Factors in Community Selection 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.

Are There Financial Incentives? 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 A community may try to attract new businesses to locate there by offering a special incentive. May also establish an enterprise zone

What Is the Makeup of the Population? 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? 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

Does the Labor Supply Match Your Needs? 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

Retail Business Site Considerations 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 Considerations 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)

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

Service/Wholesale Business Site Considerations 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 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

Extraction Business Site Considerations Extraction businesses need to be near the product they’re extracting. Ex: Gold mine Oil rigs Coal mine

Manufacturing Business Site Considerations 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

E-Business Considerations 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.

Locating Potential Sites 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.

Site Analysis and Decision Making 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

Surrounding Area Analysis 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

Tax deductible lease expenses Lease, Buy, or Build? Unless you can pay cash, you will have a loan and loan payments and interest are also tax deductible Leasing Advantages No large cash outlay Reduced risk Tax deductible lease expenses 17

Types of Leases Fixed-Rate Lease Percentage Lease Triple Net 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

Making Your Decision For each of the possible sites, compare these variables: cost advantages and disadvantages with environment, interior/exterior desirability (commute time, atmosphere, charm)

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

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

Six Steps in Layout Planning Identify the primary and supporting activities that will take Place (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) 1 2 3 4 5 6 22

Layout Considerations for Manufacturing Businesses How will you make it What will you making production processes production sequence Layout Considerations for Manufacturing Businesses space requirements materials flow How will materials move along environmental concerns control 23

Retail Layout Considerations Retail Businesses What kind of customer service will you offer How will products be displayed products to be sold projected clientele Are items arranged efficiently with the highest possibility for a sale sales per square foot of selling space aisle exposure Retail Layout Considerations Related items product coordination sales value of area within store 24

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

Wholesale Businesses 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.

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

Extraction Businesses 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.

E-Businesses 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.

Finishing Touches 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

Planning for Office Space You have two options to consider when planning office space: open office layout: best if cost, space, employee supervision, or access to files and equipment are important closed office layout: best if privacy and noise reduction are of primary concern

Building Evaluation The building must be large enough to take care of present needs and to allow for expansion.   Check the building’s interior to see how it meets your needs and the exterior’s construction, soundness, appearance, and parking.

After You Read 1. List the factors involved in deciding on a community in which to locate a business. Factors to consider include the community’s economic base, financial incentives, population makeup, and labor supply.

After You Read 2. Identify the factors to consider when selecting a business site. Factors to consider when selecting a business site vary with the type of business. For example, a retail store needs to be accessible to customers; an extraction business must be near the product it is extracting.

After You Read 3. Describe the resources that can be used in finding potential business sites. A number of resources can be used to find potential business sites: newspapers, realtors, the Internet, visual surveys, and personal or business contacts.

After You Read 4. Explain the steps involved in analyzing potential sites for a business and choosing between those sites. An analysis of potential business sites needs to be done in three areas: Surrounding area analysis is based on site area considerations for the type of business. Building evaluation includes both the interior and exterior. Deciding whether to lease, buy, or build involves analyzing the three options for the site. Choosing between the sites would involve a comparison on the basis of cost, advantages and disadvantages, and desirability.

After You Read 5. Describe the advantages of starting a business at home or in an incubator. The main advantage of starting a business at home is financial, due to lower rent and taxes. Advantages of starting a business in an incubator are lower rent, shared secretarial and administrative services, and the availability of business development services.

Section Objectives List the steps in layout planning that are common to all businesses. Describe the layout needs for each type of business. Summarize the final details of layout planning.

The Main Idea The steps in layout planning apply to all types of businesses. In contrast, development of a facility layout is based on the operational needs of the business.

Content Vocabulary layout workstation façade appointments

Layout Needs and Possibilities Although the steps in layout planning are the same for all businesses, the options and considerations are not.   Different types of businesses have different operational needs.

Section Objectives List the factors involved in deciding on a community in which to locate a business. Identify the factors to consider when selecting a business site. Describe the resources that can be used in finding potential business sites. Explain the steps involved in analyzing potential sites for a business and choosing between those sites. Describe the advantages of starting a business at home or in an incubator.

The Main Idea Selecting a community and selecting a specific location in which to establish a business each involve a systematic process.

Content Vocabulary economic base incentive census tract trade area industrial park incubator

Factors in Community Selection Factors to consider when selecting a community include: economic base financial incentives population makeup labor supply

Is the Economic Base Favorable? First, you should determine the community’s economic base. That base can be either primarily industrial or primarily service-oriented. economic base the major industries that provide employment in an area

What Is the Makeup of the Population? Demographics and population size can tell you if a location matches your target market.

Types of Manufacturing Layouts Manufacturing Businesses Types of Manufacturing Layouts product layout fixed-product layout process layout 49

Manufacturing Businesses In a product layout, all machines and supporting activities are arranged along a product flow line. As products come down the line, something is done to them at each workstation. workstation an area in a business with equipment for a single worker

Wholesale Businesses When planning for storage, follow these guidelines: Store popular items near shipping points. Store items together that were received together and will be shipped together. Provide a wide variety of storage space. Assign storage space on the basis of handling ease and popularity. Plan entrances, exits, and aisles so products can be easily reached.

Planning for Office Space appointments the furniture, equipment, and accessories contained in a building You can define the traffic patterns of an office space with appointments.

After You Read 1. List the steps in layout planning that are common to all businesses. (1) Define the objectives of the facility. (2) Identify the primary and supporting activities that will take place in the facility. (3) Determine the interrelationship—access, arrangement, and flow—between activities. (4) Determine the space requirements for all activities. (5) Design alternative layouts for the facility. (6) Evaluate the various layouts and choose one.

Criteria for Site Selection Once you determine that a community is suitable for your business, you can begin looking at sites.   The factors to consider and the criteria used to judge sites vary with the type of business activity.

Does the Labor Supply Match Your Needs? When considering a community, consider your labor needs and how well the local labor pool meets those needs.

After You Read 2. Describe the layout needs for each type of business. Layout needs differ for each type of business. Considerations for manufacturing, retail, wholesale, service, and extraction businesses and for e-businesses are described in the second section of the chapter.

After You Read 3. Discuss the final details of layout planning. Final details of layout planning include determining office space and space for equipment, furnishings, and supplies as well as planning for interior design features and alterations or improvements to the face of the building.

End of Chapter 9 Site Selection and Layout Planning