Recently, an obviously-frustrated man walked past me gesturing intently and loudly saying into his smartphone, "You told me there was going to be a lot of foot traffic!!!"
The man is a local retailer who relies on passers-by for sales volume to successfully run his business. The truth is, regardless of who he was talking to, there is no one this small business owner could afford to rely on to verify facts, like foot traffic, essential to the success of his business…no one except himself.
Starting a business or relocating one is a stressful undertaking. In the push to have the venture established in the new location, short cuts may seem attractive. If foot traffic or other elements are essential, then research is essential. If there were a recent study of the area, great. If not, the business owner should undertake the research or hire someone to carry it out. Verbal assurances of "a lot of foot traffic" mean little or nothing. They are not fact. They are not evidence. They are not a guarantee.
If the owner or landlord does guarantee something in the offer to purchase or lease, respectively, then details of what will happen if the guarantee is not upheld would also be written into the contract.
Owners and landlords must not misrepresent serious flaws like foundation problems in a premises they are selling or leasing. On the other hand, the buyer or tenant, respectively, must still take reasonable steps to verify details essential to the success of the property as a location for their business. If a problem arises, the buyer/tenant may have recourse to mutually-agreed-on remedies or in court for damages. Prudent business owners searching for a new location would be better served by verifying details before signing a contract instead of attempting to win compensation after the fact in a law suit.
Hiring a real estate or legal professional for guidance and advice is an excellent pre-cautionary step.
Real estate professionals and those in related financial professions owe clients fiduciary duties. These responsibilities dictate that consumers receive complete and accurate details related to information they require to make a confident decision to enter into a real estate contract. Any assurances the professional makes should be in writing. The care in answering these professionals commit to ensures they thoroughly check out facts that small business owners would rely on to enter into a commercial contract to purchase or lease. That said, wise consumers should ask many questions to verify details and insist on written proof where feasible.
Time for a change of location for your business, but not sure where to start?
Whether you're moving away "from" something like big box invasion or a shift in neighborhood demographics, or "to" a new venture or market, location matters enough that you should check out details thoroughly.
Real estate professionals are an excellent resource, but no one knows your business like you do, so put in time yourself:
- Clarify exactly who the preferred customer is and how and when they shop for what you're selling. Make no assumptions. How people behave in one neighborhood may mean little to what they do in another location.
- Use Census and other data to locate this demographic within selected communities. Since one venture may have only a small percentage of total potential business, would that be enough to successfully sustain and grow your business?
- Identify potential locations. Real estate professionals specializing in this type of business may prove an asset.
- Invest time observing traffic - foot, bike, and otherwise - at high priority locations and for high-market-share competitors. Check over the course of a week and at key times during the day and evening. Interview neighboring businesses. Observe first hand and compare this information with your previous experience serving this market to see if traffic flow matches shopping patterns.
- Thoroughly research parking availability at all times of the day and during rush-hour periods. Check at municipal offices to be sure long-term construction is not planned nearby.
Select the best location possible for the greatest returns. This is not where you cheap out. Don't choose based on what you can afford unless you have proof the location can sustain your business. For instance, a retail space that is a few stores around the corner from the busy main street may be cheaper, but too far away for local shoppers to frequent. A location that has seen store after store fail within a year or so, may be a high risk choice for the next tenant.
If you choose unwisely, you will end up footing the bill.