10 rules for a successful site analysis

Whether you are an expansion manager or a fresh start-up, finding the right location is considered one of the essential tasks and is often decisive for the economic success of a project. We have listed the simple and golden rules you should follow when choosing and analyzing a location.

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Create successful site analyses

Whether you want to rent or buy a property - apart from all the rules, special attention should be paid to three precise criteria: the location. Secondly: location, and thirdly ... You guessed it: location. Of course, countless other factors determine the success of a site, but without having analyzed and found the right one; these factors are meaningless. For this reason, we believe that a professional location analysis is not only something for experienced city managers, portfolio managers, or commercial brokers but also for founders and young companies.

To avoid an change of location, the following basics should help you to find the right place. Ultimately, your location analysis will determine whether your business takes off or hits the wall.

1. involve experts

Straightly advice is to get subject matter experts on your side from the start. If you don't have the necessary experience to make location decisions, you should involve a professional who will be instrumental in the entrepreneurial success. The offers range from the Chamber of Industry and Commerce and business development agencies, from franchise experts to innovative Internet offerings, including WHAT A LOCATION! Specialized agencies, such as 'CLEVER EXPANDIEREN,' can bring expertise to the location process. An investment in expert knowledge will quickly pay for itself if your basic investment sum is four to five figures. At regional industry meetings or associations, you will also find experienced companies that have faced similar challenges in their careers as you do today. Seek contact and actively exchange ideas.

2. choose business ideas that fits the target group in the right place

How decisive a location firmly depends on whether customers come to you or whether you go to the customers. You can say that the better known your brand is, the more likely you are to move into a B-location (provided there is sufficient foot traffic). If your brand is entirely new, moving directly into an A-location may be advantageous. However, with professional location analysis, it is easy to find where your customers spend their time in a city. This information can help to decide not by A or B but per customer. After all, the customer is also the one who buys from you. Therefore, don't be blinded by familiar street names or places. It's like online marketing - the better you define your target group, the easier you find product buyers. Know where your buyer base "hangs out," You can narrow the search radius considerably. Therefore, we recommend investing a little more time in research.

3. define location criteria

There are also very different location criteria for the most diverse projects, with additional individual weighting.

Among the most important of these criteria are:

• Support programs
• Kiez image
• Availability of manpower
• Traffic situation
• Costs for the location (business tax rate)
• Competitive situation
• Demand potential (do you satisfy a customer need?)
• Premises
• official requirements
• Living and working conditions
• Proximity to suppliers

It is your task to filter out the critical criteria for your project. Therefore, assign points from 1 (not necessary) to 10 (indispensable) per criterion. This will make the decision easier, as a simple comparison of all options will be possible. We also recommend that you record specific exclusion criteria in advance. These are then location factors that must be met in any case. If they are not, locations can be directly sorted out during the selection phase. Consultants or commercial real estate agents are always happy to provide such lists.

4. identify customer potential in the catchment area

Are you planning a business that depends on walk-in customers? Then you should find out how large the catchment area of the location is. People who are a maximum of 10 minutes walk from the site are more likely to become customers than people who must travel by car or public transport first. And if many of these people also occur within your target group, you have hit the jackpot. For this reason, it is essential that you have an overview of the catchment areas and whether an above-average number of target customers live, shop and work nearby. Solutions like our software can provide information about this in just a few seconds.

5. examine the competitive situation in detail

The next logical step is to evaluate the competitive situation at the location. Once you have found a site that has sufficient customer potential in the catchment area, the next step is to check with which competitors you have to share market shares. Well-known and large brands usually exert a strong pull on customers and thus also have a corresponding market share. However, a gourmet burger can also be cleverly placed next to a fast food giant. Therefore, there are no blanket answers, and you should carefully research the sales area and competition and prioritize accordingly.

A precise competitive analysis is a basis for forecasting market share, i.e., the share of customers and purchasing power you can claim. You need to understand that competitors can even boost your business. Therefore, do not be afraid of competition if you have products or services in your portfolio that others do not offer. This is why site analysis is so critical. Based on all this information, your location positioning strategy will evolve. Critical: Only if you can prove a USP in product or service competition at the location can be invigorating.

6. cleverly exploit magnetic effect

The right customer potential and an ideal competitive situation are already a reasonable basis. In addition to both factors, there is another significant factor that you should consider when choosing a location. Stores with complementary products or services can be regarded as supplementary offers and thus as a frequency driver. For a pharmacy, this might be a drugstore. For a flower store, perhaps a senior living facility. The possibilities are endless: government offices, bakeries, banks, subway stations, restaurants and supermarkets, and many more. Economic developers are now paying attention to the formation of intelligent clusters by allowing companies to locate in many locations with specific potential synergies. They can work together on projects and thus promote joint success at the site. So be sure to look for such potential when choosing a location. Properly applied, you can save considerable costs for customer acquisition in the long term. But don't put all your eggs in one basket ...

7. find the right operating site

Now it's down to the nitty-gritty. You've done your homework and gathered some real estate options in variously analyzed locations. With that, you have half the rent and can now take care of the business premises. How big is the storefront, and does it fit in with the rest of the property? Of course, it needs to make a good impression and have parking if you expect customers from out of town. A restaurateur might want an outdoor space for the summer. No matter where the needs lie, you need to know what size business fits your venture if you want long-term success.

The following criteria may count:

• Operating license
• Parking spaces
• Attractiveness and advertising effectiveness
• current equipment of the premises
• Rental conditions
• Size
• Opportunities for expansion

In addition to these hard facts, pay attention to the landlord's conditions. In addition to the rent and ancillary costs per square meter, a minimum lease term can also be important. Good locations often still require minimum terms of five or ten years. However, we believe the pandemic will cause a rethink of minimum lease terms. Be sure to address this issue. Alternatively, look for existing leases and take advantage of a remaining short term or become a subtenant. The situation in the industry today allows for much creativity.

8. create forecasts  

Because a purely static analysis of the status quo falls far short in the search for a location, to find out whether a site will still be attractive in a few years, you need to be able to make good forecasts. The longer you are tied to a lease and the higher the investment for the space, the longer you need to be able to look into the future. Avoid dependence on a frequency provider. In some time, this may disappear. In a few years, a lot can change. Even a long-term construction site can result in significant revenue losses.

On the other hand, a site may develop exceptional development potential. In such cases, plan conservatively, as the development of these sites may take longer than planned, and therefore sales projections may not be realized at the outset. You may also consider a sales-based rent or a graduated rent agreement until the end of development.

9. develop creativity

It would help to have creativity and a little courage when you can't find the correct location. That one does not find a site can have many reasons. Sometimes the cost of space does not fit the overall ratio to forecast long-term success. Sometimes it can be because there are simply no good properties currently on the market. But these are not reasons to put your project on hold. Many ventures can be accomplished in other ways, even for an interim solution. Try to become a subtenant or open a pop-up store to test your plans first. Does their business work mobile from a bicycle, or can your products be sold well at regional markets or events? Use such phases to test, familiarize yourself with the industry or find new essential contacts.

10. Do it

We believe this is one of the essential rules. If you've made it this far, you've proven you have what it takes to make it happen. Don't let the current situation on the streets drive you crazy. Stationary trade, gastronomy, medical practices, or services will always exist, and the chances of getting hold of a perfect location are pretty high. Do your homework and just get started. Have fun!