The power of location: How to find & evaluate the perfect spot for your new small business

Scroll down ↓




The Small-Biz Toolbox series offers immediately-usable tools & resources for people who are passionate about starting and growing small businesses.

Ever thought of opening your own local retail shop? Shmoozing with customers who are like family, selling only the coolest stuff and controlling your own destiny? Ah, the great American dream!

Chances are, if you’ve ever considered opening a retail business, someone in your family has pulled you aside and shared with you three rules of success—location, location, location. Why? Because…

Location can make or break your new business.

But, what do we mean by location anyway? Is it the type of building, the road we’re on, the town we’re in, the friends we make or some combination of these and other factors?

Answer is…all of the above. So, here is short primer on how the Three L’s apply to selecting the best possible location for your new small business. And, just because I know the health, fitness and wellness businesses so well, we’ll use a local fitness/yoga studio as our example, here. So, just adapt the following advice to suit your concept as needed.

Power Location Tip #1—There Is An Inverse Relationship Between Marketing Expense And Retail Exposure.

What does the heck does that mean? The more you pay for retail rent, the less you should expect to pay for marketing and vice versa. Why? Because a good retail location will drive a lot of foot/car traffic past your storefront and this increased exposure serves as a proxy for marketing and PR. Conversely, a non-retail location will require more effort and money to let people know you exist. Either way, your combined monthly rent and marketing budget is going to be about the same. It’s just a matter of how hard you want to work to get people in the door.

One thing you shouldn’t do is fool yourself into thinking you can pick up a dirt-cheap location and get by with little or no marketing. This assumption almost always leads to under-funding, the number-one reason for new business failure in the U.S.

Power Location Tip #2—Know Your Options.

Here is a short list of the types of space you’ll encounter and the pros and cons of each:

  • Shopping Center Retail:
    • Pros:
      • High exposure, if the right center is chosen
      • Close proximity to potential marketing partners
      • Exterior signage available
      • Often maintenance crew on-site to fix things
      • HVAC installed and often maintained by landlord
      • Usually ample parking for high volume business.
    • Cons:
      • Price – expensive & sometimes have to pay % of revenue
      • May have to spend a lot on build-out and use union labor
      • Usually includes an extra monthly fee, called a CAM.
    • Top-Tip: Choose a center with big anchor tenants who pull your target market into the center at least once a week, ie. supermarkets.
  • Suburban Standalone Retail:
    • Pros:
      • Storefront attracts traffic (but often not nearly as much as in a shopping center)
      • Exterior signage provides exposure
    • Cons:
      • Pricey
      • Could be worst of both worlds, still have to spend a lot on marketing, but pay retail-level rent
    • Top Tip: For a new business, with no existing customers or following, stay away from these, but if you just can’t resist, at least choose a spot that is close to the road and permits big, bold signage

  • City Retail:
    • Pros:
      • High foot-traffic equals great repeat exposure
      • Exterior signage and window displays equal retail sales
      • High exposure can reduce marketing budget
    • Cons:
      • Very expensive
      • Buildout is often costly and includes storefront construction
      • Often require substantial security deposit (3-9 months) for a new business.
    • Top Tip: Best for hybrid studio/spa/boutique with substantial retail element. Make sure to utilize windows and set up a real retail area.
  • Upper Floor:
    • Pros:
      • Affordable and, sometimes, allows exterior signage.
      • Landlords tend to be more flexible with lease terms


      • Lower-exposure will require higher marketing costs/efforts
      • Often have stairs, which may discourage moms with strollers and mature adults from attending.
      • Top Tip: Very often a good compromise for a business that relies more on word-of-mouth, appointments or direct-response marketing, allowing a good location without the expense of retail frontage, but be prepared to work hard to get the word out, especially in the beginning. Do everything you can to get exterior signage
  • Office Building/Park:
    • Pros:
      • Amenities, heat, a/c, cleaning often included
      • Bathroom may be shared, in hallway, so you don’t have to clean it.
      • If in larger building/park, you have a captive audience, especially for early a.m., lunchtime and 5:30 classes, during week
      • Not as pricey as prime retail space
      • Parking, in suburbs, is often pretty good.
      • Easy to locate and market to co-tenants and create “special-corporate” plans.
    • Cons:
      • Often little or no weekend business
      • Little or no retail exposure and rarely permitted exterior signage
      • Shared bathrooms in hall may put off some people
      • Top Tip: Choose the biggest building you can find. Best for services, programming or products that accommodate business schedules, reach out to co-tenants and assume you’ll be closed on weekends.
  • Class B/Off-The-Beaten-Path/Industrial:
    • Pros:
      • May be able to find unusual, interesting, large space for very reasonable rent.
      • Landlord may be more flexible with terms & buildout
      • Potential for signage
      • Potential to spin unusual location to create cool “buzz” factor and PR.
    • Cons:
      • Will need to market & do PR to get the word out on an ongoing basis.
      • Often requires more expensive buildout and installation of heat, a/c, lighting and floors.
    • Top Tip: Often great opportunities that allow for unique, creative space, but be prepared to spend a lot and work harder on marketing and PR to get the word out and keep it out.

Power Location Tip #3—Know Your Demo!

Once you find a space that tickles your soul, you need to learn whether the surrounding neighborhood will tickle your bank account, as well. The big question—how many people within 5-blocks (city) or a 10-minute drive are “your” people? This is the “zone” from which you will draw the vast majority of your customers. So, you need to make sure that enough of the type of people you want to serve live within your client-zone to keep your studio alive.

How do you get demographic information? These days, it’s a snap. First, if you are working with a broker, ask them to run a “radius study” of the location, that breaks out demographic information for the 1, 3 and 5-mile circles around the spot. All reputable brokers have access to this. The report will give you information on population size, male/female ratio, household income, age, traffic, competitive businesses, neighboring businesses, working vs. residential headcount and much more. If you are going it alone, check out these online resources:

Another option is to visit one of the large national commercial property databases, like, find a site near the location you are looking at and then instantly pull up the demographics on that site—FOR FREE. This is also a great resource to find locations in your area.

Power Location Tip # 4—Don’t Be Pressured.

Landlords and brokers will want you to sign a lease as soon as humanly possible. They’re not bad people, but this is how they earn a living. So, you may find yourself exposed to a variety of claims about other people interested or time-limited offers to get you to sign. Evaluate every space thoroughly and objectively and don’t be bullied. Remember the second rule of business, behind the Three L’s…if it sounds too good to be true, it is!

Now, one final giant offer for you

If you are serious about doing all you can to succeed in creating and launching your small business, you’re not going to want to miss a single upcoming Small Business Toolbox article. So…

be sure to subscribe, either by RSS or e-mail using the link just below.

And, when you do, you will get something extra and very valuable–a growing library of specialized forms, worksheets, analyzers, scripts, resources, private resources and contacts that I have developed and used over the years to help me launch and grow my own business-ventures.

How do you get all this juicy stuff? Subscribe. And, I will soon be adding a subscriber-only link to the bottom of my subscriber e-mails and RSS feeds that will take you to this private library of tools. The first one I will add early next week is my exclusive 6-page Site-Evaluation Form that will help make sure you get as much info as possible about every location you see.

Now, let’s keep the conversation going, ask questions, offer more insights on location for new small businesses and leave thoughts in the comment section below…

Join our Email List for Weekly Updates

And join this amazing community of makers and doers. You know you wanna...


Comments are closed.