Glencoe Entrepreneurship: Building a Business Community and Site Selection SECTION SECTION 9.1...

Glencoe Entrepreneurship: Building a Business

Community and Site Selection

SECTION 9.19.1

Chapter 9 Site Selection and Layout Planning

As an entrepreneur, the decision of where to locate your new business is an important one.

A location can determine who sees your business and how easily customers can get to it.

Factors in Community Selection

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A community may try to attract new businesses to locate there by offering a special incentive.

May also establish an enterprise zone

incentive

a reward or advantage that helps businesses, such as lower taxes, cheaper land, or employee training programs

enterprise zone

way to encourage businesses to start in distressed areas which gives the new business tax breaks

Are There Financial Incentives?




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Trends such as aging populations or young families can affect businesses.

These trends determine who will spend, how much they will spend, and what types of products or services they will want.

What Is the Makeup of the Population?




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Access the Census Bureau’s Web site to research the demographics of a census tract that interests you.

census tract

a small geographic area into which a state or country is divided for the purpose of gathering and reporting census data

What is the Makeup of the Population?




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Business owners need to consider:

• how many employees do you need• are there enough possible employees in the area• do the available employees have the appropriate

skills

Does the Labor Supply Match Your Needs?




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Retail businesses need to determine their trade area in order to be accessible to their target market.

trade area

the region or section of the community from which a business draws customers

Retail Business Site Considerations




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Once you pinpoint a community you want to serve and determine your business’s trade area, examine these issues:

• number and size of competing businesses• character of the area (clean and safe)• accessibility and traffic (foot and car)• competition’s business type (like yours or

different)

Retail Business Considerations




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Nature of the Competition

• Like Yours—Competing business– Sells the same or similar merchandise or service

• You sell furniture and there is another furniture store near you

• Unlike Yours—Complementing business– Sells merchandise or service that “goes with” yours

• Furniture Store next to a Home Décor Store




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Service and wholesale businesses which have customers coming to the business have the same needs as those of retail businesses.

Ex: Barber/Hair Salon

Accountant

Dentist

Service/Wholesale Business Site Considerations




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However, many service and wholesale businesses do not have customers coming to their business sites and do not need expensive, high-profile locations.

Ex: Electrician

Lawn Service

Clothing Manufacturer like Levi’s

Service/Wholesale Business Site Considerations




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Extraction businesses need to be near the product they’re extracting.

Ex: Gold mine

Oil rigs

Coal mine

Extraction Business Site Considerations




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An industrial park is usually located close to major transportation routes.

industrial park

an area set aside in a community for industrial use

Ex: Summit Street in Crown Point

Manufacturing Business Site Considerations




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Location and space are not major considerations for an e-business because electronic business sites can be located almost anywhere and require little space.

However, larger operations need more space for equipment, personnel, and shipping.

E-Business Considerations




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There are a number of ways to locate potential business sites.• Read the classified sections of newspapers.• Consult with realtors who specialize in business

properties.• Conduct visual surveys by driving through

prospective communities.• Network with personal or business contacts.

Locating Potential Sites




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Once an entrepreneur identifies possible sites for a business, he or she must consider three things before making a decision:

• the surrounding area• the building• the costs of buying, building, or leasing

Site Analysis and Decision Making




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Surrounding areas should be evaluated by the same criteria used for site selection:

• number and size of competing businesses• nature of the competition• character of the area• accessibility and traffic

Surrounding Area Analysis


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Lease, Buy, or Build?

17

Leasing Advantages

No large cash

outlay

Reduced risk

Tax deductible

lease expenses

Unless you can pay cash, you will have a loan and loan payments and interest are also tax deductible



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Types of Leases• Fixed-Rate Lease

– Tenant pays specific amount each month• Percentage Lease

– Tenant pays a percentage of sales• Sliding Scale

– Sales up to $50,000 you pay 4%– Sales over $50,000 you pay 3%

• Triple Net Lease– Tenant pays rent plus 3 other operating costs

• Insurance, Maintenance & Utilities, Property Taxes




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For each of the possible sites, compare these variables: • cost• advantages and disadvantages with environment,

interior/exterior• desirability (commute time, atmosphere, charm)

Making Your Decision




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Home-based business provides benefits such as:• No commute time• Able to work 24/7• Partial home expenses deductible for taxes

Alternative Sites


Layout Planning


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A well-planned layout can mean a more efficient operation, a more appealing sales floor, and greater customer convenience.

layout

a floor plan or map that shows the interior and exterior arrangement of a business, including such items as display cases, lighting fixtures, traffic patterns, landscaping, and parking spaces

Physical Layout


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Six Steps in Layout Planning

Identify the primary and supporting activities that will takePlace (what’s going to go on in the business)

Determine access, arrangement, and flow among the activities (how will things work within the building)

Determine space requirements for all activities

Design alternative layouts for the facility

Evaluate the various layouts and choose one

Define the objectives of the facility (what is it going to be used for)

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Manufacturing Businesses

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Layout Considerations for

Manufacturing Businesses

production processes

production sequence

materials flow

controlenvironmental concerns

space requirements

What will you making

How will you make it

How will materials move along

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Retail Businesses

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Retail LayoutConsiderations

products to be sold

projected clientele

sales per square foot of selling space

sales value of area within store

product coordination

aisle exposure

How will products be displayed

What kind of customer

service will you offer

Are items arranged efficiently with the highest possibility for a sale

Related items

Layout Planning


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When planning the layout of a wholesale business, storage and space utilization are the most important considerations.

Wholesale Businesses


Layout Planning


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Most wholesale businesses are located in single-story buildings, which makes controlling and moving stock easy.

Receiving, storage, order assembly, and shipping areas should be arranged so goods can be moved through them quickly and easily.

Wholesale Businesses


Layout Planning


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The physical layout of a service business depends largely on the specific service it provides.

Service Businesses


Layout Planning


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Like service businesses, extraction firms have unique layouts.

They share a few common features: an office area, storage areas for equipment and supplies, and the extraction business site itself.

Extraction Businesses


Layout Planning


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The layout of an e-business depends on its site and its operations.

If the e-business ships products, storage and shipping areas are needed.

E-Businesses


Layout Planning


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Once a business owner chooses a particular layout, he or she can begin planning the finishing touches. Such details include planning interior design features, as well as exterior alterations or improvements

Finishing Touches


Glencoe Entrepreneurship: Building a Business Community and Site Selection SECTION SECTION 9.1...

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