Don’t focus solely on cost

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Understandably, the first thing people often look at when evaluating a location is cost.

Beyond that, they might look at the condition of the property, and if it’s a retail or food outlet, consider frontage and whether it’s on a busy thoroughfare.

In relation to cost, though, people often give it a weight greater than all other considerations combined and may sometimes choose an otherwise unqualified location due to a perceived bargain.

Cost, though, is only one dimension and for a business, a location should be justifiable in terms of a number of other factors, such as:

How accessible is it?

If one location costs 20% more than another but allows twice as many of your target market to reach you within a defined travel time, the premium may be worth the cost.

What’s the surrounding commercial landscape?

If there are popular competing brands close by, it’s important to evaluate this. Perhaps it’s a good thing as it’s bringing custom into the area but if there is too much competition within a small area that’s a potential challenge. Conversely, a business can benefit from complementary businesses within a certain distance e.g. a clothing brand may benefit from having a shoe shop nearby.

What’s the social profile of your local customer base?

If your offering depends on a certain level of affluence, then a property that’s cheaper but doesn’t have access to the required number of affluent customers may not be worth the cost saving.

To even open one location, you should probably evaluate at least 3 to 5 sites and it’s best to have a consistent, objective method of location analysis, so that each can be looked at in its entirety.

A systematic approach to location analysis that takes a standard method and applies it to each of the prospective locations could be a simple scorecard giving a weighting to several variables e.g.:

              ·       Cost. 

              ·       Number of teenagers within 15 minutes walking distance.

              ·       Number of schools in your defined catchment. 

The goal is to decide all of the central factors, their relative importance and then apply them to contending properties. It doesn’t have to be overwhelmingly complex, it should just be actionable, so perhaps a good way to think of location analysis is to ask, “Do I understand the relevant demographic and competitive factors of the locations I’m considering?”

Remember performing inadequate location analysis can lead to costly errors, if you're looking for some inspiration on different criteria you could consider have a look at some of our sample reports.