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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Chapter 9

Selecting a Location and Selecting a Location and Planning the FacilitiesPlanning the Facilities

In the Spotlight:AMT Component, Inc.www.accessmicro.com

In the Spotlight:AMT Component, Inc.www.accessmicro.com

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Learning Objectives: Chapter 9

1. Identify the factors affecting choice of a business location.

2. Describe the attraction and challenges of a home-based business.

3. Explain how efficiency can be achieved in the layout of a physical facility.

4. Understand the equipment needs of small firms.

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Finding an Optimum Location for a Small Business

Personal PreferencePersonal

Preference• Work at home• Friends and relatives nearby• Lifestyle advantages

Customer Accessibility

Customer Accessibility

• Convenience for target customers

Environmental Conditions

Environmental Conditions

• Laws and taxes• Weather• Competition

Resource AvailabilityResource

Availability

• Incubator or leasing options

• Raw materials• Transportation• Labor supply

Site Availability and Costs

Site Availability and Costs

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Leasing vs. Buying

Advantages of Buying

1. Freedom to design or modify structure

2. Guaranteed location

3. Hedge against inflation

Advantages of Leasing

1. Conserving cash

2. Minimizing risk

Lease

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Needs That Home-Based Locations May Not Fill

Need to “Team”

Individual members contribute to the work of others.

Need for Speed

Separate locations can slow down collaboration.

Need to Serve Customers Promptly

Quick consultation with others is often required to resolve customer problems.

Need to FocusNeed to Focus

Home locations have distractionsHome locations have distractions..

Need for Personal Haven

Having the business down the hall makes it hard to relax.

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Building Layout

Factory Layout Retail Store Layout

Processlayout

Productlayout

Grid pattern

Free-flowpattern

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Grid Pattern of Store Layout

Display Racks

Racks

Racks

RestroomsStorageOffice

Disp

lay

Disp

lay Rack

s

Ch

eck-ou

t

Door

Door

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Free-Flow Pattern of Store Layout

Door

Door

Racks

Display Racks

Ch

eck-ou

t

Office

Storage

Storage

Disp

lay

Table

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Special-PurposeEquipment

• Low labor cost

• High hourly output

General-Purpose vs. Special-Purpose Equipment

General-PurposeEquipment

• Low purchase cost

• Flexible production

• Good resale value

HANDLE

WITH

CARE

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

BizPlanBuilder on Considerations for Site Selection (p. 94)

• Room and cost for expansion

• Land and construction costs

• Transportation cost and route access for common carrier

• Risks and insurance

• Packaging and material costs and availability

• Labor pool availability, skills, costs

• Local ordinances, licensing and permit requirements

• Government assistance (roads, training, exemptions, etc.)

• Government restrictions and requirements (OSHA, NLRB, etc.)

• Community attitudes toward business and manufacturing

• Continued operating costs (utilities, communications, etc.)