1. The Location Plan
Part 3 Developing the New Venture Business Plan

2. Looking Ahead After studying this chapter, you should be able to:
Describe the five key factors in locating the brick-and-mortar startup.
Discuss the challenges of designing and equipping a physical facility.
Understand both the attraction and the challenges of creating a home-based startup.
Understand the potential benefits of locating a startup on the Internet.
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3. Locating the Brick-and-Mortar Startup
Brick-and-Mortar Store
The traditional physical store from which businesses have historically operated
The Importance of the Location Decision
High cost of constructing a physical location
Effect of poor location on eventual success of the firm
Type of business affects the importance of business location to customers
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4. Location Options for the Startup
Exhibit 9.1
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5. Five Key Factors in Determining a Good Business Location
Exhibit 9.2
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6. Key Factors in Selecting a Good Location
Customer Accessibility
Customer convenience (high traffic)
Access by targeted customers (niche market)
Avoidance of shipping costs (local markets)
Business Environment Conditions
Climate-related factors
Business environment factors
Presence of established competitors
Regulations, legal requirements, and restrictions
Tax structure, exemptions, and incentives
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7. Key Factors in Selecting a Good Location
Availability of Resources
Nearness to raw materials
Availability of a suitable labor supply
Access to adequate and reliable transportation
Personal Preference of the Entrepreneur
Familiarity with home community environment
Support of entrepreneur by the community
Desire for a particular lifestyle
Contribution to the community
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8. Key Factors in Selecting a Good Location
Site Availability and Costs
Difficulty of locating a good site
Business incubator: provides shared space, services, and management assistance for new businesses
Buying: large costs and commitment required to purchase site outright
Advantages of leasing:
Avoids a large cash outlay
Allows the owners to postpone committing to the site before the business becomes a success
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9. Other Factors in Selecting a Location
Neighbor Mix
Who’s next door?
Security and Safety
How safe is the neighborhood?
Services
Is there municipal trash pickup?
Past Tenants’ Fate
What happened to them?
The Life-cycle Stage of the Area
Is the site in the embryonic, mature, or declining stage?
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10. Designing and Equipping the Physical Facilities
Design Requirement Challenges
Physical facilities should be of adequate size and accommodation; not too large or too luxurious.
Considerations
Age and condition of building • Fire hazards
Heating and air conditioning • Entrances and exits
Lighting and restroom facilities
The ideal building meets the functional requirements of the business and projects the appropriate image to customers and the public at large.
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11. Equipping the Physical Facilities
Manufacturing Equipment
General purpose equipment
Machines that serve many functions in the production system
Special-purpose equipment
Machines designed to serve specialized functions in the production process
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12. Manufacturing Equipment
HANDLE
WITH
CARE
General-Purpose Equipment
Low purchase cost
Flexible production
Good resale value
Special-Purpose Equipment
Low labor cost
High hourly output
Limited resale value
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13. Retail Store and Office Equipment
Display racks
Sales counters
Cash registers/ POS systems
Image
Luxury/utilitarian customer furnishings
Lighting
Displays
Signage
Office Equipment
Computers
Fax machines
Copiers and printers
Telephone systems
Filing cabinets
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14. Locating the Startup in the Entrepreneur’s Home
Home-Based Business
A business that maintains its primary facility in the residence of its owner
Attraction of a Home-Base Business
Low start-up and overhead costs
Convenience for family and lifestyle
Technology
Advances in office equipment allow home-based business to compete with commercial sites.
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15. Home-Based Businesses
Challenges
Business image of a home-based business
Professional image is difficult to maintain in a home environment.
Family and business conflicts
There is a need to observe regular business hours and establish spatial boundaries (specific work areas) to avoid distractions.
Legal considerations
Local laws and zoning ordinances prohibit many types of home-based businesses.
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16. Entrepreneurs’ Reasons for Operating a Home-Based Business
Source: “Home-Based Business: The Hidden Economy,” The Small Business Advocate, Vol. 19, No. 2 (Spring 2000), p. 6.
Exhibit 9.3
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17. Locating the Startup on the Internet
E-Commerce
The paperless exchange of business information via the Internet
Internet
A huge, loosely connected computer network that links smaller networks all over the world
World Wide Web (WWW)
A system of Internet servers accessible with browsers, which navigate via hypertext links
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18. Benefits of E-Commerce to Small Firms
Provides the opportunity to compete with larger firms in larger markets
Helps with cash flow problems by compressing the sales cycle
Builds better customer relationships through better service
Electronic Customer Relationship Marketing (eCRM)
An electronically based system that emphasizes customer relationships
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19. E-Commerce Business Models
A group of shared characteristics, behaviors, and goals that a firm follows in a particular business situation
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20. E-Commerce Business Models
Exhibit 9.4
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21. Types of Customers Served
Business-to-Business (B2B) Model
A business model based on selling to business customers electronically
Business-to-Consumer (B2C) Model
A business model based on selling to final customers electronically
Auction Sites
Web-based businesses offering participants the ability to list products for bidding
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22. Degree of Online Presence
Content/Information-Based Model
A business model in which the Web site provides information but not the ability to buy or sell products and services
Transaction-Based Model
A business model in which the Web site provides a mechanism for buying or selling products or services
24/7 E-Tailing: electronic retailing providing round-the-clock access to products and services
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23. Key Terms brick-and-mortar store
enterprise zones
business incubator
general-purpose equipment
special-purpose equipment
home-based business
zoning ordinances
e-commerce
Electronic Customer Relationship Marketing (eCRM) business model
business-to-business (B2B) model
business-to-consumer (B2C) model
24/7 e-tailing
auction sites
content/information-based model
transaction-based model
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