9-1 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Chapter 9 Selecting a Location and Planning the Facilities In the Spotlight: AMT Component, Inc. In the Spotlight: AMT Component, Inc.

9-2 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-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.

9-3 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Finding an Optimum Location for a Small Business Personal Preference Work at home Friends and relatives nearby Lifestyle advantages Customer Accessibility Convenience for target customers Environmental Conditions Laws and taxes Weather Competition Resource Availability Incubator or leasing options Raw materials Transportation Labor supply Site Availability and Costs

9-4 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-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

9-5 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-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 Focus Home locations have distractions. Need for Personal Haven Having the business down the hall makes it hard to relax.

9-6 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Building Layout Factory LayoutRetail Store Layout Process layout Product layout Grid pattern Free-flow pattern

9-7 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Grid Pattern of Store Layout Display Racks Racks Restrooms Storage Office Displa y Display Racks Check-out Doo r

9-8 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Free-Flow Pattern of Store Layout Door Racks Display Racks Check-out Office Storage Display Table

9-9 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Special-Purpose Equipment Low labor cost High hourly output General - Purpose vs. Special - Purpose Equipment General-Purpose Equipment Low purchase cost Flexible production Good resale value HANDLE WITH CARE

9-10 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-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.)