Chapter 8
LOCATE AND SET UP
YOUR BUSINESS
LESSONS
8.1 Choose a Retail Business Location
8.2 Choose a Location for a Non-Retail
Business
8.3 Obtain Space and Design the Physical
Layout
8.4 Purchase Equipment, Supplies, and
Inventory
ENTREPRENEURSHIP: Ideas in Action
© SOUTH-WESTERN PUBLISHING
Lesson 8.1
CHOOSE A RETAIL
BUSINESS LOCATION
GOALS
Research retail location
possibilities.
Begin to select your
location.
LOCATION POSSIBILITIES
Downtown areas
Neighborhood shopping centers
Community shopping centers
Regional shopping centers
Super-regional shopping centers
Stand-alone stores
Warehouses
DOWNTOWN AREAS
Advantages
Central
Likely to attract business shoppers
Disadvantages
Parking problems
Distance from suburbs
Crime
Lack of evening shoppers
NEIGHBORHOOD
SHOPPING CENTERS
Advantages
Supermarkets and other businesses bring
in customers
Low rent
Disadvantages
Attracts only customers who live in area
COMMUNITY
SHOPPING CENTERS
1 or 2 Anchor Stores and 10 or more smaller
stores
Advantages
Anchor stores bring in customers
Moderate rent
Disadvantages
Distance is too great when convenience is
important
ANCHOR STORE
Larger stores that advertise a lot and attract
customers from the community
EXAMPLES
JC Penney
Macy’s
Wal-Mart
K-Mart
Kroger
Walgreens
REGIONAL SHOPPING CENTERS
3 or 4 Anchor Stores and 40 or more other stores
Advantages
Anchor stores bring in customers
Walk-in traffic
Attracts customers from a large area
Disadvantages
Distance is too great when convenience is
important
High rent
SUPER-REGIONAL SHOPPING CENTERS
Very large and have hundreds of stores.
Advantages
Huge number of customers
Services a large area
Disadvantages
Very high rent
Competition from many companies
Distance is too great when convenience is
important
STAND-ALONE STORES
Advantages
Rent can be lower
No competition next door
Disadvantages
No anchor store to attract customers
Extra expense of advertising
WAREHOUSES
Advantages
Low rent
Can charge lower prices than competition
Disadvantages
No anchor store to attract customers
Requires heavy advertising
Customers may not be aware of your
business
BEGIN SELECTION OF YOUR SITE
The trade area is the area from which
you expect to attract customers.
Location type and availability
QUESTIONS TO ASK
 Is the location safe?
 Is it attractive?
 Does it seem to attract the kind of customers
your business will be targeting?
 Is it easy to reach?
 Is parking adequate?
 Do businesses in the vicinity seem to be
thriving?
Lesson 8.2
CHOOSE A LOCATION
FOR A NON-RETAIL BUSINESS
GOALS
Examine a location for a
service business.
Select a location for an
industrial business.
Operate your business from
your home.
LOCATION FOR
A SERVICE BUSINESS
For some service businesses, location
is as important as it is for a retail
business.
Is location always important?
LOCATION FOR
AN INDUSTRIAL BUSINESS
Industrial parks are sections of land
that can be used for industrial business
locations.
Enterprise zones are areas that suffer
from lack of employment opportunities.
OPERATE YOUR
BUSINESS FROM HOME
Zoning laws
Office space considerations
Advantages and disadvantages
Can write off percentage of home costs
No travel expenses
Work when convenient for you
Distractions
Lesson 8.3
OBTAIN SPACE AND
DESIGN THE PHYSICAL LAYOUT
GOALS
Evaluate leasing versus
buying space.
Consider the costs and
kinds of leases.
Design the layout for
different types of
businesses.
LEASE OR BUY SPACE
 Kinds of commercial leases
 Gross lease—Tenant pays rent, landlord pays
everything else.
 Net lease—Tenant pays rent plus all other
expenses except landlord pays insurance.
 Percentage lease—Tenant pays rent plus pays a
percentage of sales.
 Compare different locations
 Calculating rent per customer
 Rent per Month ÷ Estimated Customers per Month
Why Lease/Rent?
Not enough money to buy
Easier to get out of lease than sell
Landlord generally handles building
maintenance
DESIGN THE LAYOUT
OF YOUR BUSINESS
Your layout must include enough space for:
 Employees
 Customers
 Merchandise
 Equipment
 Restrooms
 Stockrooms
 Storage
 Offices
CREATE THE FLOOR PLAN
Supplies
and
Inventory
Clothing tables
Clothing
Sample Floor Plan
Clothing
Clothing racks
Clothing
Window display
Counter
Cash registers
Clothing
Window display
Dressing rooms
LAYOUT OF A
RETAIL BUSINESS
 Choose appropriate lighting
 Think carefully about window displays
 Make the entrance inviting
 Use common sense when organizing the
merchandise in your store
 Leave at least four feet of aisle space
 Create attractive in-store displays
 Use wall space wisely
 Place the cash register in a central location
LAYOUT OF A
SERVICE BUSINESS
Layout is influenced by where services
take place:
 At the business location—Just like a
retail business
 At the customer’s location (on-site)—
Organization is the only concern
LAYOUT OF A
WHOLESALE BUSINESS
 Locate in a one-story warehouse
 Keep merchandise close to the shipping dock
 Store popular items in accessible locations
 Be sure there are areas that accommodate
merchandise of all sizes
 Keep walkways free of merchandise
 Store items safely
LAYOUT OF A
MANUFACTURING BUSINESS
 Work teams should be situated close together
 Supervisors should be able to easily observe
the people they supervise
 Exits should be clearly marked and easily
accessible
 Any hazardous materials should be stored
safely
 Equipment and machinery should be
positioned in a way that reduces the chance
of an accident
Lesson 8.4
PURCHASE EQUIPMENT,
SUPPLIES, AND INVENTORY
GOALS
Acquire equipment and
supplies by evaluating
different vendors.
Determine the level of
inventory needed for your
business.
OBTAIN EQUIPMENT AND SUPPLIES
Identify suppliers
Evaluate proposals
STANDARD EQUIPMENT AND SUPPLY
NEEDS FOR MOST BUSINESSES
TYPE
Furniture
ITEMS
Desks, chairs, bookcases, filing cabinets,
tables, computer stands
Fixtures
Lamps, overhead lights
Office Equipment
Computers, modems, fax machines,
telephones, photocopiers
Office Supplies
Stationery, pens and pencils, scissors, tape,
staplers, paper clips, file folders, calendars
Maintenance Supplies Toilet paper, paper towels, cleaning supplies
Kitchen Supplies
Coffee maker, small refrigerator, coffee, tea
PURCHASE INVENTORY
Inventory is the quantity of goods and
materials on hand
Purchase inventory for
Start-up business
Ongoing business
The reorder point is a predetermined level of
inventory when new stock must be purchased.