Blog / Business Intelligence, Enterprise Strategy, Real Estate & Construction / 11 Considerations for Creating An Effective Real Estate Strategy to Expand Your Business
When planning your business expansion, whether corporate or through franchising, developing an efficient real estate strategy requires careful consideration of multiple factors.
Considerations should include current and future demand for your products at new locations, the amount of capital you’ll need to finance and outfit your real estate acquisition, and how to position and develop new retail stores for long-term success.
Here are 11 key considerations and thought-provoking questions to help you carefully plan your brick-and-mortar business expansion strategy.
1. Customers
Before looking at properties, paint a clear picture of your ideal customers and the type of location that would be accessible and attractive to them — while meeting your business needs.
Who are your ideal customers? Where do they reside, work, and spend their leisure time? How will they come across your location? What surroundings would complement your retail store? Visualize the appearance of your desired location. Who will be passing by your store or frequenting the parking lot? This thoughtful analysis will contribute to a consistent and compelling brand experience across all your retail outlets.
2. Market Potential
By gaining a clear understanding of your target customers, you can effectively assess the market potential of potential locations.
Start by examining the current and projected demographic profile of your potential location. Does this profile align with the criteria set by your business? Consider the proximity of other businesses to your potential store. Would these businesses attract your target customer? Could they potentially drive traffic to your location? It’s also worth investigating the success of these neighboring businesses.
Better understanding these factors allows you to make an informed decision and select a location that holds the highest potential for success.
3. Competition
Do you have competitors in close proximity to your potential location? The presence of competitors can have both positive and negative implications, depending on your business and their reputation. It’s crucial to conduct a competitive analysis to gather relevant information because the new environment may differ significantly from your flagship store’s situation. While analyzing your competitors, it’s important to assess whether your brand possesses a unique selling proposition that sets you apart in the potential location. Additionally, have you considered your marketing and advertising plans for this new location? Building awareness and attracting foot traffic will require a well-thought-out strategy.
4. Property History
It’s crucial to delve into the history of the previous occupant of your potential store. Was the business successful? Why did the business leave? Was the occupant happy with the location? If multiple businesses have experienced failures at this location in recent years, it could be a potential red flag that warrants further investigation.
5. Labor Force
The cost of labor is a significant expense for any business, and without an ample pool of talented individuals in the area, your business may face challenges in terms of growth and success, even if you have a visually appealing store. Ensure that you carefully assess the availability of skilled individuals in the area to support the growth and success of your business.
6. Accessibility
For a retail store to be successful, it must be ADA compliant and easily accessible to customers, employees, and vendors. Take the time to assess whether customers can find parking conveniently and whether suppliers have sufficient space to deliver pallets of products.
If your potential store is situated within a larger plaza, it’s important to confirm that the facility will be open and climate-controlled during your designated hours and operating days. These seemingly small details can significantly impact the success or failure of your business venture and may just be the deciding factors that make or break a deal.
7. Cost
When it comes to commercial real estate, it’s important to recognize that it involves a substantial investment. In addition, before you start your research, it’s crucial to decide whether you want to buy or lease your new store because costs can vary significantly. To make an informed decision, it’s essential to conduct thorough due diligence and carefully assess all the expenses associated with signing a lease or purchasing the potential location for operating your business. By meticulously examining the financial aspects and understanding the costs involved, you can make a well-informed choice that aligns with your business goals and financial capabilities.
Potential location expenses may include:
- Down payment
- Rent or financing costs (check the terms)
- Property outfit/improvement costs
- Operating expenses:
- Water
- Internet
- Security
- Parking
- Electricity
- Landscaping
- Trash removal
- Janitorial services
- Maintenance costs
- Property taxes and insurance
8. Property Upfit | Improvements
Before finalizing a potential location, it’s crucial to evaluate whether any upgrades or improvements will be necessary to make it suitable for your business, customers, and investors.
If the answer is yes, conducting thorough research on the time and financial investment required for these enhancements is essential. It’s important to carefully consider whether the investment will yield a worthy return. Consulting with contractors and obtaining estimates on costs and timelines will provide valuable insights. This analysis will play a pivotal role in determining whether it’s worth investing in property renovations or if it’s better to explore other options due to a lack of favorable return on investment (ROI).
Given that your goal is to attract customers to your retail store regularly, it’s vital to ensure that its appearance aligns with your brand and contributes to a positive customer experience. Enhancing the store’s aesthetics and creating an environment that strengthens your brand’s identity can significantly impact customer perceptions and their overall satisfaction.
9. Taxes and Incentives
When it comes to real estate investments, taxes play a significant role and should be carefully considered. Find out the property tax rate associated with the potential location you intend to purchase. Generally, property tax rates tend to be higher in more populated areas. However, if there are abundant business opportunities in the area, the higher rate may be justified.
Additionally, it’s important to investigate tax incentives that may be available. In some cases, local and state governments offer tax breaks and incentives to attract businesses to specific locations, aiming to drive economic growth in those areas. Exploring these incentives can potentially provide financial advantages for your business, so it’s worth delving into the potential tax benefits offered by the government.
10. Financing
If you are considering purchasing your potential location, it’s possible that you may need to apply for a loan. However, obtaining a loan for a commercial investment might not be as challenging as you anticipate. According to Linville Team Partners (LTP), Impact Brands’ exclusive real estate partner, “lenders will often be more attracted to a commercial investment than a residential since they offer greater profit potential and a more stable recurring income.”
LTP advises, “When seeking funding from a bank, do not forget the importance of a professional presentation.” Demonstrating your ambition and showcasing your skills to complete the deal, combined with highlighting the profit potential of the investment, can greatly increase your chances of securing financing.
11. Other Expansion Opportunities
If you anticipate rapid growth in your potential location, with demand potentially exceeding your capacity to keep up, it is worth exploring the availability of other properties in the area. Assessing the real estate landscape in a vibrant neighborhood that offers ample opportunities for expansion can significantly enhance your chances of achieving substantial business growth.
This strategic approach allows you to proactively plan for future expansion and ensure that your business is well-positioned to meet the growing needs of your target market.
Let Impact Brands Help Create Your Business Location Strategy
In the realm of commercial real estate, where significant investment dollars are at stake, it’s natural to feel overwhelmed and cautious about making costly mistakes. You don’t want to stumble through trial and error, especially when it comes to lease negotiations, strategic planning, and selecting optimal locations for your business.
That’s precisely where Impact Brands steps in. We’ve partnered exclusively with Linville Team Partners to provide you with seamless execution of your real estate strategy, ensuring that every step, from start to finish, is handled with expertise and precision.
If you’re ready to expand your business, tap into new market dynamics, and seize growth opportunities, our dedicated team is here to support you every step of the way. Don’t hesitate to Reach out to us today and embark on this exciting journey together!