BusinessesForSale.com

It’s been the mantra of real estate agents forever, and it still rings true when discussing the relative values of any sort of residential or commercial property. But, this focus on location is an even more important factor when that real estate purchase involves starting or taking over a business.

Here are three undeniable reasons why placement matters when considering buying a business:

1. Location Determines Cost

The spot where your new business is located may be the single biggest factor in the cost of the purchase.

For businesses that rely heavily on pedestrian or vehicle traffic, location can determine eventual success or failure. After all, no matter how great your business idea, or how beautiful your building, if no customers drop by – it’s not going to last long.

On the other hand, you need to ask yourself whether a top location is worth the higher investment. If your biggest problem is getting the right kind of customers through the door – a prime placement will solve this for you right from the outset. But if footfall is not a major issue – why waste money on rent?

Ongoing overhead costs like taxes, utilities, and maintenance will be affected by location as well, so you’ll need to think about this before you decide on a property.

2. Location Determines Clientele

In many areas, the physical location of a store or other business determines what sort of customers will frequent it.

For example, setting up a clothing shop in an airport virtually guarantees nearly all your customers will be rushed travelers. If it’s a busy airport, you can expect an extremely high volume of traffic. But you can’t expect groups of local senior citizens perusing the racks while taking a rest from their mall walking laps.

Similarly, there are thousands of shops in Manhattan but there’s only one 5^th Avenue. Leasing space on that street will cost far more than elsewhere in the city simply because that’s where the wealthiest New Yorkers go to shop.

3. Location Determines Future Opportunities

This aspect of a location’s future impact on the business is a little tougher to evaluate but you should be able to observe what’s going on in the locality and make logical guesses about business prospects.

Basically, by following local trends, keeping an eye on where economic investments are being made in the local area, and making realistic extrapolations about what the area you’re considering for your business is going to look like in 5, 10, or 20 years, you’ll be in a prime position to decide whether or not your potential property is likely to increase or decrease in value.

You’ll also be able to consider plans for future expansion on the property, or an exit strategy if and when you decide to sell and move on to something else.

Location affects more than just these three aspects of buying and running a business, but this should give you a solid foundation as you start reviewing potential properties and considering where to best locate your new business.