Chapter 6: Location and Distribution- Evaluating Alternatives

Learning Objectives:

1. Explore channels of distribution

2. Increase awareness of the role location plays in your strategic Business Plan

3. Consider location alternatives

4. Explore running your business from home

5. Investigate co-working spaces, enterprise zones, and incubators

6. Understand the importance of the right location for retail bricks-and-mortar success

7. Use primary and secondary research to refine customer profiles and select a location

8. Consult commercial real estate brokers in your search for a location

9. Review major points in leasing agreements

10. Investigate commercial and manufacturing location issues

11. Review Internet options12. Learn the importance of

multichannel distribution

Distribution and Location

Channels of Distribution Multichannel Promotion Global Village

It Was a Woman’s Raw, Bleeding Hands that Led Jock Brandis to Make a Promise

Distribution Channels & Ecommerce Business Models

Business to Business (B2B) Business to Consumer (B2C) Consumer to Consumer (C2C)

Passion Passionate Comedians Seek New Distribution Venue

Location Options

Home Office Local zoning & homeowner association laws Work and family life balance Best way to set up an in-home office Professional appearance

Coworking Space Incubators

Provide a home to grow your business Less cost and more administrative support

Action Step 31: Fantasize Your Perfect Location

Brainstorm the ideal location for your business For a retail business, start with your Target

Customer Once you have a general idea of location write

down other important items For an Internet-only business review your

distribution options and look at multiple channels If you need a manufacturing site, review the

second half of the chapter If you are going to be home based, review the

home office option and go to Action Step 32.

Action Step 32: Is a Home Business in Your Future?

List reasons to work at home List the problems of working at home List solutions to problems of working at home Go technical – what will it cost you? Where will your workspace be? Check out your home insurance Check out health insurance if needed Talk with your family and friends who own

home-based businesses

Entrepreneur’s Resource

Incubate Your Baby for Success Tips for Evaluating Incubators Finding A Quality Program

Look for a successful track record Graduation Policy Qualifications of Manager and Staff Finding the Right Match

Does the program offer the services you need? Do you meet the incubator’s criteria? Is the program fee structure right for you?

A Checklist to Choose Your Ideal Business Location

Target Customers Transportation Issues Neighbor Mix Anchor Tenant Competition Security, Safety &

Parking Labor Pool and

Education Restrictions and

Opportunities Services Costs

Ownership Present and Past

Tenants Space History of the Property Taxes Approvals Physical Visibility Life-Cycle Stage of the

Area Community Support Image

Where to Go For Location Information

Census Bureau City and County Data Independent Research Firms Geodemographic Databases Site Location Ring Studies Site Location Experts Associations that Represent your Industry Commercial Real Estate Agents & Brokers

Action Step 33: Seek Professional Help for Site Selection

Visit a commercial real estate agent or online broker site for information

Find out about growth in the community and major road plans and developments

Prepare your questions and visit a broker but leave your checkbook at home

Before You Sign a Lease

Language is very specific Terms are provisional – a starting

point for negotiation Initial terms will favor the property

owner Do not sign any lease without the

assistance of an experienced real estate attorney!

The Checklist of Terms Used in Rewriting a Lease

Escape Clause Option to Renew Right to Transfer Cost-of-Living Cap Percentage Lease Floating Rent Scale Start-up Buffer Improvements

Use Clauses Common Area

Maintenance (CAM) Parking and Storage Option to Purchase Option for Expansion Triple Net or NNN

Lease Relocation Clause

Additional Location Decisions for Manufacturers

Labor Supply Energy Availability and Costs Taxes Zoning Restrictions Access to Transportation Corridors Proximity to Suppliers and Customers State, County, Region & City Economy

Alternative Retail Locations

Swap Meets and Fairs Kiosks

Currently up to 10% of the income generated in malls

QVC 15,000 average orders per hour Can be fantastic, but very tough to

get your product accepted

Internet

Mandatory channel or distribution and/or way to market your business or service

Requires all the major functions that are part of any business

Business to Business (B2B) model offers incredible opportunities for substantial sales

Consider setting up shop on one of the “storefront” options like eBay or Amazon

The possibilities are endless and flexibility is the key to survival

Think Points for Success

The irony of the search for a retail site is need for the best site when you can least afford it.

Take your time selecting a location. Waiting for the right location may be worth it.

Begin with a regional analysis. A site analysis should include

everything that is unique to a specific building or space.

Who are your neighbors? Know the terms and buzz words

and be aware that they may mean different things in each contract or lease agreement.

Everything is negotiable. Do not be afraid to ask.

Talk to former tenants. Never sign a lease without

consulting an experienced lease negotiation attorney.

Be willing to seek out and pay for the advice of trained professionals

Coordinate your various distribution channels and make sure your image is consistent. You want to build synergy.

Capitalize on the low cost entry to Internet commerce.

Take Risks!