Frugal Small Business Start-up Tips: Step 4- Determining Your Location

Do you know where to locate your new business? Even if you are just beginning the start-up process, it's a question you need to answer early on.

Depending on the type of business you want to start, your location can make or break the venture. Here are a few considerations and some frugal options.

Some Considerations When Deciding Where You Should Locate Your New Business

Choosing the best location for your business will involve several factors. You need to decide how important location is to the success of your business as well as the kind of facilities and services your business will need to operate smoothly and efficiently. You also need to know how much you can realistically afford, which is part of the previous step- determining your start-up costs. Here are some major points to consider:

  • What kind of business are you running? You may have more flexibility with a business that is based online as opposed to a brick and mortar establishment, such as a store or a restaurant (though even here you may have some degree of flexibility, as I'll explain below.)
  • How many people will be occupying the location? Keep this in mind: people = space. If you plan on having on-site employees then your location will need to have enough physical space to hold them and any equipment that they may need to get their jobs done without stepping on each others toes. You also need to factor in space for customers and any other kind of foot traffic.
  • What services, facilities, or support do you need? Does your business require distribution or delivery services? Administrative services or equipment? Do you need specialized equipment or a specific layout?
  • How important is customer proximity? Will you or your workers be traveling to your customers? Will your customers being coming to you? If so, then how will they get there? Will you be delivering goods to your customers? In some cases being too far from your customer base may either result in less business or costs that are unsustainable.
  • How important is visibility among potential clients or customers? If you are planning on opening a retail, food service, other service-related operation, then visibility could be a key factor in your business' success or failure. Even if a given, high traffic or high profile location is technically more costly, it may be worth it if it will result in more customer interest and business.

Frugal Options When Choosing a Location for Your Business

Though there are some extreme cases on either end of the business spectrum, from the super flexible online entrepreneur who can work where ever there is Internet access, to the manufacturer who needs a specific, pre-determined amount of physical space, equipment, and other amenities, many start-up ideas fall somewhere in the middle. That is, even where certain criteria are necessary, there may be some degree of flexibility when it comes to where the new business will be located. Popular business destinations, such as Singapore, provide great flexibility through the extensive range of office spaces available to lease for both long and short term periods.

Below are a few, relatively low-cost options when choosing a business location as well as some tips to help you settle on the best place. My goal here is just to introduce each option. If you would like more detailed information, you can check out the links that follow:

1. The Home Office- Working from a home office has many benefits, the biggest being the cost savings involved. This will reduce your start-up investment and thus your risk in case the venture is not successful. It also may allow you to more evenly divide you time between raising a family and/or running a home and running a business.

Even if you require professional services, such as a receptionist or call-forwarding, of if you will be required to meet with clients on occasion, you may be able to take advantage of temporary meeting rooms and other virtual office solutions as I mentioned in an earlier post: 12 Low-Cost Tips to Make Your Small Business Look Like a Big Time Enterprise.

Here are some considerations when working from home:

2. Sublease a Commercial Property- Moving into a subleased property may be a good, low-cost option for a retail or service-related business that needs a visible and/or centralized location yet doesn't have access to a whole lot of start-up capital. In this setup, the current renter or leaser of a property agrees to share some of the space with another business in order to maximize available space and reduce rental costs. It is also possible to sublet an entire property, and you may be able to score a deal if the current renter needs to quickly unload the property to another tenant.

With a subleased commercial property, the new tenant would then have to sign a subletting agreement (here is an example of one), which typically binds the new renter to the site for a given amount of time and may have other legally binding requirements.

To locate a suitable commercial sublease you can search newspaper ads and commercial property websites to find available properties. In some cases, you may even want to seek the services of a real estate agent.

Here is a good article on the pros and cons of commerical subleasing.

3. Shared Office Space- A shared office space is similar to a subleased property. In this case, however, the setup is less formal and restrictive since the renter is not bound by a subletting agreement. This means there is no long-term commitment nor liabilities. Some shared office agreements can last as little as 3 to 6 months- which may be something to consider if you want to try out a certain location, setup, or work schedule before making any serious investment of money on a more permanent space.

A shared office usually takes one to two forms:

  • Using available office space, such as desks or cubicles, within the commercial office of another business. Many office rental and commercial property sites offer a database of businesses with office space to rent out. Here are two sites that have free searchable databases of short-term shared office space:

  • Joining a co-working community. With co-working small business owners share a common workplace in exchange for a monthly fee. The arrangement usually includes the work space as well as some or all of the equipment required to run a business- from wireless Internet and faxes, to conference rooms. There is also the opportunity for collaboration, partnerships, and mutual feedback with the other business owners occupying the space. Here is an informative article on co-working communities.

4. Virtual Office Solutions, Business Centers, and Offices "By the Day"- If you will be primarily based at home, but need some standard business services, such as office equipment, call forwarding or a receptionist or an occasional place to meet, then you may want to consider a virtual office or a serviced office within a business center. You could start your search with Regus Business Centers which has an extensive network of business hubs throughout the US.

5. Using a Kiosk, a Pop-up Store, or a Mobile Unit- For those who need a physical location, but would like a low-cost, low-risk way of getting their new business up an running, then a kiosk, a pop-up store, or a mobile unit may be the right option. Here is a brief rundown of each:

  • A kiosk is a small, stand alone structure that is used as a point of sale. Usually, they are located in malls or other high-traffic areas. They can either be staffed or "self-service."
  • A pop-up store is a temporary store, often located within a permanent retail location, such as a mall. If you are selling seasonal items or want to "field test" a retail concept, then this may be a good option.
  • A mobile unit, such as a food truck or a push cart, puts your business concept on wheels. The best part about this option is that you can easily change locations and there is no rent to worry about. You may need an operating license, however, to legally sell food or other items within a given area.