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Section 9.1Section 9.1 Pages 141-Pages 141-

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What you’ll learnWhat you’ll learn How to determine a How to determine a community for your business community for your business sitesite

The criteria to apply when The criteria to apply when selecting a business siteselecting a business site

9.1 Site Selection

What you’ll learnWhat you’ll learn The factors in location The factors in location analysis and decision makinganalysis and decision making

The advantages of starting a The advantages of starting a business at homebusiness at home

9.1 Site Selection

Why it’s importantWhy it’s important Location affects the visibility Location affects the visibility and accessibility of a businessand accessibility of a business

After investing in land, a After investing in land, a building, fixtures or heavy building, fixtures or heavy equipment, it may be difficult equipment, it may be difficult or impossible to move.or impossible to move.

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Key TermsKey Termseconomic baseeconomic baseincentivesincentivesenterprise zonesenterprise zonesStandard Metropolitan Statistical Standard Metropolitan Statistical

AreasAreascensus tractscensus tracts trade areatrade area industrial parksindustrial parks

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I. FACTORS IN SELECTING I. FACTORS IN SELECTING A COMMUNITYA COMMUNITY

No matter where you settle, No matter where you settle, there are certain questions to there are certain questions to consider.consider.

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A.A. Is the economic base Is the economic base favorable? Study a favorable? Study a community’s main source of community’s main source of income, or income, or economic baseeconomic base..

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B.B. Are there financial Are there financial incentives?incentives?

1.1. Incentives Incentives are advantages are advantages that help businesses.that help businesses.

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Lower taxesLower taxes Cheaper landCheaper land Employee training Employee training

programsprograms

2.2. States can establish States can establish enterprise zones enterprise zones that give that give tax favored status to new tax favored status to new businesses.businesses.

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C.C. What is the makeup of the What is the makeup of the population?population?

1.1. Look for information to Look for information to show if a location show if a location matches a target market.matches a target market.

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2.2. The Census Bureau’s The Census Bureau’s Standard Metropolitan Standard Metropolitan Statistical AreasStatistical Areas (SMSA) (SMSA) are geographic areas that are geographic areas that usually include a usually include a metropolitan area.metropolitan area.

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3.3. A A census tractcensus tract is a SMSA is a SMSA subdivision containing subdivision containing 4,000 to 5,000 people.4,000 to 5,000 people.

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D.D. Does the labor supply match Does the labor supply match your needs? Consider your your needs? Consider your labor needs and how well labor needs and how well the community can meet the community can meet them.them.

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II. CRITERIA FOR SITE II. CRITERIA FOR SITE SELECTIONSELECTIONOnce a community is Once a community is determined to be suitable for determined to be suitable for business, begin looking for business, begin looking for sites within it.sites within it.

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A.A. A A trade areatrade area is the is the region or section of the region or section of the community from which community from which you can expect to draw you can expect to draw your customers.your customers.

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B.B. Number and Size of Number and Size of Competing Businesses - Competing Businesses -

Mark all potential Mark all potential competitors.competitors.

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C.C. Nature of the Competition - Nature of the Competition -

Mark all potential Mark all potential competitors.competitors.

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1.1. To encourage To encourage comparison shopping, comparison shopping, locate your business locate your business next to a similar sized next to a similar sized competitor.competitor.

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2.2. If you offer a large If you offer a large variety of products, variety of products, your drawing power your drawing power may allow you to may allow you to locate away from the locate away from the competition.competition.

D.D. Character of the Area - Character of the Area -

Consumers like to shop in Consumers like to shop in attractive, safe, and thriving attractive, safe, and thriving environments.environments.

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E.E. Accessibility and Traffic - Accessibility and Traffic -

If you find there is no If you find there is no convenient route, or if the convenient route, or if the site is difficult to locate, site is difficult to locate, customers are not going to customers are not going to reach you.reach you.

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IV.IV. SERVICE/WHOLESALE SERVICE/WHOLESALE BUSINESS BUSINESS CONSIDERATIONSCONSIDERATIONSSimilar to retail, except many Similar to retail, except many service and wholesale service and wholesale businesses don’t have clients businesses don’t have clients visiting their site.visiting their site.

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Reinforcement

Provide examples of large and small trade areas in your community.

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V. MANUFATURING/V. MANUFATURING/

EXTRACTION EXTRACTION BUSINESS BUSINESS CONSIDERATIONSCONSIDERATIONS

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A.A. Extraction businesses must Extraction businesses must be near to whatever they be near to whatever they are extracting.are extracting.

1.1. Ore Ore

2.2. Fish Fish

3.3. Trees Trees

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B.B. A manufacturing firm A manufacturing firm may be located in certain may be located in certain areas set aside for areas set aside for industrial uses, sometimes industrial uses, sometimes called called industrial parksindustrial parks..

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Reinforcement

What are the advantages and disadvantages of an industrial park?

VI. LOCATING POTENTIAL VI. LOCATING POTENTIAL SITES SITES

A.A. Newspapers Newspapers

B.B. Realtors Realtors

C.C. Internet Internet

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D.D. Visual Surveys Visual Surveys

E.E. Contacts Contacts

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VII. SITE ANALYSIS AND VII. SITE ANALYSIS AND DECISION MAKINGDECISION MAKINGAnalyze the surrounding Analyze the surrounding area, the building, and the area, the building, and the costs of buying, building, or costs of buying, building, or leasing.leasing.

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A.A. Surrounding Area Analysis - Surrounding Area Analysis -

Each potential site you Each potential site you identify should be evaluated identify should be evaluated on the same basis as your on the same basis as your earlier considerations.earlier considerations.

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B.B. Building Evaluation - Building Evaluation -

A building must be big A building must be big enough to take care of enough to take care of present needs and to allow present needs and to allow for expansion.for expansion.

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C.C. Exterior - Exterior -

Consider a building’s looks, Consider a building’s looks, signage, and parking for signage, and parking for customers.customers.

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D.D. Interior - Interior -

Look at the walls, floor, and Look at the walls, floor, and ceiling.ceiling.

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E.E. Lease, Buy or Build - Lease, Buy or Build -

There are advantages to There are advantages to leasing over buying or leasing over buying or building.building.

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1.1. A large cash outlay is A large cash outlay is avoided.avoided.

2.2. Risk is reduced. Risk is reduced.

3.3. Lease expenses are tax Lease expenses are tax deductible.deductible.

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F.F. Making Your Decision - Making Your Decision - Consider the variables.Consider the variables.

1.1. Cost comparison Cost comparison

2.2. Advantages and Advantages and disadvantagesdisadvantages

3.3. Desirability Desirability

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VIII. HOME BUSINESS VIII. HOME BUSINESS OPTIONOPTION

Working at home is viable Working at home is viable under certain conditions.under certain conditions.

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A.A. When there is little When there is little personal contact with personal contact with consumersconsumers

B.B. Where work is picked up Where work is picked up and dropped off when and dropped off when completedcompleted

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End of Section 9.1End of Section 9.1