Finding the right location for your retail business is one of the most important decisions you’ll ever make. No pressure! Even mediocre shops with flawed business models can get by with an immaculate location. And the best-of-the-best products can fail when placed in a sub-par position. That’s why it’s important to spend a bit of time zeroing in on the perfect spot for your business. The right decision-making process goes beyond onsight impulse and dives into the details. This guide to finding the right location for your retail business will walk you through everything you need to know before deciding on a place to open up shop. We’ll help you avoid common problems that can crop up later (or on day 1) and put your business in a precarious position. First, let’s get on the same page with why putting in all this effort to find the right location is worth it. Then, we’ll get into how you can narrow down your options to the perfect spot. Location, Location, Location: Why It Matters Have you ever watched The Great Food Truck Race? Every episode is a lesson in why location is one of the most critical parts of short-term and long-term business success. Find the right location, and you’ll win—even if your competitors have better products and price points. Just because you build it does not mean they’ll come. You’ll need a location with visibility and affordability. Often, that means settling on a balance between the 2. Of course, if you could pick any location you’d like, you’d choose a retail spot on Times Square in New York or Fisherman’s Wharf in San Francisco—but the reasons you’d want those locations are the reasons the real estate is so expensive. On the other end of the spectrum, you could find the most affordable real estate location out in the boonies (it could even be free), but you probably won’t get any customers. You’ll have to pay a price for visibility and traffic. It’ll be different depending on your state and city, but you’ll have to find what revenue estimate will justify the cost for various locations. Notice and Eliminate Psychological Bias Psychological bias will make you lean toward one location over another, regardless of how the facts line up. While it’s OK to lead with your heart every once in a while as a business owner, sometimes you need data to back up your decisions—this is one of those times. The first step in eliminating psychological bias is noticing it. When it comes to things like food, real estate, and even clothing, we all have opinions. To support those opinions, we often look for information that supports our preexisting feelings while rejecting (or ignoring) facts that contradict what we believe. For example, your heart may be leading you toward the cozy cottage on Main Street to open up your boutique, even though the location gets little-to-no foot traffic. You’ll justify the site by looking for information about succeeding without foot traffic or selling more products online. That’s an example of confirmation bias. How to Avoid Psychological Bias How do you prevent physiological bias from creeping into your decision-making? Good question. Here are a few things you can do: Make a Pros and Cons List It’s easy to say “I love it” or “I hate it,” but digging into the why can reveal new insights. If you’re considering a location, start thinking about what makes it good and what makes it bad. Even if you don’t end up choosing the place, this practice can help you discover what’s truly essential to your business and what’s not. Do the Research Go beyond curb appeal and dig into the data. How have businesses performed here recently? What about in the past? Is there a vacant retail location? Why is it vacant? What happened to the business before you? Ask these sorts of questions to go deeper. Figure out where the market is going and if there will be demand 3 years or 5 years from now. You likely won’t find answers to all of your questions, but learn as much as you possibly can. Talk to Someone Talk to someone you trust: mentor, colleague, or trusted friend. Show them the facts, and present your case. They’ll likely voice concerns you hadn’t thought about or obviously overlooked. Don’t brush them off and think, “Well, they don’t know this industry like I do.” That’s letting confirmation bias sink in again. If you can, talk to small business owners in the areas you’re considering. Ask them about foot traffic, seasonal trends, and likes or dislikes. They might uncover some nasty surprises or some game-changing insights. Share with them your idea of opening a business. They might have ideas for partnerships. Or they might know the area well and be able to refer you to a better location. Need help knowing what factors to look at? Getting too into the weeds can lead to paralysis by analysis—a condition we’d desperately like to help you avoid. Below, we’ll walk you through the top 11 factors you should consider when choosing a location for your business. You can weigh other characteristics, too, but focus on these elements to prevent going down the rabbit hole of creating a research report on every location’s viability. 11 Factors to Consider Before Choosing a Location for Your Business Your perfect location is out there—you just need the know-how to find it. Let us help. There are plenty of factors to consider when evaluating a retail spot location. You could look at everything from the curb appeal to the smell outside to the subway tile bathroom. It’s a lot to think about. While these things are all important, some considerations are going to be more important. That’s what we’re going to focus on. Below, we’ll walk you through the top 11 considerations you should think deeply about before choosing a final location for your retail business. 1. Zoning Regulations Figure this step out first. You don’t want to get too invested in the perfect retail business location just to find out your business activity isn’t allowed there. Look to see if retail stores can use the location. Then, look at proximity to commercial and residential zoning. Closeness to other commercial businesses could help you earn extra foot traffic, while nearness to residential zoning can help nearby customers access your store in less time. Take care of the logistics of zoning, and then you’ll be free to look at the other factors. 2. Cost of the Location Price should be one of your first considerations. It doesn’t matter if you find the perfect home for your retail business if you can’t afford it. You’ll need to calculate different costs to determine affordability: Rent: How much will the monthly rent cost? Terms: What terms are associated with the lease? Will you need to sign for 2 years or on a month-by-month basis? Fees: Are there any other fees associated with the property? Are there additional fees for trash pickup or receiving deliveries at the location? Remodeling: Is the space move-in ready, or does it need substantial upgrades to prepare for business? Factor in all of these costs to create better apple-to-apples comparisons when evaluating locations. Set a budget before you start shopping around for a location. If you find a site you love, you might be tempted to stretch your budget to make it work. However, keep in mind that rent will be one of your most expensive ongoing costs—it’s something you want to minimize if possible. 3. Target Customer Presence If you’ve done your audience research, then you know everything there is to know about your target customer. Since you likely know a lot about their demographics, do you think they will traffic the location? Do they live nearby or shop in this area often? Foot traffic is essential, but it’s not as crucial as customer presence. You don’t want just any customers strolling by the store—you want your potential buyers. For example, selling athletic footwear to a retirement-aged population probably isn’t the best fit for your products. 4. Traffic Flow Most retail locations thrive on foot traffic. You need potential buyers coming by your store frequently—not just on Friday night. You’ll want to consider how customers will see your business and how easy you’ll make it for them to visit. Monitor traffic in the area over a few different periods. You’ll want to see how traffic does throughout the day on a typical Monday through Thursday. Then, you’ll want to monitor traffic during the weekends (Friday through Sunday). How is the traffic? Is there more during the lunchtime rush when employees temporarily take off work or more during a typical Friday night? Take notes. Also, consider the season. For example, a downtown area might not get much foot traffic during the cold winter months, but it might be bustling when things warm up in the summer. These are make-or-break factors you’ll want to consider before settling on a location. 5. Competitor Proximity Competition is healthy, but you’ll want to be strategic about it. Setting up a discount clothing store across from Wal-Mart might not be the best idea. However, you’ll notice that wherever there’s an Old Navy, there’s usually a Ross or TJ Maxx nearby. These stores have similar customers, but they aren’t necessarily stealing business from one another—they’re drawing customers to a central location to do all their shopping. Consider how competitors might affect your business. Will you have the opportunity to share customers with them, or will you be going head to head with every shopper that walks down the street? You might want to look for an area with high demand but no solution. For example, your retail shop might work in an area of town that’s notorious for long waits for dining. Shoppers want something to do while they wait 45 minutes for the next table, and your retail store could be the right fit. If you find the perfect location but a competitor has already set up shop, you’ll want to consider whether you can beat them with your products or price points. When in doubt, find another location. 6. Nearby Complementary Stores Next, you’ll want to look at nearby complementary stores. For example, you might want to set up your high-end apparel store next to a jewelry shop. Or you could open a bike shop next to a running or skiing store. Think about your customer when considering advantageous complementary stores. What will make their shopping experience better? Does your store become a and or an either/or? If it’s the former, then there’s a good chance the proximity will help your business. 7. Location’s Popularity Trend Just because a location is booming now doesn’t guarantee it will stay that way. Look at factors contributing to its success and gauge whether it’s a brief novelty or a lasting trend. Is a new mall or shopping center opening on the other end of town soon? How will that impact popularity at your desired location? Take a look at the existing businesses in the area. Are they all brand-new, or are some long-timers? A load of new businesses will indicate an area is up-and-coming, while several long-time businesses will establish the long-term legitimacy of the space—a combination of the 2 is ideal when choosing a location. 8. Parking Availability Think about how customers will access your business. Is there free parking available in front of your store? If not, is it available somewhere nearby? Or will customers need to park blocks down the road to access your store? Many of these factors will depend on whether you choose to locate your business downtown or a more car-friendly part of the city. There’s not a right answer, but keep parking in mind when evaluating your options. 9. Commuting Distance It’s easy to get lost on the map trying to find the perfect location for your retail business, but don’t forget about your home location. If you’re planning on running operations, you’ll be commuting to and from the store daily—ensure that this doesn’t conflict with your work-life balance. It might be worth opening a shop in a slightly less ideal location if it means maintaining (or creating) the lifestyle you want. Also, consider the commute for your employees. Will you be able to find nearby workers, or will your staff need to drive a distance to work? 10. Gut Check While it’s best to do your research and find data to back up your decisions, make sure you listen to your gut, too. Do you like the location? Does it make sense for your business and customers? If everything adds up on paper but not your heart or mind, don’t pursue it. There are lots of opportunities out there—don’t settle on a location that’s going to make you uneasy or unhappy. 11. Brand Alignment Often, a location will say more about your brand than any logo or tagline ever will. Ensure your desired location is compatible with your brand. Will your retail shop make sense in this area? Will the brand be heightened or diminished due to the space? For example, you might spot an opportunity to sell luxury sunglasses at a shopping center, but will your brand image be damaged if it’s smushed between a pretzel shop and a nail salon? You know your brand best, so this decision is one that’ll be hard to find data to back up. Choose a Location With Confidence That’s a lot to consider, right? While choosing the perfect location for your retail business can seem overwhelming, don’t get too into your head. Many would-be entrepreneurs let big decisions like this completely derail their business plans. Yes, choosing a good location is important. However, so is selecting a brand name, logo, product, business entity type, sales model, and so many other things—it’s all important. Take it one day, one decision, at a time. On the flip side, don’t feel rushed into choosing a location for your retail store. The market may have you believe there’s a once-in-a-lifetime opportunity for the perfect retail space—but don’t let it get to you. Take your time. Do your research. There isn’t necessarily a soul-mate location for your business. Chances are that your retail store could thrive in a variety of places. Do your research, evaluate these 11 factors, and find a location with confidence.