draw people to your neighbourhood who in turn will discover your business as well)
While neighbouring businesses may be complementary, they may also be competitors. Before locating close to a direct competitor, you should take the time to do their research and understand whether the local market is large enough to support both businesses, whether the competitor is in a position to innovate or deliver greater additional value that would threaten the viability of your efforts, or if the costs of competing in the short term (even with a superior offering) would be too high to build enough initial momentum.
While competition can make things difficult, locating close to competitors can in fact be a smart strategy. The presence of similar businesses proves that a local market exists for your offering. Additionally, it also proves that the resources necessary to run your businesses are accessible.
For those entrepreneurs where a dedicated space doesn’t make sense, the growing shared-space market may provide an ideal location solution. Here in Toronto, the Centre for Social Innovation provides a great example of the model at work. The diversity of business activity and level of innovation going on in shared-working environments is truly astounding and can be beneficial to an entrepreneur looking to leverage the networking opportunities and skill-sets that being part of a community affords.
The items above clearly demonstrate that location is a variable that all entrepreneurs should pay close attention to. What aspects of location were most important to you when you were getting started with your business? I look forward to hearing about!
Written By: Sabine Ghali, Director at Buttonwood Property Management and an entrepreneur at heart who endeavors to help investors create real estate wealth over time in the Greater Toronto Area
Source Link: http://www.futurpreneur.ca/en/2017/the-importance-of-location-to-entrepreneurial-success/