We’ve all heard the old saw that “location is everything” and that in business what you need is “location, location, location.” There’s a lot of truth to this little gem of common wisdom, but successful businessman Charles Bouri says it can also be misleading. Bouri has seen too many businesses invest everything in location and still manage to stumble. That’s because any great location is a double-edged sword and comes with its share of challenges, which businesses aren’t always ready to meet.
So what exactly is the problem with a killer locale? Here are three things Charles Bouri says can go wrong:
One of the biggest problems with chasing down a prime location is that all of your competitors are doing the same. We’ve all seen neighborhoods that have four of the same type of business on the same street, or two competitors directly kitty corner to each other. This can be advantageous in the sense that you have a chance to scoop up customers headed to your competitor’s store—but it works against you for the same reason. Ultimately, the “best” location may be an under-served neighborhood, even if it has less traffic or visibility, rather than the in the shopping district where you have to fight over that traffic flow. Being the only game around can lead to strong early growth and a loyal base of customers by the time a competitor finally does move in.
Hands down the biggest drawback of a good location is the price you’ll pay for it. Building owners know the value that’s placed on a prime location and they will price it accordingly—often even higher than it’s worth. When you consider that you also have the usual costs involved in opening a location on top of the high lease price, getting close to all that customer traffic may be too expensive to justify. Plenty of crowded, popular businesses have gone under simply because their bills were too high – this is a major danger in any in-demand location.
Wrong type of crowd
There are different kinds of good locations with different kinds of shoppers, and not all of them will be right for your business. For example, a seemingly prime location like a popular shopping center may not be a good spot for a cash advance business, but that same business may do very well in a traditionally undesirable location like a low income neighborhood. You have to find the right type of customer for you.
How much do you consider location when launching a business?