A McDonald's V.P once said that choosing the right site is one of the most critical decisions the company makes. That is why McDonald's created their own volume estimating model tied to a process known as Site Location Analysis.
A fact-based site decision is critical to the success of any business, yet, it amazes me how many retailers pick their own site without it. Very few small retail business owners have access to the expertise that will help them properly analyze a site. They entrust the success of their business to their own instincts or the advice of an unqualified or under-qualified commercial real estate broker.
For the most part, commercial real estate brokers barely skim the surface when it comes to site analysis. Sometimes a broker's motivation is to simply fill a vacancy in one of his or her listed shopping centers.
Commercial brokers, by and large, have varying degrees of expertise necessary to help a business owner analyze a trade area. The broker may supply the client with a set of demographics, usually for a one, two, or three mile radius, and possibly a map showing the locations of existing shopping centers and the client's primary competitors. This is NOT site analysis.
The supporting data does very little to help the small business owner assess the strengths and weaknesses of a particular site. Therefore, business owners often make a critical site decision with incomplete data and then they wonder why their business is under performing or failing!
How to Reduce the Site Risk:
- Identify the Customer and how far they are willing to drive to come to your business.
- Define the Trade Area through "Gap Analysis" - Most professional site locators, especially those in convenience driven businesses, define their trade area in drive times, not radii, and place the business with competitive positioning in mind.
- Analyze the Key Components that Drive Sales and how each component affects the business. The three key components are demographic, physical, and economics. And each of these can also be further broken down into 30 or more subcomponents.
- Zoning - Understand how or if local zoning ordinances can adversely affect your business.
Opening a new business an emotional decision, but finding the best location for that business should be a fact and logic-based decision. Don't let poor site selection ruin your dream of a successful business. Use a broker who offers Site Location Analysis and reduce site choice risk.
For the last 30 years, Joe Langran has used site location analysis to help the franchisees of successful chains like Arby's and McDonald's find the best possible locations. Joe now offers his national "big boy" site selection experience to businesses across the country in his role as a commercial real estate broker based in Colorado and through Three Peaks Analytics (www.threepeaksanalytics.com), an out source real estate department for early stage franchisors. He can be reached at jlangran@antonoff.com or (303) 589-4839.
