Is your business maxing out its potential? Are you looking for the best location to start your business idea? Finding the right spot for a business is a crucial step for business owners. Whether it is the first or an additional location, a well-defined site selection process is essential for successful expansion.
Why is site selection important? Consumer behavior has significantly changed over the past decade, especially recently. With real estate prices skyrocketing, the complexities of finding promising locations in increasingly competitive and saturated markets quickly pile up.
This article will assist business owners in determining a proper site for their business venture. It will share some improvements and common mistakes to avoid. This article will sum up with a data-driven approach and tangible examples for franchise, retail, and restaurant site selection.
The Five Site Selection Factors for Businesses
Site selection is the process of determining an appropriate spot for businesses. While a site selection process requires a comprehensive analysis over a well-defined area, there are five site selection factors that businesses in retail, franchise, and restaurants must include in their research:
Factor #1: Demographics
Operating a business for end consumers requires a thorough understanding of the potential customers in that area. For this reason, information about the demographics is essential. Companies should compare different sites based on the representation of targeted customer persona. Demographic data analysis can reveal valuable insights into the community by weighing in characteristics. Important components might be age, household income, and housing situation, among others, such as population density.
Factor #2: Accessibility
Accessibility is a site selection factor that reflects the ease of reachability for customers. This factor may comprise different characteristics with alternating importance for a specific business: Traffic distribution (by foot or car), distance to major traffic lanes, walkability, and parking space are criteria that can distinguish appropriate business sites.
Factor #3: Competition
Keeping an eye on the competition is a crucial business task. A comprehensive competitor analysis reveals which businesses already operate in these markets and how well these are performing. In combination with demographic analysis, business owners can also gain insights into the driving factors that led their competitors to enter the market at this location.
Factor #4: Real Estate
This factor includes the characteristics of the physical site in question. Evaluating the object’s characteristics and the total costs are essential and often a tiebreaker when comparing different locations side by side.
Factor #5: Legal
Another critical factor is the compliance requirements for different sites. When comparing other sites, an overview of zoning laws, health codes, licensing requirements, and business taxes is essential. This compliance is necessary when narrowing down to specific areas.
How to Improve Site Selection
Considering all site selection factors and conducting research for each can be time-consuming. Business site selection requires a strategic approach, comprehensive market research, and the most recent, reliable data. However, there are a few tricks to overcome these potential roadblocks.
Site Selection Criteria and Objectives
So, what should be considered when developing site selection criteria? A common method for selecting valuable selections is deriving them from the business model. Here are some example questions for this:
- What are the essential factors that make a business thrive?
- What are the target customers? What characteristics do they have?
- Does the business come with specific requirements and restrictions?
Translating the five site selection factors to the business can help identify criteria and objectives. This alignment ensures that these requirements are not biased, preventing the business from missing promising sites early on.
Researching Market and Competition
Continuous market research is essential for both business operations and site selection. During the site selection process, market research aims to provide valuable insights into the demographics and psychographics of the customer base. There are many instruments for acquiring those insights:
- Active Research: Conducting traffic and market analysis, studies, and surveys for a specific hypothesis or use case.
- Passive Research: Loyalty and reward programs and other incentives are fundamental for returning customers and deriving sentiment, especially in highly competitive markets.
Comprehensive research complements the five site selection factors, providing more sentiment throughout the process. It is essential to keep up with upcoming trends and shifting consumer interests.
Data-Driven Decision Making
Staying updated on emerging trends and shifting customer behaviors is a key area of interest across industries. This tendency also applies to site selection. Collecting, processing, and deriving insights from data is a priority for any business. On the other hand, identifying, gathering, and transforming scattered information from numerous sources requires considerable effort, especially in site selection. Some applications and services, such as Mapchise, offer reliable and comprehensive services for site selection at an attractive price. Utilizing these applications is mandatory to navigate the complexities of site selection.
Data-Driven Decision-Making with Mapchise
Mapchise provides a comprehensive service that can assist businesses in their site selection process. The solution integrates a variety of trustworthy data sets from governmental and private sources for demographic and psychographic analysis. Moreover, this enables forecast and trend projections, which are essential in site selection. Catching hot spots before they are booming allows businesses to reserve their spots in upcoming, trending areas earlier than competitors, potentially giving headstarts.
Apart from that, how can Mapchise improve the site selection process for various business areas? Given its ease of use and compelling visualizations, here are three examples of how the advanced features of Mapchise can further assist businesses.
Site Selection Retail
Site selection for retail businesses requires deep insights into the demographics and psychographics of a specific, often limited area. Businesses can use these requirements to identify communities matching their customer persona. This alignment is essential since a community match significantly increases business success in retail.
For this reason, Mapchise has various filtering features that are responsive to the nature of the users’ businesses. Following a short questionnaire, this platform uses the provided information to personalize certain platform features for accessibility and time savings.
Site Selection Franchise
For Franchise businesses, Mapchise offers features to match search criteria to some unique franchise regulations. Many franchise contracts regulate their subsidiaries’ density, preventing new franchisees from competing in existing markets. This is where radius exclusion zones come into play. This advanced feature allows businesses to specify and visualize almost any restrictions to comply with franchisers. This feature can also help identify locations with lower competition, as its use is not limited to a specific franchiser. Thus, the feature also works for competitive intelligence purposes.
Site Selection Restaurant
When starting a restaurant or expanding into new areas, restaurant owners need additional information about restaurants, cafes, and diners already in that area. In addition to overall market saturation, additional characteristics such as cuisine and price level are available. Restaurant owners can research and filter these characteristics to evaluate the suitability of a location. Like franchises, restaurants can further assess market potential using the radius exclusion feature and traffic flow insights.
These examples show how business owners can increase their confidence in site selection processes and save time. While this might be a non-extensive list of features, business owners can leverage advanced features to quickly examine their existing business areas with the potential of looking for new, promising locations.
Site Selection Follows a Strategic Approach
Site selection is an essential task for establishing a sustainable and successful business. Proper site selection requires a strategic approach. Business owners can assess and define criteria and objectives for their search. These characteristics and requirements should align with the business and will support decision-making throughout the site selection process. Finding a suitable location is challenging and time-consuming. It requires an extensive analysis of numerous data sets and research on customers, markets, and competition; however, given the right tool, businesses can drastically decrease the complexities of site selection, leverage platform features, and ultimately save time and resources during this critical business task.
Increase Site Selection Confidence with Mapchise
Are you looking for the optimal site? At Mapchise, we offer an easy-to-use, insightful application that covers everything you need to know to make informed decisions about your current and next location, from fine-grained demographics and psychographics to comprehensive location and competition intelligence. Get the insights you need and start your business journey today!
FAQ
What are the five principles of site selection?
The five principles of site selection, also called factors, are demographics, accessibility, competition, real estate, and legal. Note that the exact naming of these factors might vary.
What are the steps in site selection?
Site selection follows a well-defined process that consists of four consecutive steps:
- Defining Criteria and Objectives
- Conduct Initial Screenings (High-Level)
- Analyze Potential Sites (Low-Level)
- Evaluate The Fit
What should be considered to develop site selection criteria?
Site selection criteria must accurately describe the requirements for successful business operations. These should comprise customer personas, products, service characteristics, and other business-related specifics.
