SECTION
9.1
Community and Site
Selection
Factors in Community Selection
As an entrepreneur, the decision of where to locate
your new business is an important one.
A location can determine who sees your business and
how easily customers can get to it.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Are There Financial Incentives?
A community may
try to attract new
businesses to
locate there by
offering a special
incentive.
incentive
May also establish
an enterprise zone
way to encourage businesses to
start in distressed areas which
gives the new business tax breaks
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
a reward or advantage that helps
businesses, such as lower taxes,
cheaper land, or employee training
programs
enterprise zone
SECTION
9.1
Community and Site
Selection
What Is the Makeup of the Population?
Trends such as aging populations or young families
can affect businesses.
These trends determine who will spend, how much
they will spend, and what types of products or
services they will want.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
What is the Makeup of the Population?
Access the Census
Bureau’s Web site to
research the
demographics of a
census tract that
interests you.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
census tract
a small geographic area
into which a state or
country is divided for the
purpose of gathering and
reporting census data
SECTION
9.1
Community and Site
Selection
Does the Labor Supply Match Your Needs?
Business owners need to consider:
•
•
•
how many employees do you need
are there enough possible employees in the area
do the available employees have the appropriate
skills
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Retail Business Site Considerations
Retail businesses
need to determine
their trade area in
order to be
accessible to their
target market.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
trade area
the region or section of the
community from which a
business draws customers
SECTION
9.1
Community and Site
Selection
Retail Business Considerations
Once you pinpoint a community you want to serve
and determine your business’s trade area,
examine these issues:
•
•
•
•
number and size of competing businesses
character of the area (clean and safe)
accessibility and traffic (foot and car)
competition’s business type (like yours or
different)
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Nature of the Competition
• Like Yours—Competing business
– Sells the same or similar merchandise or service
• You sell furniture and there is another furniture store
near you
• Unlike Yours—Complementing business
– Sells merchandise or service that “goes with” yours
• Furniture Store next to a Home Décor Store
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Service/Wholesale Business Site
Considerations
Service and wholesale businesses which have
customers coming to the business have the same needs
as those of retail businesses.
Ex: Barber/Hair Salon
Accountant
Dentist
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Service/Wholesale Business Site
Considerations
However, many service and wholesale businesses do
not have customers coming to their business sites and
do not need expensive, high-profile locations.
Ex: Electrician
Lawn Service
Clothing Manufacturer like Levi’s
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Extraction Business Site Considerations
Extraction businesses need to be near the product
they’re extracting.
Ex: Gold mine
Oil rigs
Coal mine
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Manufacturing Business Site
Considerations
An industrial park
is usually located
close to major
transportation
routes.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
industrial park
an area set aside in a community for
industrial use
Ex: Summit Street in Crown Point
SECTION
9.1
Community and Site
Selection
E-Business Considerations
Location and space are not major considerations for
an e-business because electronic business sites can
be located almost anywhere and require little space.
However, larger operations need more space for
equipment, personnel, and shipping.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Locating Potential Sites
There are a number of ways to locate potential
business sites.
• Read the classified sections of newspapers.
• Consult with realtors who specialize in business
properties.
• Conduct visual surveys by driving through
prospective communities.
• Network with personal or business contacts.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Site Analysis and Decision Making
Once an entrepreneur identifies possible sites for a
business, he or she must consider three things
before making a decision:
•
•
•
the surrounding area
the building
the costs of buying, building, or leasing
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Surrounding Area Analysis
Surrounding areas should be evaluated by the same
criteria used for site selection:
•
•
•
•
number and size of competing businesses
nature of the competition
character of the area
accessibility and traffic
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
Lease, Buy, or Build?
Leasing Advantages
No large
cash
outlay
Reduced
risk
Unless you can
pay cash, you
will have a loan
and loan
payments and
interest are also
tax deductible
Tax
deductible
lease
expenses
17
SECTION
Community and Site
Selection
9.1
Types of Leases
• Fixed-Rate Lease
– Tenant pays specific amount each month
• Percentage Lease
– Tenant pays a percentage of sales
• Sliding Scale
– Sales up to $50,000 you pay 4%
– Sales over $50,000 you pay 3%
• Triple Net Lease
– Tenant pays rent plus 3 other operating costs
• Insurance, Maintenance & Utilities, Property Taxes
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Making Your Decision
For each of the possible sites, compare these
variables:
• cost
• advantages and disadvantages with environment,
interior/exterior
• desirability (commute time, atmosphere, charm)
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.1
Community and Site
Selection
Alternative Sites
Home-based business provides benefits such as:
• No commute time
• Able to work 24/7
• Partial home expenses deductible for taxes
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
Physical Layout
A well-planned
layout can mean a
more efficient
operation, a more
appealing sales
floor, and greater
customer
convenience.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
layout
a floor plan or map that
shows the interior and
exterior arrangement of a
business, including such
items as display cases,
lighting fixtures, traffic
patterns, landscaping, and
parking spaces
Six Steps in Layout Planning
1
Define the objectives of the facility
(what is it going to be used for)
2
Identify the primary and supporting activities that will take
Place (what’s going to go on in the business)
3
Determine access, arrangement, and flow among the
activities (how will things work within the building)
4 Determine space requirements for all activities
5 Design alternative layouts for the facility
6 Evaluate the various layouts and choose one
22
Manufacturing Businesses
What
will you
making
production
processes
space
requirements
production
sequence
Layout
Considerations for
Manufacturing
Businesses
environmental
concerns
control
How
will you
make it
materials
flow
How will
materials
move
along
23
Retail Businesses
How will
products
be
displayed
products to
be sold
aisle
exposure
Related
items
projected
clientele
Retail Layout
Considerations
product
coordination
What kind of
customer
service will you
offer
sales per
square foot
of selling
space
sales value of
area within
store
Are items
arranged
efficiently
with the
highest
possibility
for a sale
24
SECTION
9.2
Layout Planning
Wholesale Businesses
When planning the layout of a wholesale business,
storage and space utilization are the most
important considerations.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
Wholesale Businesses
Most wholesale businesses are located in singlestory buildings, which makes controlling and moving
stock easy.
Receiving, storage, order assembly, and shipping
areas should be arranged so goods can be moved
through them quickly and easily.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
Service Businesses
The physical layout of a service business depends
largely on the specific service it provides.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
Extraction Businesses
Like service businesses, extraction firms have
unique layouts.
They share a few common features: an office area,
storage areas for equipment and supplies, and the
extraction business site itself.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
E-Businesses
The layout of an e-business depends on its site and
its operations.
If the e-business ships products, storage and
shipping areas are needed.
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business
SECTION
9.2
Layout Planning
Finishing Touches
Once a business owner chooses a particular
layout, he or she can begin planning the finishing
touches.
Such details include planning interior design
features, as well as exterior alterations or
improvements
Chapter 9 Site Selection and Layout Planning
Glencoe Entrepreneurship: Building a Business