Few factors play as big of a role in the success of a small business as location. An inconvenient location can spell the demise of a business that literally possesses every other ingredient for success. The right location, on the other hand, can bring unprecedented success to a retailer, restaurant, or hotel that is otherwise completely average compared to its competitors. In fact, some of the biggest chains in the world, like Dominoes and Starbucks, center their entire business model around location as opposed to quality.
But choosing and designing the right location for your small business isn’t as easy as securing a lease in a busy area and doing the bare minimum when it comes to alterations. Each choice must be made strategically, and one strategy that has repeatedly proven successful for small businesses is mimicking their largest competitors.
Here are four things to remember before opening up a second or new location for your small business:
1. Keep Your Friends Close…
People outside of the business world often scoff at competing businesses situated very close to one another. You might see a McDonald’s, Wendy’s and Burger King all in a row, or a Gap right across the street from an Old Navy. This seems counterintuitive; a surefire recipe for one store’s disaster. But research has shown that when competing businesses are located nearby, they use each other’s foot traffic to their advantage and actually increase the likelihood of customers coming into their stores.
Logic tells you that if a big chain is located near a much smaller, independent business, the chain will just take all the customers for itself. This notion, however, assumes that everyone shopping in that area is looking for items specific to the chain. It turns out that more shoppers than you think are really just looking for food, coffee, clothes, or other broad subjects. Someone is more likely to be looking for “coffee” in general than the more specific “Starbucks coffee.” The more competition in one area, the more customers both businesses will ultimately receive.
So, instead of choosing a space that lacks businesses in the same industry as yours, stay as close to your competition as possible. Shoppers will already be coming to that area in search of the products or services you provide.
2. What Did Your Competitors Change?
Your competitors should be kept in mind as you contemplate how to design your new store as well. Their space probably looked just like yours when it was first purchased. Did your competitors invest in tenant/leasehold improvements, like tearing down walls, lighting changes, new plumbing, or something related to HVAC (heating, ventilation, air conditioning)? Then, examine how they set up their inventory, displays, and customer service areas. More often than not, the locations of display areas for certain types of products are not chosen at random.
In some cases, copying design-related investments from your competitors will only help your business. An increasing amount of independent restaurants, for example, are beginning to invest in outdoor heating to avoid serious damage from seasonality. But you must also keep in mind how much space your competitors have for their outdoor area, how their tables are configured, etc.
3. Customer Service Cannot Be Compromised
A big reason brick and mortar businesses will likely never lose their appeal is customer service. Shoppers enjoy interacting with welcoming employees who appear genuinely interested in helping them. So, when choosing a location, consider what changes need to be made in order for your team to do what they do best. Let’s say a goal of this location is to give your business a more professional image. You might want to give your employees uniforms or just a new dress code that goes along with this initiative. Maybe you’d benefit from a customer service desk that fosters organization and prevents shoppers from going ignored.
4. Yes, All This Is Actually Possible
You’re probably wondering how you’ll be able to mimic the strategies of your larger competitors when you don’t have access to the same level of capital. Well, what if you found out you were eligible for small business loans that are tied to sales volume that you wouldn’t have to pay larger payments on until your new store is making consistent sales? United Capital Source specializes in working capital loans such as merchant cash advances, accounts receivable factoring, and business lines of credit geared towards securing or renovating new locations when funds are tied up in the various other expenses associated with business expansion.
Unlike banks and other online business lenders, these business funding programs do not force you to make significant payments shortly after funding is distributed and can be adjusted to accommodate slow periods, whether they occur as you are designing your store or several months after. We understand that it takes time to iron out cash flow following the opening of a new location, which is why design our terms to ensure minimal impact on cash flow during the early stages and, depending on the program, let you increase your payment frequency as customer activity and sales do the same.
We’re Ready When You Are
Another major advantage of working with an alternative business lender is their ability to approve applications in less than two days and distribute funding in the same amount of time. You can begin renovations or put a down payment on your new location when it is makes the most sense for you and your finances. Other business lenders offer speedy approvals but only companies like United Capital Source can give you flexible terms that make sure you’re not worrying about paying your bills while you’re busy developing a floor plan. Opening a new location is understandably intimidating, but you’d be surprised to learn just how much easier it can be when the need for extra funding is taken out of the way.