Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-1 chapter Distribution and Location 7 7 Prepared by Ron Knowles Algonquin College
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-2 Business Plan Building Block Chapter 7 will help you select a distribution strategy and location that is best for: The customer Your type of business The options that are available chapter 7 7
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-3 Learning Opportunities Understand the contribution of location to small business success. Understand the uniqueness of business-location needs. Focus on customer needs when evaluating a location. Develop a checklist for evaluating potential sites for a business. Think about if and when you should locate your business out of the home. Use both secondary and primary sources of information in locating your business. Understand and negotiate a lease contract.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-4 Distribution Strategy Your distribution strategy will depend on a number of factors, such as: Customer needs Type of business (B2C or B2B) Type of product/service Transportation costs Competition Successful entrepreneurs take advantage of more than one distribution channel.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-5 Distribution Strategy Successful entrepreneurs take advantage of more than one distribution channel. Your physical location should depend on a multiple distribution strategy.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-6 The “Best” Location ___Local/municipal licensing ___Neighbourhood mix ___Competition ___Security, safety ___Labour pool ___Services ___Costs ___Ownership ___Property owner/landlord ___Past tenants ___Space ___Accessibility ___Professional advice ___Parking ___History of the property ___Physical visibility ___Life-cycle stage of the area ___Image ___Hours of operation ___Utilities ___Local zoning by-laws ___Taxes ___Approvals ___Transportation ___ Your target customers A location filter or checklist will help you zero in on the “perfect” location Use a scale of 1 to 10 to rate the relative importance of each item on this list. When you finish scoring, go back and note the high numbers anything above 5.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-7 The Rise of the Gold-Collar Worker Working at home has become a major trend and is one of the golden industries of the 21st century. 10 Major reasons for the home-based trend Increased Efficiency Growth of Service Industry Growth of Service Industry Computerization Higher Productivity Two-Income Families Cocooning Vigilant Consumer Improved Service Mobility Downsizing
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-8 Is Home the “Best” Place? Potential Disadvantages Potential Advantages Low risk of expensive mistakes Opportunity to use household resources Low overhead Gradual start-up and growth No commuting time or expense Tax advantages (with deductions allowed for part of the house) Relatively inexpensive way to test a market Reduced child-care costs Increased quality time with family Isolation and lack of contact with colleagues Increased family stress Need for self-discipline Local by-laws and regulations Less established or refined image Conflict with neighbours Parking problems
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-9 A Location Checklist for Home-Based Business A consideration of the following items may help you determine if you should operate your business out of the home. Target market Neighbourhood mix Physical visibility Competitors Life-cycle stage Image Local/municipal licence Local zoning by-laws Space/physical requirements Approvals Insurance Utilities Work habits/behaviour Lifestyle
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter Sources of Information Selected Secondary Sources of Location Information Census Market Research Handbook Statistics Canada catalogues Statistics Canada Web site Industry Canada Web site—Strategis Local and regional governments Local resource centre or library Potential suppliers Private research companies Commercial real estate agents + Your New Eyes Research (Primary Research)
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter Sources of Information Primary Sources of Location Information Finding the right location is a real opportunity to practice new-eyes research. Textbook examples of this type of research are provided for the following businesses: Dry cleaning Gift store Restaurant Travel Home renovation
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter The Language of Leases Key Terms Net rent Gross rent Rentable area Common area Usable building area Building gross area Loss factor
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter Before You Sign a Lease Checklist Before You Sign a Lease Checklist Escape clause Option to renew Right to transfer Cost-of-living Percentage lease Floating rent sale Start-up buffer Improvement Restrictive covenants Maintenance
Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter Plotting Your Future Checklist qWhat criteria are important to your location? qWhat secondary research do you need to make a decision about location? qIf you plan to operate a home-based business, be sure to complete your location analysis checklist. qDefine the importance of location for your target customer. qIf you are a home-based business, how have you separated work from home? qWhy have your chosen the site that you have selected? qIf you have a home-based business, identify any zoning issues you face.