How to attract customers with the best location of your brick-and-mortar?

Many people know that "location" is perhaps the most prominent factor in determining the destiny of a business. Do we have to locate our businesses on a main street, beside a busy avenue or near a downtown core? It depends on the following:

a) The nature of a business

b) The business activity

c) The types of potential customers

d) The ambience of a district or a community

One of the most common mistakes many business owners make is attempting to please all people without considering their capacity to adopt proper business operations, business management and business strategy.

In other words, coffee shop owners would likely locate their business near an office complex; it sounds fine, doesn’t it? Not really, they need to consider their capacity, capability and competitivity.

a) The nature of a business:

This can be interpreted as the genre or "genes" of a business. A family-run coffee shop differs from a coffee chain regarding different target customers, approaches, and visions. The coffee shop owner has to face "innate limitations," such as lacking capital, connections and reputation when establishing their business in a competitive market. The coffee chain's objectives are clear, gobbling other coffee shops and expanding its market share.

At this point, the coffee shop owners may wonder why they still set up their business when the market is so competitive and callous. In the twenty-first century, we have to understand that running a business may let us have a greater extent of control over our career; working for a corporation seems "stable"; however, we have no control over the destiny of the organization as there are many unforeseeable and extrinsic factors.

We cannot make radical decisions on reforming the organization, managing staff duties, and changing the organization's status quo. Establishing our own business gives us greater freedom and flexibility in learning more about various tasks and responsibilities, gaining experience in business operation and obtaining a sense of independence; a business owner is responsible for ensuring the business is profitable and thriving.

Knowing the "genes" of a business well is crucial as every business has pros and cons; if a business owner fails to comprehend the details of their business, it is quite dangerous to the company itself and the industry itself owner. For instance, the coffee shop owner is expected to know the relation between "coffee," "trend," "demand," and "culture"; they have to be able to see the correlations among those factors.

Before starting anything, the owner should know about the background of "coffee," brewing techniques, suppliers of coffee, coffee production sources and so forth. If the owners are unable to clear those doubts, they are better off investing elsewhere; it is not worth wasting their money.

In some cases, "location" can be a determinant of making a business successful or unfavorable. A small or family-run coffee shop can suffer losses if located in a quiet cul-de-sac. However, specific genres of enterprises, such as professional services, funeral services, and auto repair services, may find it acceptable. It is because those genres of businesses rely on customers going to their business sites directly; they have fundamental reasons and specific purposes for consuming goods and services at the sites of those businesses.

b) The business activity:

The term "business activity" mainly refers to revenue-generation means. For instance, the coffee shop owner needs to take the costs of production, sales, marketing, operation, administration, and customer service into account; knowing the costs and losses is the first step in running a business.

Many business starters tend to think about how much they could make after starting their businesses first. However, they should know about the importance of knowing how much they could lose within a specific period. All those areas (i.e., production, sales, marketing, operation, administration, and customer service) can help the owner gain or lose revenue; thus, a business owner needs to execute a business activity plan in which the owner can better understand how those resources are allocated. This certainly helps the owner manage their finances more effectively.

In the case of the coffee shop business, foot traffic is strongly tied to its business activity; if the volume of traffic is adequate, the likelihood of spending on marketing expenses is relatively low compared to other elements of business activity. Having a high volume of foot traffic does not always guarantee a rise in revenue; the passersby may only walk past the coffee shop without purchasing. If this is the case, the owners need to consider investing more resources in sales. They are expected to focus more on adopting specific sales strategies in order to be able to attract potential customers who may turn into loyal customers. The owner also needs to strengthen the coffee quality and develop some signature coffee.

Some argue that location is a prime factor in making a "successful" business; it is not completely correct. It is one of the advantages only. Many cases imply that even though a company is founded at a prime location, this does not mean that the business would be "successful." On the other hand, a small or family-run business located on a less busy street seems unfavorable.

Despite that, it can build its reputation and attract recurring customers; the owner can handle the high rental cost. A lower rental price entails the owner arranging more resources to enhance the elements of business activity. As such, they can focus more on boosting sales and improving production. This may help strengthen the resilience of the business.

c) The types of potential customers:

"Potential customers" are those who have not become "true customers" of a business; they are interested in trying the goods and services of the business. Almost all genres of businesses have attempted to know their "true types" of potential customers; they would spend a tremendous amount of money collecting and analyzing "big data." Indeed, this is a "game" reserved for those conglomerates.

For those small and family-run businesses, they can do some fieldwork first before deciding where their shops should be located. For instance, the coffee shop owner may be concerned about passersby's age groups, socioeconomic status (SES), purchasing power, etc. If the potential shop is located in a community surrounded by high-rise apartments, it is more likely that those residents will consume goods and services offered by nearby businesses. In contrast, a business owner would not locate their business in a low-density residence district as the pool of potential customers is inadequate.

The genres of businesses need to be aligned with the suitable types of potential customers to attract them to purchase. For example, it is not reasonable for a dessert shop located near senior housing apartments. Instead, a drug store will likely start business in that area.

In many cases, the social backgrounds of potential customers are the vital indicators of insinuating whether the supply of goods and services would "fit" the demand of potential customers. In the case of a dessert shop, it belongs to the inessential food service; therefore, those from the aging population are unlikely to purchase that dessert house. Senior consumers tend to spend their money thriftily; they would not get essential goods and services.

Moreover, most seniors are "passive-consumption" cohorts who would not quickly try new things and go to new shops. For younger consumers, it is entirely different; they are "proactive consumption" cohorts. As they are the economic powers within the economic structure, they would willingly spend on most goods and services, and trying new things and shops is one of their consuming habits.

d) The ambience of a district or a community:

Depending on the zoning characteristics, by-laws and local cultures of a community, a business owner should look at the business ambience of the community where people willingly make purchases. In order to recognize the local business ambience thoroughly, business owners may look for those well-established businesses or aged companies and may check local consumers' tastes and preferences.

Those aged businesses know the locals' tastes, preferences, demands and purchasing habits; they, by large, can undergo and notice the changes from generation to generation. Furthermore, they can mostly retain the quality of their goods and services and are able to accommodate various changes throughout periods.

In many developed societies, demographic shifts always link to SES shifts, directly affecting consumers' purchasing power and habits. For example, the coffee shop owners likely locate their business in a mixed-use downtown rather than an office-oriented downtown. The former comprises office buildings, residential buildings, entertainment shops and diverse companies. The latter includes office buildings only; the downtown core will be quiescent without vibrancy after working hours.

In some North American metropolises, the presence of suburbanization has had impacts on businesses located near or in the downtown core; this would restrain the downtown businesses' growth.

In addition, the inhospitable ambience of the empty downtown core would only attract social unrest and hamper local businesses' growth in the downtown communities. It will deter existing and potential businesses from doing business in those communities. If those impacted businesses struggle for survival, they may either move out or close down.

Would it be better to have little or even no competition in a community? If a community lacks competition, it is more likely to indicate that the business ambience is absent or a dearth of demand.

In the case of the coffee shop, there may be much competition in the mixed-use downtown district; however, this lets business owners understand that there are opportunities and demands. Also, the types of potential customers and businesses are diversified; this helps attract foot traffic and potential customers who will consume goods and services from those businesses.

Small business owners need to consider other factors besides location when establishing a business. In some cases, doing business in a busy and prime district can drain the finance of those business owners drastically.

Choosing a location that fits a business owner's financial capacity, capability, and competitiveness is rather important. Getting a "prime" location is not necessarily suitable and critical to all businesses. Focusing on elevating production quality is rather vital for new business owners. Choosing a proper business location requires thorough fieldwork, on-site examination, and detailed scrutiny; a business owner is expected to bear such costs before establishing a business in the middle of nowhere.