Depending on the type of business you run, choosing the right location can be of utmost importance. Any franchising expert (or even a beginner really) will tell you that choosing your location smartly is the first key thing you need to do, before jumping in on other matters.
Stationary businesses (like retail stores, cafés, restaurants, etc.) are heavily reliant on an ideal location for your franchise. While the actual choice is heavily reliant on a number of factors (like cost, availability, comfortability, etc.), all those factors trace and link back to the one that makes all the difference in the world: your target customers.
Whatever site location you are considering, the idea is to make it as comfortable and enjoyable for your target customers as you can. Even the cost (the second most important factor) is heavily reliant on your buyers. If you can attract enough customers to your franchise business, even the high cost of the site may be worth it in the end. Similarly, if you choose a poor location, even the lowest site cost will become a problem for you.
But then, there are mobile businesses for whom the location doesn’t really mean that much. For example, if you are running a pet care service that you deliver to customers yourself, the actual office location doesn’t do much. Sure it will be more convenient and probably cost efficient to rent a space that is close to the neighborhood where you operate, but in the long run (or depending on the neighborhood), you might be better off with renting a site that is relatively far, but more affordable.
So let’s take a look at both perspectives and analyze their pros and cons, to help you determine what location you should go after.
Brick and mortar business: advantages
More opportunities for getting potential customers – Today’s technology, software, data availability and deep customer insights allows franchisees to analyze every potential site thoroughly and choose a location that will bring the highest number of customers, thus ensuring very high profit margins, taking into consideration the site cost.
Offer more than one reason for consumers to choose your business – When customers visit a brick and mortar business, not all of them come for the core product or service. Let’s take a coffee shop as an example. Depending on target customers, location, product quality and comfortability, people might come visit you for various reasons:
- They like the coffee that you make more than any other (the obvious reason)
- It’s closer to their home/office (comfortable/easy to get there)
- Your location offers great surroundings to relax (a lot of nature is nearby or it has a pleasant view)
- It’s closer to the subway or has a huge parking lot (depending on target customers, they might be using a car or the subway to get to you)
Easier to calculate costs – When you have a stationery business, the costs are almost always the same: you pay the same rent price, the same salaries to employees, buy the same raw materials from vendors, etc. There are no unexpected costs.
Brick and mortar business: disadvantages
Harder to reach new consumers – When you have already chosen your location for a known number of customers, it’s hard to increase their number or reach a wider audience. Your franchise will have to be pretty damn good to attract new people who will have to travel longer miles just to reach you.
Difficult to acquire home addresses/emails – For marketing purposes, businesses usually want to have as much information about their customers as possible, with the home address and emails being among the top of the desired information. While gathering emails and home addresses (for nurturing and delivery purposes) can be done, it’s more of a hustle and also requires a lot of time. You will typically have to ask each customer to leave his or her email/home address when they come to visit you, and not everybody might be willing to share it.
Brick and mortar business: solutions
There are a number of solutions you can use to minimize the effects of disadvantages for your business. For example digital marketing can be used to reach more potential customers and offering mailing coupons with discounts or loyalty program registrations to your customers can be a great way to acquire their home and email addresses.
Mobile business: advantages
Location doesn’t matter that much – Since mobile businesses deliver the service/product to their customers themselves, having a perfect location doesn’t matter too much. The only difference it can make is whether you can find a location that is closer to the neighborhood where you operate, but then, your customers can be way too spread out, rendering this option technically irrelevant.
Easier to acquire new customers – Thanks to you offering a mobile service, customers don’t have to visit your physical store/office. All they need to do is call your office/write an email and the rest will be taken care of. This can potentially help reach new customers much easier.
Easier to acquire emails/home addresses – Since you will be delivering your service to people, it will be much easier to acquire emails and home addresses: it’s kind of obligatory if they want to use your services. This opens up new opportunities for promotions and offers that you might be willing to make in the future.
Mobile business: disadvantages
Limited reasons as to why customers choose you – the only way you will be getting customers to choose your business, is the quality of service that you provide. Let’s use the pet store example from above. It won’t matter much what kind of a van you use to get to the homes of people, as long as you deliver quality service and pets feel great about it.
Harder to calculate costs – Since you are reliant on mobility, various potential costs arise from time to time: fixing the vehicles, buying the gasoline needed for traveling, traffic jams/accidents, etc. While all those costs are relatively low, it’s still important to calculate them to understand your financial position.
Mobile business: solutions
You can offer some additional services in complement to your main service to stand out from the competition. It doesn’t have to be anything big: for example in case of the pet store, you can offer discounts to people if they have more than 3 pets or throw in a free one time care to long term customers.
In case of costs, analysis and good estimation skills can come handy. Review all the data you have from past months and calculate the average costs for your business. Knowing this, you can estimate the average “accidental cost” for the following months.
Locations are very important for a franchise business, but the type of business you run will dictate that more fluently. After all, the whole point is to offer quality service/products to your customers and be profitable, and if your mobile business can afford to compromise on location to achieve this goal, it should be taken into account, by all means.