You could have the best business idea in the world, guaranteed to be successful. Open your business in the wrong location; and you just turned a successful business into a “nothing” business.
Choosing a business location is more than just choosing a building. It’s one of the most influential aspects of a successful business; and requires consideration of a broad range of factors, from local zoning and tax laws to the accessibility of your business to customers and employees. The mantra of university and college marketing professors to their MBA students is “location, location, location;” and it's still true.
Types of Locations
For some businesses, such as home-based businesses or those that are primarily online businesses, a brick-and-mortar location is not as important to business success. However, if your customers will need to visit you, you’ll need a location that is both professional looking and appropriate to your type business.
1. Home-based: This is the trendiest business location these days. Many entrepreneurs start at home, then as their business grows, they move into a commercial space. I’ll address the home-based business location in an upcoming article.
2. Retail: Retail space comes in a variety of shapes and sizes. It may be located in enclosed malls, strip shopping centers, free-standing buildings, downtown shopping districts, mixed-use facilities, airports, hotel lobbies and sports stadiums.
3. Commercial: Commercial space includes office buildings, business parks, and sometimes interspersed among suburban retail facilities.
4. Industrial: If your business involves manufacturing or heavy distribution, you'll need a plant or warehouse facility. Light industrial parks typically attract smaller manufacturers in non-polluting industries, as well as companies that need showrooms plus manufacturing facilities. Heavy industrial areas tend to be older and poorly planned areas with rail and/or water port access.
According to Connie Rankin, LEED® AP certified and President of Customized Real Estate Services, “The Houston office market continues on an economic downtown like the rest of the country. The overall vacancy rate rose to 16.7% in the second quarter compared to 12.8% a year ago. The overall rental rate averaging $23.67 per square foot fell slightly.”
However, there is good news for the small business looking for a commercial location. Connie Rankin states, “Such downturn has resulted in the Commercial Real Estate market changing from a Landlord to a Tenant market with greater rental concessions now seen in the form of free rent and increased tenant improvements.”
Key Location Considerations
Aesthetics: Does the location appear to be professional? What about the buildings and businesses around it; do they complement the space? How will the aesthetics impact your customers’ experience? Is the part of town consistent with the image for your business? Will the demographics of your customers dictate the location? What is the business climate in the area?
Build Out: Have you considered your construction requirements? Does the location have adequate wiring, including voice and data communications? Will it be ADA (American with Disabilities Act) compliant? Check with the City of Houston’s Department of Public Works and Engineering for specific requirements for permits, water and sewer rates, flood plan documents, etc.
Cost: If your business expands quickly, would it be more costly to move or to pay a little more now by choosing a larger space? What amenities and services are included in the cost of the location? Will the space require remodeling with specific amenities and services? Will higher rent cause you to charge higher prices to your customers?
Competitors: Would you prefer to be in a location near other businesses that would attract your competitor’s customers? No customers = no business. For example, there are many Starbucks’ kiosks inside Randall’s Grocery Store. Where is their competition?
Facility requirements: Is it easy to find? Do you have any special needs, such as high power consumption or specialized wiring? Are there adequate storage facilities on site? Is there room for expansion?
Incentives: Check with the City of Houston’s Economic Enhancement Community Division for incentives in the area you are considering. There are often tax benefits to locations that the City of Houston is working to rehabilitate.
Insurance: Can you get insurance at a reasonable cost at this location? Are there restrictions to the insurance?
Parking: Is there adequate parking for customers, employees, commercial vehicles? What are the parking regulations and restrictions? Is it free, expensive or an extra cost? Is the parking close by and well lit?
Potential investors or buyers: You may not even be thinking about this yet, but potential investors look at the long-term value of the business. They will see your location as an important factor.
Rent vs. Buy: Rent payments can increase over time. Rent to own may be a way to find a business location. But if you own the property, your debt payments will usually remain the same.
Safety and Security: This is an increasingly important issue for both customers and employees. Is there security on the premises? Will your customers and employees feel secure visiting your location at any time? Is the location in a high-crime neighborhood? Do you know the crime data of the locations you’re considering? The Houston Police Department can furnish this information.
Shared Office Space: Shared office offers flexible and competitive lease terms on a monthly, semi-annually and yearly basis. Will you have a “live” receptionist? Will the space be fully furnished? Will there be high-speed Internet through T3? What type of equipment will be available? Does it include an executive suite secretarial service? Will the space package includes faxing, photocopying, conference rooms and other support services.
Signage Options: Are there any signage restrictions? Will it have good visibility so your customers can find you? Are there good options for placing signage. This information can be obtained from the City of Houston’s Planning and Development Department.
Suppliers: Are there adequate support services nearby, such as suppliers, printers, and distribution centers?
Traffic: Will the traffic be drive by, walk by or both traffic? Restaurants need high traffic areas. Is it accessible to public transportation? To obtain information regarding traffic, contact the City of Houston Traffic and Transportation Division .
As you can see, a fully informed location decision involves a myriad of considerations. I would suggest you use a business location checklist before making your business location, location, location decision.
List of Resources
Better Business Bureau
Business Information Center (BIC - City of Houston, SBA and SCORE)
Governor's Office of Economic Development and Tourism
Houston Business Development, Inc. (HBD – contract with City of Houston)
Harris County Clerk's Office (assumed Name/DBAs)
Harris County, TX (regulations, restrictions, taxes)
Houston One Stop Business Center (City of Houston department for permit and license requirements, zoning restrictions, etc.)
Houston Works (City of Houston non-profit Job Training and Placement, Scholarships, Consulting, Technical Initiatives focusing on Science, Technology, Engineering and Mathematics)
Real Estate Decisions – Renting Office Space Do’s and Don’ts
Service Corps of Retired Executives (SCORE - non-profit association; Resource Partner of the U.S. Small Business Administration)
The Houston Minority Business Development Center (assists ethnic and racial minorities to participate in free enterprise.)
U.S. Small Business Administration (programs and services support the small business person.)
University of Houston Small Business Development Center (15 sub centers - provides free professional business consulting; affordable training and small business library.)
CrossLoop (remote tech support)
DimDim (web conferencing)
DOOMI (tracking tasks)
Foxit Reader 3.0 (viewing PDFs; uses less memory)
QuickBooks Online (free version)
Google Calendar Sync (syncing with Outlook)
Inc.com’s “Thirty Profiles of Resilience in Business”
Mozy (automatic back-up; stores 2gb data free)
Skype (making VoIP calls)
Xobni (pronounced ZOB-nee; organizing Outlook)
ZoHo Writer (word processing; alternative to Microsoft Word and Google Docs)
Next article: "Choosing your business structure."