Considering the Location: Evaluating the Impact of Geography on the Business

As a business owner, you want to make sure that every aspect of your company is contributing to your success. But have you ever thought about how your company’s physical location impacts its value? Find out more in this guide.

Drawing New Customers

If you have a destination business, your exact location may not matter as much. In these cases, customers travel just to see you.

However, if you aren’t a destination business, you might rely on drawing in customers who are just passing by. And if your company is in a high-traffic area (like a shopping mall or a town square), you’re much more likely to build your customer base.

If you’re selling your business, this matters, too. Buyers will appreciate a business with a high-traffic location.

Rent as a Portion of Expenses

You want to keep your company’s expenses as low as you can. As you’re probably aware, rent is one of a company’s major expenses.

You may have already seen that location drastically affects what businesses pay in rent. But rather than simply looking at the dollar amount paid, consider what percentage of total expenses go toward rent. Sometimes, setting up shop in a higher-rent area can translate to greater profits.

Attracting Quality Employees

The quality of your employees has a significant impact on your company’s success. Imagine a customer entering your store for the first time. If the employees are rude to them, they might not come back — and they might tell their friends about the negative experience, too. In contrast, when employees are kind and helpful, the customer will associate that warmth with your company.

When you’re deciding where to open a business, consider whether a given location will give you access to the types of employees you need. For instance, if you primarily sell and repair computers, you might have more luck finding qualified employees if you open your business close to an information technology college.

Signage

You might not think of your business signage when you consider the effects of location. However, the further you are from well-traveled areas, the more likely it is you’ll need to invest in quality signage.

If you’ve noticed billboards along the interstate, you’ve seen this signage in action. Drivers on the interstate have no way of knowing what businesses are situated off of each exit. But if a business rents a billboard showing what it offers and exactly how to get there off the interstate, the influx of new customers makes that investment more than worth it.

Your Ability to Grow

If you’re considering selling your business, your company’s ability to draw in new customers is especially important. Buyers often want to see growth potential.

But even if you aren’t thinking about selling anytime soon, paving the way for growth is never a bad idea. For example, If you’re opening a location in a major metropolitan area, you might eventually find that it makes financial sense to open another location in the same area. Some areas offer more growth opportunities than others.

As you expand your business, you’re likely to see your company’s value grow, too. You can keep track of that value with Sunbelt’s easy online business valuation calculator.

Thinking About Selling Your Business?

If a sale is in your company’s future, you want to do all you can to maximize its value — and Sunbelt can help. Our experienced brokers work exclusively with small and medium business owners to help them find qualified buyers.

Want to see what we can do for you? Reach out to our team today.