Chapter 6: Location and Distribution- Evaluating Alternatives Learning Objectives: 1. Explore channels of distribution 2. Increase awareness of the role location plays in your strategic Business Plan 3. Consider location alternatives 4. Explore running your business from home 5. Investigate co-working spaces, enterprise zones, and incubators 6. Understand the importance of the right location for retail bricks-and-mortar success 7. Use primary and secondary research to refine customer profiles and select a location 8. Consult commercial real estate brokers in your search for a location 9. Review major points in leasing agreements 10. Investigate commercial and manufacturing location issues 11. Review Internet options 12. Learn the importance of multichannel distribution

Distribution and Location Channels of Distribution Multichannel Promotion Global Village It Was a Woman’s Raw, Bleeding Hands that Led Jock Brandis to Make a Promise Distribution Channels & Ecommerce Business Models Business to Business (B2B) Business to Consumer (B2C) Consumer to Consumer (C2C) Passion Passionate Comedians Seek New Distribution Venue

Location Options Home Office Local zoning & homeowner association laws Work and family life balance Best way to set up an in-home office Professional appearance Coworking Space Incubators Provide a home to grow your business Less cost and more administrative support

Action Step 31: Fantasize Your Perfect Location B rainstorm the ideal location for your business For a retail business, start with your Target Customer Once you have a general idea of location write down other important items For an Internet-only business review your distribution options and look at multiple channels If you need a manufacturing site, review the second half of the chapter If you are going to be home based, review the home office option and go to Action Step 32.

Action Step 32: Is a Home Business in Your Future? List reasons to work at home List the problems of working at home List solutions to problems of working at home Go technical – what will it cost you? Where will your workspace be? Check out your home insurance Check out health insurance if needed Talk with your family and friends who own home-based businesses

Entrepreneur’s Resource Incubate Your Baby for Success Tips for Evaluating Incubators Finding A Quality Program Look for a successful track record Graduation Policy Qualifications of Manager and Staff Finding the Right Match Does the program offer the services you need? Do you meet the incubator’s criteria? Is the program fee structure right for you?

A Checklist to Choose Your Ideal Business Location  Target Customers  Transportation Issues  Neighbor Mix  Anchor Tenant  Competition  Security, Safety & Parking  Labor Pool and Education  Restrictions and Opportunities  Services  Costs  Ownership  Present and Past Tenants  Space  History of the Property  Taxes  Approvals  Physical Visibility  Life-Cycle Stage of the Area  Community Support  Image

Where to Go For Location Information Census Bureau City and County Data Independent Research Firms Geodemographic Databases Site Location Ring Studies Site Location Experts Associations that Represent your Industry Commercial Real Estate Agents & Brokers

Action Step 33: Seek Professional Help for Site Selection Visit a commercial real estate agent or online broker site for information Find out about growth in the community and major road plans and developments Prepare your questions and visit a broker but leave your checkbook at home

Before You Sign a Lease Language is very specific Terms are provisional – a starting point for negotiation Initial terms will favor the property owner Do not sign any lease without the assistance of an experienced real estate attorney!

The Checklist of Terms Used in Rewriting a Lease  Escape Clause  Option to Renew  Right to Transfer  Cost-of-Living Cap  Percentage Lease  Floating Rent Scale  Start-up Buffer  Improvements  Use Clauses  Common Area Maintenance (CAM)  Parking and Storage  Option to Purchase  Option for Expansion  Triple Net or NNN Lease  Relocation Clause

Additional Location Decisions for Manufacturers Labor Supply Energy Availability and Costs Taxes Zoning Restrictions Access to Transportation Corridors Proximity to Suppliers and Customers State, County, Region & City Economy

Alternative Retail Locations Swap Meets and Fairs Kiosks Currently up to 10% of the income generated in malls QVC 15,000 average orders per hour Can be fantastic, but very tough to get your product accepted

Internet Mandatory channel or distribution and/or way to market your business or service Requires all the major functions that are part of any business Business to Business (B2B) model offers incredible opportunities for substantial sales Consider setting up shop on one of the “storefront” options like eBay or Amazon The possibilities are endless and flexibility is the key to survival

Think Points for Success The irony of the search for a retail site is need for the best site when you can least afford it. Take your time selecting a location. Waiting for the right location may be worth it. Begin with a regional analysis. A site analysis should include everything that is unique to a specific building or space. Who are your neighbors? Know the terms and buzz words and be aware that they may mean different things in each contract or lease agreement. Everything is negotiable. Do not be afraid to ask. Talk to former tenants. Never sign a lease without consulting an experienced lease negotiation attorney. Be willing to seek out and pay for the advice of trained professionals Coordinate your various distribution channels and make sure your image is consistent. You want to build synergy. Capitalize on the low cost entry to Internet commerce. Take Risks!