location of business plan

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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How do you write a location for a business plan?

As an Ecotourism Specialist, I understand the importance of choosing the right location for a business. The location of a business can greatly impact its success and profitability. In this article, I will guide you on how to write a location for a business plan and provide some tips on how to choose the ideal location for your business.

Why is the location section important in a business plan?

The location section of a business plan is essential as it provides basic information about the terms of any lease you have signed for the property. It includes details such as the length of the lease, rental rate, and any special clauses that may affect your business operations. This section helps potential investors and lenders understand the financial implications of your chosen location.

How do you introduce a business location?

To introduce your business location, you can list your new company location and website with online regional and local Yellow Pages and business directories. Another effective strategy is to trade links with other businesses in the area, where they feature your new company location in exchange for you providing a link to their websites. This helps increase your online presence and visibility in the local market.

How do you define a business location?

A business location refers to the choice of region and the selection of a particular site for setting up a business or factory. The decision is made after careful consideration of the cost and benefits of different alternative sites. It is a strategic decision that cannot be easily changed once taken. Factors such as proximity to target customers, accessibility, competition, and cost play a significant role in defining the business location.

What is an ideal location for a business?

An ideal location for a business is one where there is high demand for your product or service and minimal competition. It is important to choose a location that is not saturated by your competitors, as this can make it challenging to attract and retain customers. Conduct market research to identify areas where your product or service is in high demand, and consider the competition level before finalizing your business location.

What is location planning in business?

Location planning in business is the process of evaluating the impact of location on the consumer buying process. Each location is unique and can significantly influence a business’s success. Factors such as customer demographics, accessibility, proximity to suppliers, and infrastructure are taken into consideration during location planning. Careful analysis and strategic decision-making are crucial to ensure the best possible location for a business.

How do I make a location plan?

To create a location plan, there are several key elements that should be included:

1. The location plan should be at an identified standard metric scale, usually 1:1250 or 1:2500 for larger locations. 2. Ensure that the plan indicates the direction of north. 3. Resize the plan to fit on an A4 document for convenience. 4. Display sufficient roads and/or structures on land adjacent to the application site. 5. Clearly mark the boundaries of your location and any surrounding landmarks or notable features.

What factors should be considered in location decision-making for business?

When making location decisions for a business, it is crucial to consider the following factors:

1. Proximity to target customers: Choose a location that is easily accessible to your target market. 2. Competition: Assess the level of competition in the area and evaluate how it may impact your business. 3. Accessibility and transportation: Consider the availability of transportation options and how it will affect the movement of goods and employees. 4. Cost: Evaluate the cost of operating in different locations, including rent, utilities, and taxes. 5. Labor availability: Ensure that there is an adequate supply of skilled labor in the vicinity to support your business operations. 6. Infrastructure: Consider the presence of essential infrastructure such as roads, electricity, and internet connectivity. 7. Market trends: Stay updated on market trends and potential future developments in the area that may affect your business. 8. Legal and regulatory considerations: Research and comply with any local laws and regulations that may impact your business operations.

How does location affect a business’s long-term performance?

Location plays a significant role in attracting and retaining the best employees, optimizing work-life balance, and accessing market forces and resources. A strategically chosen location can contribute to a business’s long-term performance by increasing customer footfall, enhancing brand reputation, and improving operational efficiencies. It is essential to carefully analyze and select a location that aligns with your business goals and target market.

1. What are the advantages of choosing a central business district location? 2. How can I assess the potential foot traffic in a specific location? 3. What are the considerations for choosing a location in an eco-tourism industry? 4. How do I evaluate the infrastructure of a potential business location? 5. What role does proximity to suppliers play in selecting a location for manufacturing businesses? 6. Should I prioritize cost or accessibility when choosing a location? 7. How can I gather market research data to determine the demand for my product or service in a specific location? 8. What are some common mistakes to avoid when selecting a business location?

In conclusion, the location of a business is a critical factor that can significantly impact its success and long-term performance. By carefully considering factors such as customer demographics, competition, accessibility, and cost, you can choose an ideal location that aligns with your business goals and maximizes profitability. Conduct thorough research and analysis before making a final decision on your business’s location.

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10 min read

Find the Right Space at the Right Time: Selecting A Business Location

We’ve all heard the phrase: Location, location, location. Where you place your business is one of the most critical decisions you will make. If you are opening a consumer-facing retail or service-based business, where you operate could be the defining factor in your success.

But how do you know if a location is good? It largely depends on what type of business you’re running and what your consumer demographics are. For example, a high-end furniture store will have a different ideal location than a payday lending store. 

Have-To-Haves vs Nice-To-Haves

Before deciding on the best location, it’s crucial to understand what your company actually needs. Sometimes it’s helpful to think of it in terms of things you must have,  things that would be nice to have, and things that are deal-breakers. I always think the best place to start is the must-haves. 

First and foremost, consider how much space you need. Since rent is typically calculated on a per-square-foot basis, the larger the space, the more costly it becomes. But, keep in mind that the price per square foot may decrease with larger spaces, similar to bulk purchasing.

A lease is a long-term commitment. Typically, landlords seek a term of at least five years. So, when evaluating a space, think about your future plans and choose a space that can accommodate growth. But be wary of taking on too much space. It’s wasteful to pay rent on square footage that goes unused, especially early on. Those types of cash flow decisions can make or break your business. 

This presents an opportunity to think outside the (literal) box. Could you augment your storefront with a storage unit so you’re not wasting floorspace on boxes? Can you use vertical storage to maximize your footprint (you’re paying for the square foot, not the cubic foot!)? Can you employ a remote- or hybrid-work model to reduce the size you need? Can you sublet part of your space to a complementary business? A note to the wise: if you choose to enter into a shared leasing situation, make sure you put everything in writing.

A second “must-have” consideration is proximity. The kind of business you operate will determine this, and zoning laws may also play a role. Determine whether your company is a destination business. In other words, is your product or service something that your customers are willing to travel for? If you’re opening the only tile store in town, you probably don’t need to worry as much about placement. But if you’re a high-end boutique tile shop, you may want a showroom in your city’s trendy neighborhood.

Your final, and possibly most important “must-have” consideration is your budget. Many business owners become preoccupied with the monthly rent component of the equation. We challenge you to think of it differently: how much do I need to make in revenue to afford this space? In other words, consider rent as a percentage of revenue rather than just dollars. What portion of your income should go to rent and utilities depends on your business, but as a very general rule, rent should be between 5% and 15% of your total income. 

Researching industry benchmarks can be a helpful way to determine a reasonable rent expense for your business ( our favorite is IBISWorld ). Remember that these are guidelines, and while keeping your expenses low is important, the most important budgetary question to answer is what will allow you to be profitable.

Know Your Customer

Figuring out what demographic characteristics are ideal for your company can be challenging, but every entrepreneur should have a firm grasp of this before entering business. “Know Your Customer” is a foundational trait of a successful business, because the answer is never “everyone.” 

Narrow down the demographic traits of the people that make up 80% of your likely customer base, and then search for areas of your city or town that match those characteristics. Of course, your business will cater to customers that come from areas outside your neighborhood, but the majority of your customers as a brick-and-mortar business will live nearby, so you want to position your storefront ideally to capture the correct demographic.  

There are several ways to determine the ideal demographic traits of your customer group, the first and most obvious being a simple Google search:

This simple search yielded several high-quality articles that cite primary sources about the ideal customer demographics for coffee shops. It won’t always be that easy, depending on what your business sells, but typically the information is available. 

If an internet search fails you, the next steps we recommend are:

• Join an industry association
• Join a local business networking group, like the Chamber of Commerce
• Conduct informal polls of people in your friend group

Another quick way to get a sense of commercial real estate properties in your area is to use a listing service like Loopnet . Loopnet allows you to search for properties that are for sale and lease. You can sort by use, size, and other criteria. Because real estate agents use sites like Loopnet to promote their listings, you can often view flyers about available properties with demographic and other information. This is also a great way to get an idea of what different sized spaces will cost based on their locations.

Know Your Competition

When choosing your location, it can be tempting to place your business as far away from direct competitors as possible so that you can be the only option for customers within a geographic area. But this isn’t always a winning strategy. Think about it this way: how often have you seen a Chipotle located kitty-corner from a McDonald’s? What about a Home Depot in the shopping center across the intersection from a Lowe’s? A Target near a Wal-Mart? 

The fact is that these big corporations purposefully place their locations near competing businesses because they’ve learned what many entrepreneurs haven’t learned yet: customers want variety. If they don’t see what they want at Home Depot, they are highly likely to cross the street to check Lowe’s. As a mom of two children, I can attest that I have had to stop at McDonald’s and then go across the street to Taco Bell just to satisfy my kids’ different wants. Think about shopping malls: within one corridor in one mall, you will find three clothing stores catering to the 18-35 age group because customers love to be able to stroll from one store to another. I live in a small walkable neighborhood in Portland, Oregon, and there are seven thriving coffee shops all located within an easy one-mile radius of my house. I love it, because I have options . 

Just remember: if no one’s offering your product or service in an area, that probably means that there isn’t enough demand to support that type of business there. That said, as a start-up business, there can be wisdom in putting a little bit of distance between your storefront and a major competing chain. If you’re struggling to decide between two locations, mapping your competitors can be a helpful exercise. Just bear in mind that your goal isn’t necessarily to avoid competition. Instead, take a look at the existing competition within an area as an indication of the level of consumer demand there and then ask yourself if your products and services can stand out against the competitors’ offerings in some meaningful way.

Find the Next Big Spot

It will cost more to operate a business in a location that already has high foot traffic and household incomes. Sometimes it makes more sense to move into a developing area while rents are low rather than pay a premium to be in a more established part of town. So, how do you spot the next big thing? You know your area as well as anyone, so your instincts can be a good place to start. You can also inquire with your city’s development office to see if any areas are slated for transportation or infrastructure improvements. Always keep up with local news and keep an eye out for new developments and investments in your area. Finally, don't be shy about seeking advice from others. The way your friends and coworkers talk about the recent changes in their area can give you insight into its potential for development.

What Data Matters?

Again, this depends heavily on the type of business you’re starting. But generally speaking, income is one of the most important factors. You need to make sure that there are enough households in your target income bracket to support your business. Age is another important factor, especially if you’re opening a business that caters to adults only, like a bar. For some businesses, knowing what type of job your customer base works is important. For those selling heavy-duty work clothes, it’s important to make sure that your area is home to plenty of blue-collar workers.

Traffic Counts

Vehicular traffic counts aren’t our favorite way to analyze a site, but they do matter. 

There are several challenges with using this method, including: 

• Finding accurate and recent data
• Accounting for differences in geography, and 
• The value of the traffic count varies based on which side of the road your business is on

Information on ideal traffic counts for specific industries is typically kept secret by corporate site planners, and each has their own idea of what is best for their brand. But if you can find information online about the minimum viable traffic counts for your type of business, you can use this to make sure that the location you’re considering has enough traffic to support your business. A quick search did not yield helpful information regarding the ideal traffic counts for a coffee shop, but I did learn that the best daily traffic count for a convenience store is between 5,000 and 15,000 vehicles per day .

Demographics

Now that you know what type of demographic and traffic data you’re looking for, you need to know where to find it. Here at Masterplans, we are huge fans of ESRI’s Business Analyst Online tool, and we use it on nearly every locally-based business plan we write.

Unfortunately, an ArcGIS subscription is typically out of the price range of the average entrepreneur who is just opening one storefront, especially those just trying to scout options. ESRI allows us to pinpoint a location and choose a radial analysis with customizable distances in miles, drive time minutes, or even walk time. We can find information on traffic counts and consumer spending on almost any category you can think of, compared with the national average to give context to the data.

We do not have a free site to recommend that can handle the in-depth analysis that ESRI offers. But, you can use the Census Bureau data to find out information about the people living within a zip code, including total population, age and sex, education, employment, and income. Census Bureau data is highly detailed, but not always user friendly. 

For this reason, I sometimes recommend sites like Sperling’s Best Places or Niche , which take Census Bureau data, remove the filler, and make it more visually appealing. But, just like the Census Bureau website, you cannot use these sites to plug in an address and find detailed information on the population living within a 10-minute, 20-minute, and 30-minute drive, like you can with ESRI. 

For traffic count data, the best place to go is to your state’s department of transportation, although once again, this data can be hard to comb through. 

Consult a Commercial Real Estate Broker

If you haven’t yet begun working with a commercial broker, now might be the time to begin developing this relationship. Brokers usually have access to demographic data for the properties they represent. This source can be a little less trustworthy, because they’re trying to sell you something. Whenever possible, it’s best to rely on neutral third-party sources, but if all else fails, you can use the data the broker provides.

Keep Your Eye Out For Potential Problems

When picking a location for your business, be thorough! You need to spend time observing the site in order to find out about potential problems. So park your car in the parking lot and plan to just hang out for a while. Take along a visually observant friend if your powers of observation aren’t fantastic. Be on the lookout for pest problems, crime problems, and anything else that might be a red flag. Have an inspector check out the storefront itself to make sure there are no structural issues that can cause a problem down the line. Finally, if it is not new construction, look for any online reviews you can find of the previous business that occupied the space. You never know what you may learn about the structure itself!

Can your customers find you (& once they do, find parking)?

The introduction of real-time mapping has made finding businesses easier than it used to be, but being noticeable remains an important factor in site selection. If your business is set back from the street or in a difficult-to-find location, it may discourage customers from seeking you out. The same holds true for making sure there is visible signage, especially at night. How many times have you driven by a business thinking you should check it out before finally going? Your location is an important part of your marketing strategy. Finally, take a look at the parking situation. This may not be an issue for some businesses, such as coffee shops, where the majority of customers walk and the product is small and light-weight. For others, however, having a convenient and accessible parking solution can mean the difference between success and failure. This is especially true for appointment-based, dining, or pickup businesses where customers expect a smooth and hassle-free experience. Nobody wants to circle the block several times to pay $5 in parking for a $20 pizza.

Borrow Intel From the Experts

Some of the site analysis tools we have mentioned are expensive, but America’s largest enterprises go a step further, holding proprietary information that they use to choose prime locations for their establishments. 

For this reason, you can be fairly certain that a shopping center that is home to a Starbucks, a Target, and a Chipotle is targeting upper-middle-income families with children that live an on-the-go lifestyle. If the shopping center is home to a Sephora, P.F. Changs, and Banana Republic, you’re looking at a high-income neighborhood where residents can afford to spend a little more. If your shopping center has a Goodwill, Dollar Tree, and McDonald’s, you know that this neighborhood will have a lower income customer base. The big players have already done the analysis for you, and their longevity points to the validity of their bet on a specific site. You can use the intel you gained from the vote they made with their money to determine whether the local area matches your target demographics.

can Old be Made New again?

There are pros and cons to renovating an existing building or starting from scratch, so it's important to weigh all of your options before making a final decision. Renting a space that was previously occupied by a similar business can result in lower build-out costs. You can even be the fortunate recipient of some of the previous tenant's customers.

However, if the previous venture (or ventures) failed, you should investigate why so you don't repeat the same mistake. Indeed, bankers we work with tell us that lenders take the previous tenant into account during the underwriting process. If you're looking at a space that had a previous tenant, read online reviews to see if location, parking, and other factors played a role in its failure. And, if you intend to get a bank or SBA loan , be prepared for the bank to inquire about the space’s history.

Older buildings may lack modern conveniences such as air conditioning and adequate electrical. A general contractor's assessment of a potential commercial space is a smart idea before making a commitment, much like having a mechanic inspect a used car before you buy it.

Tenant improvement allowances (TIAs), which are offered by many new buildings and some older ones, let you alter the interior to your specifications. Keep in mind that when utilizing a TIA, you will typically be required to front the money for the upgrades before getting reimbursed by the landlord.

It’s Not Easy, But it’s Worth The Effort

Choosing the right location for your business is a big decision, so it’s important to put time and effort into it. However, while demographic data and expert opinions are useful, the final decision of where to set up shop is ultimately up to you. 

Keep in mind that landlords and real estate brokers will be looking out for their own interests, so be sure to double-check the information they provide. They may also put pressure on you by setting deadlines and mentioning that other businesses are interested in the same space, so be prepared for that.

But remember, there’s no such thing as the perfect location. It’s always about balancing the pros and cons. With hard work and ingenuity, you can make just about any location work for your business. 

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Business Location Analysis: Definition, Objectives, Factors

Location refers to the choice of region and the selection of a particular site for setting up a business or factory.

But the choice is made only after considering the cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken.

If at all changed only at considerable loss, the location should be selected as per its requirements and circumstances. Each plant is a case in itself.

A business person should try to attempt at the optimum or ideal location. An ideal location is one where the cost of the product is kept to a minimum, with a large market share, the least risk, and the maximum social gain.

It is the place of maximum net advantage or which gives the lowest unit cost of production and distribution, for achieving this objective, this purpose.

What is Business Location Analysis?

Location analysis is a dynamic process where entrepreneur analyses and compares the appropriateness or otherwise of alternative sites to select the best site for a given enterprise.

It consists of the following:

Demographic Analysis

It involves the study of population in the area in terms of total population (in no.), age composition, per capita income, educational level, occupational structure, etc.

Trade Area Analysis

It is an analysis of the geographic area that provides continued clientele to the firm. He would also see the feasibility of accessing the trade area from alternative sites.

Competitive Analysis

It helps to judge the nature, location, size, and quality of competition in a given trade area.

Traffic Analysis

To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site.

Site Economics

Alternative sites are evaluated in terms of establishment costs and operational costs under this.

Costs of the establishment are the cost incurred for permanent physical facilities. Still, operational costs are incurred for running a business on day to day basis, they are also called as running costs.

Objectives of Business Location Analysis

The location of a business must be decided to keep in mind the following objectives:

To hold minimum investment and operational cost

The foremost objective in selecting an ideal location is to ensure minimum investment and lower operational costs.

This could be achieved if the business is located in a place where raw materials, labor, transport, and power are easily, regularly, and sufficiently available.

To ensure the smooth operation of the business.

Another objective of the ideal location is to ensure the smooth operation of the business.

This could be achieved if the business is located in a place where the services of banking , communication , transport, repairs, and maintenance are available easily and regularly.

To promote employee welfare.

If the business is located where the educational recreational, medical, and religious needs of employees are met, they will certainly feel attached to the enterprise. They would develop loyalty and commitment to it.

To co-ordinate with Government Policies.

The entrepreneur , while selecting a location, must ensure that his decision does not conflict with the government policy of balanced regional development.

Factors to be Considered in Selecting a Business Location

Selecting the ideal business location is guided by four main factors, namely:

Nature and Type of Business

The nature and type of your business is the single greatest determinant of where the business should be located. Businesses that rely on walk-in customers from the public are the most affected, the main ones being in the service industry.

If your business relies heavily on walk-in clients as opposed to businesses that prospect, then location is everything. Getting your location wrong can spell doom for your business.

In the restaurant business, for example, there are three “main” rules when setting up. These are “LOCATION, LOCATION, and LOCATION.”

This example underscores the importance of a great location for restaurants.

A study of McDonald’s reveals this to be true. Senior management at MacDonald’s will tell you that they are burger salespeople, but their business is real estate.

Therefore, businesses such as restaurants, supermarkets, liquor stores, Ice cream parlors, and the like must be located in easily accessible areas with high levels of human traffic.

In contrast, businesses such as law firms, accountants, software firms, and so forth, which do not rely on high levels of human traffic, can be located in posh offices within office blocks.

The amount of money you can afford to obtain premises must, of course, come into play. Most first time entrepreneurs will be renting due to budget constraints.

Always try and secure premises that provide the best value for your money, considering the nature of business.

Space required

Certain types of businesses require very large amounts of space.

For example, car dealerships and car rentals require a large space to park their vehicles. This may mean looking for an out of cheap town location.

Special facilities needed

Certain types of businesses require special facilities to carry out their business effectively. For example, IT companies have some very special mechanical, electrical, plumbing, and fire suppression requirements.

Server rooms and computer areas need dedicated cooling units. These must be taken into consideration before settling on a business location.

At one point, we may want to determine the size of the business . This helps in knowing whether it’s growing or not.

Also, you ascertain it to plan its various requirements. If you know the size of your firm , then you’re able to determine its efficiency. Any enterprise is the ether; small , medium or large size .

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Four tips to improve your business’s location strategy

A business’s success depends on many factors, but its location plays a significant role. Choosing where to locate your business requires specific considerations – attracting and retaining customers and employees, increasing productivity, and more.

Setting up your business in the right place in the right way and creating brand awareness would make your business successful and enhance your customer’s experience. Check out this value-added quick video that summarizes the benefits of using locatio n data in your business analytics. Don’t miss it!

Take Walmart , a successful multinational retail company whose location strategy includes stores located in or near urban areas and consumer population clusters. Walmart has an incentive to keep its stores close to each other as it can economize on shopping. 

Therefore, Walmart successfully avails materials and goods to its employees and targets customers through strategic warehouse locations.

Also, Walmart believed that having quite many stores would facilitate deliveries’ logistics. Hence, Walmart waited to get to the plum locations until it could build out its store network to reach the customers. This made Walmart the favorite of many consumers.

So the real question is – Does location strategy help a business grow and mark its success by capturing people’s minds? Let’s find out.

What is a location strategy, and why is it important?

A business location strategy is a well-defined plan for identifying and choosing the exact location for starting a business to fulfil its objectives and requirements. It helps in market segmentation, customer analysis, localizing, and branding. 

Therefore, selecting the right business location helps determine the product offering, market demand, service setup, and more.

Maximizing the potential market share, reducing costs and risks, identifying corporate requirements, and consulting with stakeholders becomes comfortable with location analysis. 

Now, let’s dive into a few ways to improve your business’s location strategy.

Tips to improve a business’s location strategy

Your business’s location is something that you cannot avoid considering it as a crucial element for enhancing its productivity and success. For this, few variables can help you choose your business location.

1. Discover the best location: There always arises a need for products that may not be readily available to the customers. Therefore, it is wise to open your outlet where there is a necessity and significant demand for your product or services.

Locating your brand very close to or too far from your competitor may not help your business. It is also not advisable to locate your business in the middle of nowhere as it can hurt your marketing demand. 

Therefore, if your brand’s presence is not too close but within your competitor’s store’s radius, it would improve your marketing strategy, product demand, and customer traffic.

2. Get real-time data: When you are devoid of a specific location’s necessary datasets like population, type of people, natural resources, and more, the whole process becomes complicated and uneasy.

Determining the exact business location becomes smooth and easy only when you have valid data points of the specific area. Accurate location datasets help understand the customers, their requirements and adopt necessary steps to fulfill those needs, improving customer satisfaction.

Location strategy helps monitor the competitors, analyze the market demand to help decide and fix the brand location to improve your performance for the long-run.

3. Plan ahead: Not just immediate success but life-long success is what all entrepreneurs aim for. Many years of investments and capital are required for any business’s sustainability.

Planning your business for the next 10-20 years would help you reduce operating costs and save you from unexpected resource shortages and price shocks. 

A clear idea of any specific business location can prevent you from risks like natural hazards, security threats, acquiring government properties, and more.

With business location analysis, you can invest wisely in expansion strategies, attain more customers, and sustain your business indefinitely. 

4. Improve your customer experience: A happy and satisfied customer is always an asset to any brand. This develops an emotional connection between the brand and the customer that would enhance the business’s functioning. 

Identifying, tracking, and targeting the right customers with the right location strategy enhances your customer experience throughout the journey. This way, you get real-time insights on the customers to extend your brand’s preferential status.

Also, providing seasonal discount coupons, rewards for the number of purchases and visits would improve customer engagement and foot traffic. This customization would fuel your business’s success. 

Work on your business’s location strategy with POI Data.

LocationsXYZ, our location data solution , can empower your location strategy with valid points of interest datasets. We cover a wide range of data points like amenities, company names, people, and more to have detailed information and target a particular location’s right audience.

We help you get real-time data by enabling periodic refresh in frequencies of 30-60-90 days to keep your location database accurate and fresh all the time.

Our solution also allows you to stay in the know of competitor stores within your geographical boundary and strategize your store establishment decisions and attract customers towards your store with promotional messages. 

It helps you build sustainable expansion strategies across lucrative locations considering competitor store location data, demographic data, or other relevant points of interest datasets. 

If you are interested, request a demo here and get to know us more. 

Anna is a passionate reader. She spares a whole lot of time reading books, wall painting, and watching Netflix. She loves writing poems and book reviews, so she engages herself in blogging. She is also passionate about exploring new food recipes in her kitchen.

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The business owner who is deciding on the best location for his company should consider a number of factors. These include the type of business, available finances, where the customers are, the location of competitors and restrictions such as zoning. Advances in communication and transportation have enabled some businesses to maximize efficiency and save money by separating various facets of their organizations and placing them in different locations, even different countries.

The first step a business owner should take in the business-location process is to form an understanding of the elements he must have in the new location. He should make the distinction between what he needs in a business location, what he would like to have and what would not be acceptable. For example, he might need a certain amount of floor space in a part of town with abundant consumer foot traffic. He would accept a place with limited storage space if there is room for future expansion, but not if the neighborhood is unsafe. Before embarking on a search, he must know how much he can afford to spend on new premises.

Next, business owners should consider their needs. A store owner might have a certain brand image that she has developed over the years. To avoid confusing her customer base, the new location would have to be compatible with that image. An industrial enterprise might gain an advantage by locating to a place that is convenient for the local labor force. It might be best for another business to be close to suppliers.

Financial considerations comprise the next step. A wise business owner typically gives serious consideration to the financial details of locating an organization in a certain place. If he is unfamiliar with the proposed location, he should devote time to learning the ground rules. He might want to consult with local officials to learn in depth about taxes, hidden costs and any available economic incentives. Major questions affecting location decisions include the necessity of dealing with labor unions and whether a state has a minimum wage that is higher than the federal level.

Split Locations

Another step would be to consider multiple locations for the same entity -- something made possible by advances in telecommunications, the Internet and transportation. In some cases, a company can gain efficiencies and financial advantages by locating parts of the business in places that are best-suited for those specific parts, but not for the entire company. A case in point would be a software firm whose customers are major financial organizations. Its coding and development operation could be in a low-cost overseas place with a highly skilled workforce. Back-office functions could take place in a small city with low real-estate and labor costs, and executive management could be located in a major city, near the company's customer base.

• Small Business Administration: Tips for Choosing Your Business Location
• Entrepreneur: Choosing a Location for Your Business
• Brookings: Business Location Decision-Making and the Cities: Bringing Companies Back
• "How to Run a Small Business"; J.K. Lasser Institute

Charles Crawford, a former commercial banker, has been a business writer in New York since 1990. He has produced marketing materials for an executive outplacement firm, written the quarterly newsletter of a medical nonprofit organization and created financing proposals/business plans. Crawford holds a Bachelor of Arts in English and a Master of Science in international affairs from Florida State University.

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Where to Locate Your Business and What to Consider

When it comes to starting a business, you may think the only option is to start it in your current home-base. As it turns out, however, there’s more to consider than where you currently live. Depending on your business’s products and services, industry, and needs,  the ideal location  to start up will vary. Before committing to a location, you’ll need to consider both the financial implications and the geographic pros and cons of a location.

Cost Impacts of Business Locations

Everyone has heard the rumor that starting a business can cost an arm and a leg. Locating a business is no different. Choosing any particular location can minimize the cost on your business or drive your costs sky-high, so it’s important to know these four major cost impacts of any given location:

Real Estate Costs

Real estate costs are the most obvious ones you’ll face when choosing a location. If your business requires a physical space, or even if your team requires its own office space, you will have to pay rent or buy a location. Your costs will vary from state to stay, city to city, or even street to street. When prioritizing real estate, you should consider whether customers will interact with your physical space, whether the location will foster your team’s performance, and whether you’ll be able to build a business there.

Applicable Minimum Wage

Although there is a federally established minimum wage, many states and some cities have a minimum wage that is higher. The more you are required to pay in wages, the higher your expenses will be. Keep this in mind when choosing where to start and hire your first employees.

Applicable Taxes

Taxes apply to any given location differently. They vary from state to state and city to city, so you’ll need to account for this when choosing your location. If your business will be operating in multiple states, or even if you’ll be doing business outside of your home state, this will have additional implications for your taxes. In addition to your headquarters, some states require that you register and pay taxes there.

Government Economic Incentives

The federal government and certain states provide extra incentives to help foster small business in specific locations. These include access to loans or tax incentives, so they can have significant impacts on your company’s cash flow. Economic Development Agencies are the best organizations to find these types of incentives. With services like financial assistance, site selection assistance, and human resource support, these incentives could entice you to veer away from you home-base.

Geographic Considerations of Business Locations

While a location can minimize the cost of starting a business, the there’s more to consider when it comes to where to locate a business. Your business has specific needs, from labor to suppliers. Knowing these needs and how you’ll gain access to them is an important piece of choosing the right location.

Proximity to Suppliers

If your business relies on third party suppliers, like food for your restaurant or glassware for your food & bee business, you should already be looking into where you’ll get the right items. The higher the importance of these supplies, the more you should prioritize the ease of receiving them. Because delivery takes both time and money, being close to the right suppliers can have major impacts on your ability to do business. (If you have to bring parts of your product from abroad, locate close to a port or airport.) This will improve your production process help you compete.

Proximity to Skilled Labor

It may be hard to imagine when you’re first starting out, but your small business will need to hire. For certain businesses, your employees may need a specific skillset or education. Being close to a location with those types of workers will make it easier to find talent without creating an end for them to relocate. It’s not enough to know that this skillset exists in your location now. You should make every effort to guarantee that the type of employees you need will be there when you’re ready to hire. Consider population trends: are your ideal employees moving in or out of the area? If your business is starting in a developing area, you may have enough potential employer in the near future to grow. However, certain neighborhoods or cities can turn employees away and cause hiring problems when the right time comes.

Competition for Employees

If certain skills in your industry are in high demand, you’ll not only be competing for customers; you’ll also be competing for employees. This is another factor that can be highly dependent on your location. If you are a young company, attracting, hiring, and retaining the right employees can be difficult. Position your company and explain why you provide a better place to work. High competition could increase your expenditures in salaries and employee benefits. If your business could thrive in a less competitive area and get all the same benefits, you should evaluate this option.

Proximity to Customers

Will your customers be coming into your store, restaurant or office? Will you be visiting them? Or will you be providing an entirely virtual experience? Placing your business near your customers could decrease your marketing costs and cost of acquisition. The easier it is for your customers to find you, the more likely it is that they will come across your great product and become a loyal customer. If on-site traffic to your business is important to get off the ground, consider food and vehicle traffic, neighborhood demographics, and other traffic generators in the area.

Proximity to Competitors

Counter to what you may think,  locating your small business near competition  is not an inherently bad idea. If your product or service is better than your neighbor’s, being near each other can have certain benefits. Let’s assume your competitor is moderately successful: they’ve chosen a well-suited location and have put in the effort to attract customers. When your competitor’s loyal customers visit, they may also take an interest in your business, driving extra traffic for both businesses. Certain locations often become known as a “go-to” for a specific market, and that’s when your new business will benefit. With so many factors to consider, it’s clear that using your current home-base as a location for your new business may not always be the best choice. Entrepreneurs and entrepreneurs-in-the-making should be willing to relocate if it will drive the success of their business.

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Download this comprehensive guide for completing a business plan narrative. Sections included:

• Executive Summary : Summarize the business, including its name, address, legal form, owners, market need, products/services, financial projections, and financing requirements.
• Company Summary : Detail startup costs, facility descriptions, equipment needed, and operational details, including location advantages and disadvantages.
• Products & Services : Describe the offerings, pricing strategy, cost margins, and any packaging or shipping concerns.
• Market Analysis : Analyze market characteristics, target market demographics, customer profiles, and buying criteria, supported by research.
• Competitive Assessment : Identify competitors, their market share, strengths and weaknesses, and compare their pricing and services to yours.
• Marketing/Sales Strategy : Develop a value proposition, pricing, distribution, sales strategy, and marketing plan to capture market share.
• Management Plan : Outline the roles, responsibilities, and qualifications of owners and key managers, including projected salaries and employee positions.
• Financial Plan : Provide a summary of financial projections for the first three years, with detailed assumptions and sensitivity analysis.
• Appendix : Include pro forma financials, resumes, leases, contracts, and personal financial statements for lenders.

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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10 Tips to Design Your Business’s Physical Location to Grow Your Business

Considering moving to a new location or updating your existing location here are our top 10 tips to leverage good design to grow your business..

Transformation Fitness and Wellness , an Indianapolis-based personal training and wellness company, was like a lot of small companies that rely on a retail location to draw in new customers. They had their own mixed feelings about wanting an upgraded location that better supported the business, but feared the costs and hassle of either moving or remodeling.

They recently decided to take the leap and move to a new location. Determined to seize the opportunity to reinvent their facility in the hopes of enhancing their business, they selected a top architectural firm in their area to help them with their new image ( Brenner Design ).

The existing building they had purchased was nondescript and easy to walk right past (see photo).

inlineimage

When they began work with Brenner Design, Indiana's largest woman-owned architectural firm, their goal was to use the new location to both generate new business, but to also increase their retention of existing clients through creative design.

Brenner Design president Diana Brenner FAIA said, " The thing about moving a business is that it's a unique opportunity to use solid design and creative planning to make the interior support the core function of the business. Considering how long the average business will "live" in one location, a small investment in efficient space planning and impactful design can yield long term dividends for the business that directly feed its bottom line. "

Thinking that you may someday move or update your business's physical location? Here are ten real world tips to leverage the design on your facility (either a new location or updating your existing location) to grow your business.

1. Hire the best advisors. - Don't take your friends' advice. Don't try to do everything in-house. Use the expert professionals; real estate broker, architect, move consultant, real estate attorney, banker, and accountant.

Utilize a commercial real estate broker with experience in the type of real estate aligned with your business type; office, industrial or retail. Hire your own tenant development broker for renewals or relocations. Like residential brokers, it won't cost you anymore and you want to hire a broker that represents your needs, not the building owners' needs.

If you are purchasing property or developing a new building, make sure you find a broker with a successful track record of negotiation and follow-through. Due diligence is the key in any transaction, so make sure to involve a real estate attorney (not your regular attorney) to guide you through the Letter of Intent (LOI), Lease or Purchase Agreement (PA).

2. Understand the process. - Where do I begin? What is the timeline? What are the steps?

Begin the process 12-24 months ahead for leased space and 24-36 months for new construction. The search and real estate transaction usually takes the longest to complete.

Don't forget to allow appropriate time for design, approvals and construction. Your real estate broker and architect together can help advise you on a design/construction timeline for your particular business needs.

3. Understand the lingo. -What does all this mean? USF, RSF, CAM, LOI, PA.

The area you occupy in a building is usable square feet (USF). The total area you pay for is rentable square feet (RSF). Your rent (or cost/sf) includes your portion of common areas in the building such as lobby, restrooms, etc.

When preparing budgets, make sure to include the rentable factor multiplier. Each building has its own unique factor depending on its design. Make sure you understand what is included in the proposed costs. Some buildings tack on a Common Area Maintenance (CAM), charged annually. If you will own the building, you will pay for your own CAM.

Leverage your advisors to get the short course on what all these words mean and how they will impact you.

4. Determine your space requirements. - Do you really need more space? What is the cost of space vs cost of labor? How do you program for efficient use of space?

The cost of labor is the highest cost factor for businesses today. When you look at designing workspace for your work force, create functional workspace with efficient adjacencies based on individual staff functions. The cost of real estate and furniture is a small cost compared to the cost of labor. Workspace design can directly affect productivity, morale and health of your workers, thus directly impact your bottom line.

Engage an architect early. Nothing is worse than guessing at your future space needs. A reputable architect can prepare a space analysis program that includes growth projections based on benchmarks for your particular business type. Your architect should work hand in hand with your real estate broker to evaluation options and cost alternatives of lease versus own or whether a new property suits your long term needs.

Some buildings are more efficient than others. Your architect can provide test fits to determine if a new or existing building footprint best fits your needs. The small cost of comparing options can have a huge impact on annual rent and result in thousands of dollars in savings or expense over the term of a lease.

5. Determine your total budget. - What is the total cost impact?

Besides the direct cost of rent, determine what added costs you will incur. Utilities may or may not be included in the rent but are certainly a factor in considering a purchase. Make a list of anticipated soft costs that may include closing costs, attorney fees, design fees, and building permits.

Furniture, fixtures and equipment (FF&E) should also be considered early. Depending on whether your furniture is new or reused, FF&E costs can run upwards of 25% of construction costs. Furniture sometimes has a 10-16 week lead time, so the process of selecting, bidding and installation should be factored into your timeline.

6. Investigate your options. - Don't believe everything you read!

Don't rely on the stats presented in the real estate flier. Most times the actual square footage, acreage and zoning has been supplied by the owner and is not verified by the real estate broker. Buyer beware! Make sure your planning team verifies the information before you spend time and money in due diligence.

Title work and surveys are required for any new real estate purchase. Most banks require a "clean" Phase I environmental report as requirement for financing. Keep in mind that the shelf-life of such reports are only six months. Zoning changes, variances and planning approvals can also take several months to complete. Submission and hearing dates are established by local government authorities and vary widely. Make sure your team advises you on the sequence of your due diligence and that timeline is integrated into your LOI and PA.

7. Negotiate the deal . What's the best use of my Cash?

Your real estate broker and accountant can assist with assessing the cost implications of several scenarios based on your ability to self-finance or bank finance. You may consider Lease, Lease with an Option to Buy, or outright Purchase. Each option carries different cost impacts. Your real estate broker will help negotiate the deal, but remember, you call the shots.

The build-out cost of a lease space is usually rolled into the rent as a tenant development construction allowance. Make sure that allowance covers the cost of your build-out, otherwise you will incur unanticipated out-of-pocket expenses. Typically a building owner only allows for the basics, no design features and only building standard fixtures.

If you want to create a facility that represents your companies' image, you need to allow for an appropriate build-out cost. The design and aesthetics of your business can directly impact your bottom line. Sometimes additional costs can be amortized over the term of the lease. Before you sign a deal, make sure you have done your homework and understand exactly what you are paying for.

8. Take the time to design and document. - Every dollar you spend in planning equals $5 saved in changes. Do it right the first time.

Take the time to carefully plan and design your facility. Don't leave the task to your facilities manager. That person is usually tasked with cutting costs and is driven by that motive. As the owner of the company, you should set the vision and direction of the final design image. Make sure the design reinforces your companies' goals and objectives. The most successful companies' use design to invigorate personnel, attract top people, increase productivity and move the company forward. A well-designed facility can increase productivity by at least 10%.

Make sure your Architect coordinates the selection of furniture in concert with the design of the space. If you wait to select furniture later, this can create change orders due to electrical requirements and relocated data connections.

9. Understand the construction delivery process. - Bidding, Permits, Approvals.

There are many construction delivery methods including Fast-Track, Design-Build or Design-Bid-Build.

Consider the options before you move ahead. Selecting your contractor is an important step. Make sure the contractor has the resources, experience and reputation to complete your work. Make sure your architect and contractor are in alignment with your project goals. Allow a reasonable time to obtain bids, file for permits and obtain all approvals.

10. Plan the move well ahead of time. - Utility transfer, IT coordination, tear-down and set-up.

A reputable move consultant can help you estimate these costs ahead of time and make the stressful event of a move easier for your staff. It's worth the investment to make sure your business is back up and running as soon as possible.

Your staff doesn't do this for a living and many times they overlook the details as proper phasing and scheduling. Tear-down and set-up of furniture takes time to complete. You need to implement a plan for the least amount of down time.

Don't forget the IT. Scheduling a changeover must be done in well in advance, so make sure your communications network makes a smooth transition so your business doesn't suffer any interruptions. Include moving costs as well costs to change websites, stationary and letterhead in your overall budget.

Careful planning can reduce costs and minimize disruption. Utilize the professionals with experience to help plan for the future and grow your business. The future of your business depends on your decisions.

So what ever happened with Transformation Fitness and Wellness?

Their new location and its new design directly resulted a 13 percent increase in sales, and will likely enhance their membership retention.

Arin Lindauer, co-owner of Transformation Fitness and Wellness says, "I have never regretted the decision [of the redesign] because I love how prospects say, 'Oh yeah, the funky building on Penn, I know where you are located.' It's music to my ears."

Bottom line: Good design can not only be cost effective, but done well, it can have measureable ROI.

Good luck applying what you just learned.

For more ideas on growing your business, including a free tool kit with 21 in-depth video trainings to help you scale your business and get your life back, click here .

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

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How to Open a Second Business Location: 7 Items to Consider

March 27, 2024

Getting a new small business off the ground with your first location is a daunting task. It takes a remarkable amount of planning, a great team, and a willingness to take a risk. So for those of you who have successfully opened your own small business, congratulations!

For the ambitious business owner, perhaps at this point you’re thinking about opening a second shop and expanding your retail business. After all, scaling your company is the next big step. And you’ve gotten the hardest part out of the way: developed a reliable customer base and figure out your cash flow. But it’s important to know when and how to open a second business location. You’ll have a second team, a second set of costs, a second shop to manage your inventory, and a whole lot more to worry about.

So let’s start by examining if your business is ready to expand and then go over the steps to turn your operation into a multi-store business .

1. Know If You’re Ready to Open a Second Location

Before starting the process of opening a new location, it’s important to be sure that it’s the right time to do so. Start by asking yourself a few questions:

• Do you need more space? Maybe your retail space has become too small for the number of customers that come through or an expanded catalog of products.
• Is there a market for your product or services in a different location? Remember, what works in one neighborhood, city, or state may not work elsewhere. 
• How’s your cash flow? Opening a second location is expensive so you need to have the cash on hand, or secure financing of some sort.
• Can you manage the new obligations and stress of growing your business ? Remember how hard it was to open your first store? Get ready to do it all over again!

Carefully consider each of these items prior to making any big commitments.

2. Be Sure That Opening a Second Location is Necessary

Again, carefully consider the questions above. Prematurely opening a second location for your business can be catastrophic, even ruining the success of your first shop.

Be aware of false signs that you may need to expand:

• Consider increasing your team so that they can serve more customers.
• Add new products to your inventory to attract a larger customer base.
• Target new demographics and continue to build your current location.
• Add better access and parking if possible.

It’s critical to open a new shop at the right time. And it’s better to err on the side of caution by waiting too long to open than doing so too early.

3. Look at Other Sales Channels First

Another way to make sure that you’re ready to open a new location is to first exhaust all alternative sales channels. Selling your product or service solely at your brick and mortar store is not enough. First, look at creating an omnichannel shopping experience:

• Partner with other local businesses to test out new products or a new market. It’s a great way to meet other retailers and become a deeper part of the community.
• Try out a pop-up shop or kiosk to test out a new area and market.
• Sell on social media channels. More and more shoppers buy directly from Facebook, Instagram, and Pinterest.
• Open an eCommerce store. With your POS system integrated into both your brick and mortar and eCommerce platform, selling on both channels has never been easier.

4. You Need Managers That You Can Trust

So once you do decide that it’s time to open a second location for your business, you need to prepare yourself for certain facts. One of the hardest things that small business owners face is the fact that they simply have to cede some control and responsibilities to their team. You won’t be able to be at two locations at once. While a cloud-based POS system makes it easier to manage your business remotely, you’ll still need to put trust in your team at each location.

A lot of businesses promote internally so that existing team members move on to bigger roles as your business expands. This helps give owners the peace of mind that their management are people that they can trust and rely on.

5. Replicate Success But Make It New

Of course, if you’re expanding your business, you’ve already established a successful shop. So make sure you capitalize on the success that you’ve already found. 

• Keep your best sellers and any items that define your brand. For instance, if you’re a QSR, any staples your customers have come to expect should stay on the menu.
• Use your existing operational tools, including the same POS system. You need your sales reporting and multi-store inventory management under one system, so keeping a uniform point of sale for multiple locations is critical.
• Make all lines of communication streamlined by using the same service for each location.
• Your prices shouldn’t vary too much. Shoppers who have been to your first location will be turned off if the new shop is more expensive.
• Implement the same CRM system so that shoppers can receive the same loyalty benefits at any of your businesses.
• Make all branding on point and design similar enough so that customers recognize each store as being related.

At the same time, you want your new location to stand out. Add new menu items and some differences in your layout to make the experience unique. It’s good if you have shoppers who prefer one location over another. This means that they have a personal connection to your business and will likely be back.

The more I learn to use KORONA POS, and with the help of awesome customer support, the more I believe this POS system could be a very good fit for many types of businesses out there. What I love the most about this software is the 24/7 customer service and reporting function which are very easy to use.

6. Conduct Basic Market Research at Potential New Locations

You are likely to have a hunch on most factors that go into creating your new location. But make sure you confirm these with actual objective research into each matter.

• Build a separate business plan and start by defining a narrow target market.
• Consider the demand for your product and services while also taking into account the expected competition in the areas you’re looking .
• Gauge your marketing costs and the best advertising outlets for your target audience.
• Run some basic tests so that you can confirm all of this. As we mentioned earlier, pop-up shops are a great way to try out new products or test new markets. It’s a far lower investment than an actual full retail space, but will most closely mimic an actual retail environment , giving you a more accurate picture of your future business.

7. Secure All Necessary Funding

Opening a new shop is going to be expensive. Retail space leases are not cheap, and putting together the infrastructure of an entirely new store adds up fast. 

So it’s necessary to get all financials in order from the beginning. In part, this will be an aspect of your business plan.

• Determine how much liquid cash you have to invest yourself. You don’t want to starve your existing location or yourself, but investing some of your money into the project is wise.
• Look for outside investments from friends, other business owners, or people excited about what you’ve created. Individual investors can go a long way toward funding a second location.
• Peer-to-peer lending options online are starting to replace traditional bank loans. Check out our blog on this alternative financing to learn more.
• And banks are still an option, too. There are typically better solutions for most businesses, but a local credit union or bank can also finance your new store.

How to Open a Second Business Location with KORONA POS

As we talked about above, it’s important that you have a uniform point of sale solution between all of your locations. And for businesses with a single location, you’ll need a POS system that can help your business scale. POS inventory management and sales reporting provide you with remarkable insight into your business. You’ll be able to identify problem areas and the necessary changes to fix them.

If you’re interested in growing your business and expanding to new locations, try out KORONA POS. It’s built to help retailers grow and become multi-store operations. Sign up today for a no-commitment free trial!

Michael Chalberg

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Location Strategy for Business: Factors Analysis

A new branch can be opened by big brands like Jollibee or Mercury Drug almost anywhere and expect people to come through the doors – but picking exactly the right location can mean much bigger profits. For a smaller business, knowing where to set up could make the difference between staying open and shutting down. But how do you work out where to open up? Location strategy can help. By understanding things like how people travel, you can identify which locations will attract the most customers – and that can mean big money in business.

In the same way, your knowledge in geography can help to work out the best countries to expand into, or help to predict how changes in the economy that might affect a business’s future. It is also vital for businesses that are trying to become more environmentally friendly – so even if you’re more motivated by saving the planet than making money, there might be a place for you in the world of business. Strategic Locations for a Business Finding the perfect location for your business is not an easy task.

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Some businesses don’t rely on foot traffic while others rely on a place that has a lot of natural traffic, plenty of parking and is in an area that penetrates your target market. But there are many factors that go into finding the perfect space that involve the size of your business, the type of business and your budget for a space. Where is the Competition? For some businesses, such as a bookstore or small family grocery store, being close to a competitor is a bad thing especially if the competitor is bigger than you and can offer more selection or better prices.

For other businesses, such as restaurants or shoe stores, being close to a competitor can offer an advantage. Having a restaurant near others allows people to go to one place and find something to eat. Of course, you don’t want to be an Italian restaurant competing with an Italian restaurant. But if you offer a different type of cuisine or if one restaurant is too crowded, people will overflow to you or simply decide to try you for something different.

Shoe stores and other retail providers can do well being near each other because hoppers like to shop and find the best deal. Staying close to competitors will have people going back and forth to find the better deal.  When you determine how large of a location you need, you will also have to take a close look at what you can afford. The corner of the busiest street may be an ideal location, but way out of your budget range. You will need to consider if it is more important to get a location on this street, albeit smaller, to have walk-in traffic improve or get a larger location, slightly off the beaten path, that highlights what you do.

Hair salons often go with high-traffic areas, but if you are promoting a salon and spa, being slightly away from traffic will help your clients feel like they are getting away and improve the quality of their experience. Parking Being on the busy strip will drive walk-in traffic into your establishment. But if you are not somewhere people are walking, they need to have easy access to your building. If you are a lawyer or a certified public accountant, you will not need a lot of parking.

Still, you will want a few spaces available for people to park during their appointments. You will not need to worry about an overflow parking area because the appointments regulate your incoming traffic. But if you are a retail provider, having ample parking is important. If people don’t like the parking situation, they may keep driving until they find a place to park where one of your competitors happens to call home. As for global companies the top five location factors are costs, infrastructure, labor characteristics, government and political issues, and economy.

Key sub-factors are the availability and quality of the labor force, the quality and reliability of modes of transportation, the quality and reliability of utilities, wage rates, worker motivation, telecommunication systems, record of government stability, and industrial relations laws. Other sub-factors—protection of patents, availability of management resources and specific skills, and system and integration costs—are of increasing importance. Location Strategy Formulation Being in the right location is a key ingredient in a business’s success.

If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on. Consequently, location often plays a significant role in a company’s profit and overall success. A location strategy is a plan for obtaining the optimal location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks. A company’s location strategy should conform with, and be part of, its overall corporate strategy.

Hence, if a company strives to become a global leader in telecommunications equipment, for example, it must consider establishing plants and warehouses in regions that are consistent with its strategy and that are optimally located to serve its global customers. A company’s executives and managers often develop location strategies, but they may select consultants (or economic development groups) to undertake the task of developing a location strategy, or at least to assist in the process, especially if they have little experience in selecting locations. Formulating a location strategy typically involves the following factors:

• Facilities. Facilities planning involves determining what kind of space a company will need given its short-term and long-term goals.
• Feasibility. Feasibility analysis is an assessment of the different operating costs and other factors associated with different locations.
• Logistics. Logistics evaluation is the appraisal of the transportation options and costs for the prospective manufacturing and warehousing facilities.
• Labor. Labor analysis determines whether prospective locations can meet a company’s labor needs given its short-term and long-term goals.
• Community and site. Community and site evaluation involves examining whether a company and a prospective community and site will be compatible in the long-term.
• Trade zones. Companies may want to consider the benefits offered by free-trade zones, which are closed facilities monitored by customs services where goods can be brought without the usual customs requirements. The United States has about 170 free-trade zones and other countries have them as well.
• Political risk. Companies considering expanding into other countries must take political risk into consideration when developing a location strategy. Since some countries have unstable political environments, companies must be prepared for upheaval and turmoil if they plan long-term operations in such countries.
• Governmental regulation. Companies also may face government barriers and heavy restrictions and regulation if they intend to expand into other countries. Therefore, companies must examine governmental—as well as cultural—obstacles in other countries when developing location strategies.
• Environmental regulation. Companies should consider the various environmental regulations that might affect their operations in different locations. Environmental regulation also may have an impact on the relationship between a company and the community around a prospective location.
• Incentives. Incentive negotiation is the process by which a company and a community negotiate property and any benefits the company will receive, such as tax breaks. Incentives may place a significant role in a company’s selection of a site.

Depending on the type of business, companies also may have to examine other aspects of prospective locations and communities. Based on these considerations, companies are able to choose a site that will best serve their needs and help them achieve their goals.

Reasons for adopting the best Business Location Strategy Whether it is a fast food store or a manufacturing facility, there are a lot of strategies to consider when choosing a business location. Many businesses have various locations catering to its different needs. A corporate headquarters in a business district can provide the company with an easier connection to potential clients, whereas a production facility in a different state might provide the business with tax and labor cost incentives. The strategy of each location takes into account specific business goals, depending on the purpose of the location.

Relocation incentives, reinforcement of corporate culture, and adding value to company’s branded image are all viable reasons why a specific location is chosen. Add Value to Corporate Brand There is a reason why companies fork over top dollar to get the right high-priced address: Location lends credibility to a corporate brand, thus strengthening its value.

A design house on an affluent strip or a corporate office in a wealthy business complex communicates to clients that products or services are worth a premium price. This justifies the sometimes high costs, such as rent and insurance, associated with spending money on the location. Creating a Unique Corporate Culture Corporate culture directly affects worker productivity, so it is not a surprise that companies select a location with the objective of reinforcing their unique culture and brand values.

For example, a sustainable company might choose an ecologically friendly facility to create a well-branded complex, equipped with a macrobiotic restaurant and sleeping and exercising facilities. If the strategy is to create an atmosphere that epitomizes the company’s core values, then the facility must be a translation of the corporation’s mission and strong belief system.

The need for a highly trafficked and visible location is often associated with retail businesses, as they have a need to be in constant and direct contact with their customer. In a highly trafficked area, the business or storefront acts as an advertising vehicle, making impressions on the pedestrians that pass by. This location strategy is not only for the retail environments. It can translate to any type of business that needs to be constantly visible to their end-customer.

For instance, there are news organizations that have their production facilities visible and accessible from a highly trafficked street.  Strength in Numbers Some businesses thrive off of being in a specific district, such as a financial district or a garment district. There is strength in numbers and situating a business location around similar companies can bring about prestige and cross-company sales. For instance, a buyer might be more inclined to visit a fashion showroom, production facility or tech business if it is situated in the respective district.

Relocation Incentives Some cities have incentives to promote foreign companies headquartering themselves there. Tax incentives, access to capital, and energy efficiency programs are just some of the perks that can make a location attractive to an out-of-state or international company looking to invest in a new facility. As mature companies look shave their operational costs and pad their bottom line, a move to a more cost-effective location is attractive and if they add more jobs to a location resulting in positive local consumer sentiment, that’s even better.

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Downtime can do serious damage to an organization's bottom line and reputation. Business continuity and disaster recovery -- two closely related practices -- help keep an organization running even in the wake of disaster. This guide explains how BCDR works, why you need it and how to build a BCDR plan for your organization to protect it today and into the future.

Disaster recovery (dr).

• Kinza Yasar, Technical Writer
• Erin Sullivan, Senior Site Editor
• Paul Crocetti, Executive Editor

What is disaster recovery (DR)?

Disaster recovery (DR) is an organization's ability to respond to and recover from an event that negatively affects business operations.

The goal of DR is to reduce downtime, data loss and operational disruptions while maintaining business continuity by restoring critical applications and infrastructure ideally within minutes after an outage. To prepare for this, organizations often perform an in-depth analysis of their systems and IT infrastructure and create a formal document to follow in times of crisis. This document is known as a disaster recovery plan .

What is a disaster?

The practice of DR revolves around serious events. These events are often thought of in terms of natural disasters, but they can also be caused by systems or technical failures, human errors or intentional attacks. These events are significant enough to disrupt or completely stop critical systems and business operations for a period of time. Types of disasters include the following:

• Cyberattacks, such as malware, distributed denial-of-service and ransomware .
• Power outages.
• Hardware failures.
• Equipment failures.
• Epidemics or pandemics, such as COVID-19.
• Terrorist attacks or biochemical threats.
• Industrial accidents.
• Hurricanes.
• Earthquakes.

Why is disaster recovery important?

Disasters can inflict damage with varying levels of severity, depending on the scenario. A brief network outage could result in frustrated customers and some loss of business to an e-commerce system. A hurricane or tornado could destroy an entire manufacturing facility, data center or office.

Also, the shift to public, private, hybrid and multi-cloud systems and the rise of remote workforces are making IT infrastructures more complex and potentially risky. An effective disaster recovery plan lets organizations respond promptly to disruptive events, offering the following benefits in return:

This article is part of

What is BCDR? Business continuity and disaster recovery guide

• Which also includes:
• 7 top business continuity certifications to consider in 2024
• ITGC audit checklist: 6 controls you need to address
• 12 key points a disaster recovery plan checklist must include
• Business continuity. Disasters can significantly harm business operations, incurring costs and disrupting productivity. A DR plan enables automation and the swift restart of backup systems and data, ensuring a prompt resumption of scheduled operations.
• Data loss reduction. A well-designed disaster recovery plan aims to reduce the amount of data lost by using methods such as frequent backups, quick recovery and redundancy checks. The probability of data loss increases with the length of time an organization experiences a system outage, but effective DR planning reduces this risk.
• Cost reduction. The monetary costs of disasters and outages can be significant. According to results from Uptime Institute's "Annual outage analysis 2023" survey , 25% of respondents reported in 2022 that their latest outage incurred more than $1 million in direct and indirect costs, indicating a consistent upward trend in expenses. In addition, 45% reported that the cost of their most recent outage ranged between $100,000 and $1 million. With disaster recovery procedures in place, companies can get back on their feet quickly after outages, reducing recovery and operational costs.
• Help with compliance regulations. Many businesses are required to create and follow plans for disaster recovery, business continuity and data protection to meet compliance regulations. This is particularly important for organizations operating in the financial, healthcare, manufacturing and government sectors. Failure to have DR procedures in place can result in legal or regulatory penalties, so understanding how to comply with resilience standards is important.
• System security. A business can reduce the detrimental effects of ransomware, malware and other security threats by incorporating data protection, backup and restoration procedures into a disaster recovery plan. For instance, several built-in security mechanisms in cloud data backups can minimize questionable activity before it affects the company.
• Improved customer retention. When a disaster strikes, customer confidence in an organization's security and services can be questioned and easily lost. A solid disaster recovery plan, including employee training for handling inquiries, can boost customer assurance by demonstrating that the company is prepared for any disaster.
• Emergency preparedness. Thinking about disasters before they happen and creating a response plan can provide many benefits. It raises awareness about potential disruptions and helps an organization prioritize its mission-critical functions. It also provides a forum for discussing these topics and making careful decisions about how to best respond in a low-pressure setting. While preparing for every potential disaster might seem extreme, the COVID-19 pandemic illustrated that even scenarios that seem farfetched can happen. For example, businesses with emergency measures to support remote work had a clear advantage over unprepared companies when stay-at-home orders were enacted during the pandemic.

DR initiatives are more attainable by businesses of all sizes today due to widespread cloud adoption and the high availability of virtualization technologies that make backup and replication easier. However, much of the terminology and best practices developed for DR were based on enterprise efforts to re-create large-scale physical data centers. This involved plans to transfer, or failover , workloads from a primary data center to a secondary location or DR site to restore data and operations.

What is the difference between disaster recovery and business continuity?

On a practical level, DR and business continuity are often combined into a single corporate initiative and even abbreviated together as BCDR , but they aren't the same thing. While the two disciplines have similar goals relating to an organization's resilience, they differ greatly in scope.

Key points of DR and business continuity include the following:

• BC is a proactive discipline intended to minimize risk and help ensure the business can continue to deliver its products and services no matter the circumstances. It focuses especially on how employees continue to work and how the business continues operations while a disaster is occurring.
• DR is a subset of business continuity that focuses on the IT systems that enable business functions. It addresses the specific steps an organization must take to recover and resume technology operations following an event.
• BC is also closely related to business resilience , crisis management and risk management, but each of these disciplines has different goals and parameters.
• DR measures could typically include developing extra safety precautions for employees, such as buying emergency supplies or holding fire drills.
• A business continuity plan helps guarantee that communication channels, including phones and network servers, stay operational during a disaster.
• DR is also a reactive process by nature. While planning for it must be done in advance, DR activity isn't kicked off until a disaster actually occurs.
• Business continuity ensures the overall functioning and resilience of an organization throughout the entirety of an event, rather than solely focusing on the immediate aftermath.
• The disaster recovery process is complete once systems fail over to backup systems and are finally restored. With business continuity, plans stay in place for the entirety of the event and even after the systems are back up following the disaster.
• Top of Form

Elements of a disaster recovery strategy

Organizations should consider several factors while developing a disaster recovery strategy. Common elements of a DR strategy include the following:

Risk analysis

Risk analysis, or risk assessment , is an evaluation of all the potential risks the business could face, as well as their outcomes. Risks can vary greatly depending on the industry the organization is in and its geographic location. The assessment should identify potential hazards, determine whom or what these hazards would harm, and use the findings to create procedures that take these risks into account.

Business impact analysis

A business impact analysis ( BIA ) evaluates the effects of the identified risks on business operations. A BIA can help predict and quantify costs, both financial and nonfinancial. It also examines the effects of different disasters on an organization's safety, finances, marketing, business reputation, legal compliance and quality assurance.

Understanding the difference between risk analysis and BIA and conducting the assessments can also help an organization define its goals when it comes to data protection and the need for backup. Organizations generally quantify these using measurements called recovery point objective ( RPO ) and recovery time objective ( RTO ).

• RPO. RPO is the maximum age of files that an organization must recover from backup storage for normal operations to resume after a disaster. The RPO determines the minimum frequency of backups. For example, if an organization has an RPO of four hours, the system must back up at least every four hours.
• RTO. RTO refers to the amount of time an organization estimates its systems can be down without causing significant or irreparable damage to the business. In some cases, applications can be down for several days without severe consequences. In others, seconds can do substantial harm to the business.

RPO and RTO are both important elements in disaster recovery, but the metrics have different uses. RPO is acted on before a disruptive event takes place to ensure data is backed up, while RTO comes into play after an event occurs.

Incident response

This encompasses detecting, containing, analyzing and resolving a disruptive event. Incident response includes activating the disaster recovery plan, evaluating the incident's scope and effect, executing the recovery strategy, restoring normal operations and deactivating the plan. To maintain accountability and promote ongoing improvement, it's also essential to record and report incident response actions and results.

The components of a DR strategy can vary depending on the size, industry and particular demands of an organization. Therefore, these plans should be customized to meet the unique requirements of each business.

What's in a disaster recovery plan?

Once an organization has thoroughly reviewed its risk factors , recovery goals and technology environment, it can write a disaster recovery plan. The DR plan is the formal document that specifies these elements and outlines how the organization will respond when disruption or disaster occurs. The plan details recovery goals including RTO and RPO, as well as the steps the organization will take to minimize the effects of the disaster.

A DR plan should include the following components:

• A DR policy statement, plan overview and main goals of the plan.
• Key personnel and DR team contact information.
• A risk assessment and BIA to identify potential threats, vulnerabilities and negative effects on business.
• An updated IT inventory that includes details on hardware, software assets and essential cloud computing services, specifying their business-critical status and ownership, such as owned, leased or utilized as a service.
• A plan outlining how backups will be carried out along with an RPO that states the frequency of backups and an RTO that defines the maximum downtime that's acceptable after a disaster.
• A step-by-step description of disaster response actions immediately following an incident.
• A diagram of the entire network and recovery site.
• Directions for how to get to the recovery site.
• A list of software and systems that staff will use in the recovery.
• Sample templates for a variety of technology recoveries, including technical documentation from vendors.
• A communication that includes internal and external contacts, as well as a boilerplate for dealing with the media.
• A summary of insurance coverage.
• Proposed actions for dealing with financial and legal issues.

An organization should consider its DR plan a living document. It should schedule regular disaster recovery testing to ensure the plan is accurate and will work when a recovery is required. The plan should also be evaluated against consistent criteria whenever there are changes in the business or IT systems that could affect disaster recovery.

How to build a disaster recovery team

A DR team is entrusted with creating, documenting and carrying out processes and procedures for an organization's data recovery and business continuity in the event of a disaster or failure.

The key steps and considerations for building a disaster recovery team include the following:

• Identify the key stakeholders. Determine who within the organization should be involved in the disaster recovery planning process. A DR team typically includes cross-departmental employees and executives, such as the chief information officer , IT personnel, department heads, business continuity experts, impact assessment and recovery advisors and crisis management coordinators.
• Define roles and responsibilities. Once the members of the DR team are determined, the next step is to assign them specific roles and responsibilities to ensure effective management of the recovery process. Common roles include team leaders, IT experts, business continuity experts, disaster recovery coordinators and department liaisons.
• Assess expertise. If the organization lacks internal expertise, it can outsource or engage a service provider. These providers can offer external expertise to aid the team, deliver disaster recovery as a service ( DRaaS ), or provide consulting services to bolster the capabilities of the internal team.
• Develop a recovery plan. The team should outline a detailed disaster recovery plan that outlines procedures for responding to various types of disasters. This plan should include steps for data backup and recovery, system restoration, communication protocols and employee safety procedures.
• Train team members. It's important to teach and train team members on their responsibilities within the disaster recovery strategy. This could entail doing frequent drills and simulations to evaluate the plan's efficacy and pinpointing areas in need of development. For example, this could include testing all apps and finding ways to access the critical ones in the event of a disaster.
• Regularly revise the DR plan. The disaster recovery plan needs to be reviewed and updated regularly to reflect organizational changes and how they affect the recovery process.
• Document the procedures. All procedures and protocols within the DR plan should be documented in a clear and accessible format. This ensures that team members can easily reference and follow the necessary steps during a crisis.

Disaster recovery sites

An organization uses a DR site to recover and restore its data, technology infrastructure and operations when its primary data center is unavailable. DR sites can be internal, external or cloud-based.

An organization sets up and maintains an internal DR site. Organizations with large information requirements and aggressive RTOs are more likely to use an internal DR site, which is typically a second data center. When building an internal site, the business must consider hardware configuration, supporting equipment, power maintenance, heating and cooling of the site, layout design, location and staff.

An external disaster recovery site is owned and operated by a third-party provider. External sites can be hot, warm or cold.

• Hot site. A hot site is a fully functional data center with hardware and software, personnel and customer data, which is typically staffed 24/7 and operationally ready in the event of a disaster.
• Warm site. A warm site is an equipped data center that doesn't have customer data. An organization can install additional equipment and introduce customer data following a disaster.
• Cold site. This type of site has infrastructure to support IT systems and data, but no technology until an organization activates DR plans and installs equipment. These sites are sometimes used to supplement hot and warm sites during a long-term disaster.

A cloud-based disaster recovery site is another option, which is also scalable. An organization should consider site proximity, internal and external resources, operational risks, service-level agreements (SLAs) and cost when contracting with cloud providers to host their DR assets or outsourcing additional services .

Disaster recovery tiers

In addition to choosing the most appropriate DR site, it can be helpful for organizations to consult the tiers of disaster recovery identified by the Share Technical Steering Committee and IBM in the 1980s. The tiers feature a variety of recovery options organizations can use as a blueprint to help determine the best DR approach depending on their business needs.

The recognized disaster recovery tiers include the following:

• Tier 7. Tier 7 is a highly advanced level of disaster recovery capability. At this level, artificial intelligence and automation are likely to play a key part in the recovery process.
• Tier 6. Tier 6 disaster recovery capabilities are comparable to Tier 5's, but they often include even more sophisticated technology and techniques for rapid recovery and minimal data loss.
• Tier 5. Tier 5 often implies advanced disaster recovery capabilities beyond a hot site. This can include capabilities such as real-time data replication , automated failover and enhanced monitoring and administration tools.
• Tier 4. This tier includes a hot site, which is a DR site that's fully functioning and ready to use. Hot sites replicate the primary data center's systems and operations in real time, enabling quick failover and minimal downtime. They provide the maximum availability and recovery speed, but they're also the most expensive alternative.
• Tier 3. By electronically vaulting mission-critical data, Tier 3 options improve upon the capabilities of Tier 2. Electronic vaulting of data involves electronically transferring data to a backup site, in contrast to the traditional method of physically shipping backup tapes or disks. After a disaster, there's less chance of data loss or re-creation because the electronically vaulted data is usually more recent than data sent through conventional means.
• Tier 2. This tier improves upon Tier 1 with the addition of a hot site, which are disaster recovery locations that have hardware and network infrastructure already set up to facilitate faster recovery times. There might still be a need for additional setup and configuration.
• Tier 1. This level consists of cold sites that provide basic infrastructure but lack preinstalled systems. Businesses in this category have data backups, but recovery involves manual intervention and hardware configuration, which lengthens recovery times.
• Tier 0. This tier denotes the lowest preparedness level and is usually associated with organizations that don't have disaster recovery or off-site data backups . Because recovery in this tier is entirely dependent on on-site technologies, recovery times can be unpredictable.

Another type of DR tiering involves assigning levels of importance to different types of data and applications and treating each tier differently based on the tolerance for data loss. This approach recognizes that some mission-critical functions might not be able to tolerate any data loss or downtime, while others can be offline for longer or have smaller sets of data restored.

Types of disaster recovery

In addition to choosing a DR site and considering DR tiers, IT and business leaders must evaluate the best way to put their DR plan into action. This will depend on the IT environment and the technology the business chooses to support its DR strategy.

Types of disaster recovery can vary, based on the IT infrastructure and assets that need protection, as well as the method of backup and recovery the organization decides to use. Depending on the size and scope of the organization, it might have separate DR plans and response and resilience teams specific to different departments.

Major types of DR include the following:

• Data center disaster recovery. Organizations that house their own data centers must have a DR strategy that considers all the IT infrastructure within the data center as well as the physical facility. Backup to a failover site at a secondary data center or a colocation facility is often a large part of the plan. IT and business leaders should also document and make alternative arrangements for a wide range of facilities-related components, including power systems, heating and cooling, fire safety, and physical security.
• Network disaster recovery. Network connectivity is essential for internal and external communication, data sharing, and application access during a disaster. A network DR strategy must provide a plan for restoring network services, especially in terms of access to backup sites and data.
• Virtualized disaster recovery. Virtualization provides disaster recovery by letting organizations replicate workloads in an alternate location or the cloud. The benefits of virtual DR include flexibility, ease of deployment, efficiency and speed. Since virtualized workloads have a small IT footprint, replication can be done frequently, and failover can be initiated quickly.
• Cloud disaster recovery. The widespread acceptance of cloud services lets organizations, typically reliant on alternate or on-premises DR locations, host their disaster recovery in the cloud. Cloud DR goes beyond simple backup to the cloud. It requires an IT team to set up automatic failover of workloads to a public cloud platform in the event of a disruption.
• DRaaS. DRaaS is the commercially available version of cloud DR. In DRaaS, a third party provides replication and hosting of an organization's physical and virtual machines. The provider assumes responsibility for deploying the DR plan when a crisis arises, based on an SLA. In the event of a disaster, the DRaaS provider shifts an organization's computer processing to its cloud infrastructure. This enables uninterrupted business operations to be carried out seamlessly from the provider's location, even if the organization's servers are offline.
• Point-in-time snapshots. Point-in-time snapshots or copies generate a precise replica of the database at a specific time. Data recovery from these backups is possible, provided they're stored offsite or on an external machine unaffected by the catastrophe.

Disaster recovery services and vendors

Disaster recovery providers can take many forms, as DR is more than just an IT issue, and business continuity affects the entire organization. DR vendors include those selling backup and recovery software, as well as those offering hosted or managed services. Because disaster recovery is also an element of organizational risk management, some vendors couple it with other aspects of security planning, such as incident response and emergency planning.

Examples of options for DR services and vendors include the following:

• Backup and data protection platforms.
• DRaaS providers.
• Add-on services from data center and colocation providers.
• Infrastructure-as-a-service providers.

Choosing the best option for an organization ultimately depends on top-level business continuity plans and data protection goals, as well as which option best meets those needs and budgetary goals.

Examples of DR software and DRaaS providers include the following:

• Acronis Cyber Protect Cloud.
• Carbonite Disaster Recovery.
• Dell EMC RecoverPoint.
• Druva Data Resiliency Cloud.
• IBM Storage Protect Plus.
• Microsoft Azure Site Recovery.
• Unitrends Backup and Recovery.
• Veeam Backup & Replication.
• VMware Live Cyber Recovery (formerly known as VMware Cloud DR).

Emergency communication vendors are also a key part of the disaster recovery process, as they help keep employees informed during a crisis by sending them notifications and communications. Examples of vendors and their systems include AlertMedia, BlackBerry AtHoc, Cisco Emergency Responder, Everbridge Crisis Management and Rave Alert.

Download a free SLA template for use with disaster recovery products and services .

While some organizations might find it challenging to invest in comprehensive disaster recovery planning, none can afford to ignore the concept when planning for long-term growth and sustainability. In addition, if the worst were to happen, organizations that have prioritized DR would experience less downtime and be able to resume normal operations faster.

Businesses often prepare for minor disruptions, but it's easy to overlook larger and more intricate disasters. Examine the top scenarios for IT disasters that disaster recovery teams should test vigorously.

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A dozen more Texas Red Lobsters at risk of closing if court approves restructuring plan

Dozens more Red Lobster locations are at risk of closure if a court approves the company's plan.

After abruptly closing 50 locations throughout the U.S., the seafood chain filed for bankruptcy . Red Lobster reported having over $1 billion in debt and under $30 million in cash on hand. By selling its business to its lenders, the company hopes to get financing to stay afloat, according to CNN .

Red Lobster says it is doing what it can to restructure and stay alive. "For many of our guests, visiting their local Red Lobster is a family tradition reserved to mark a special occasion, big or small," the company said in a statement to USA TODAY on Tuesday. "We're honored our guests choose us to be at the center of their important life moments and we can't wait to be there with warm Cheddar Bay biscuits for generations to come."

More on bankruptcy: Red Lobster files for bankruptcy days after closing dozens of locations, 8 in Texas

Red Lobster started in Lakeland, Fla., in the late 1960s. In an April 2024  Bloomberg report citing sources familiar with the discussions , the seafood chain was considering a bankruptcy filing to renegotiate burdensome leases and address other long-term contracts, as well as rising labor costs.

According to Bloomberg, Red Lobster has been finding it difficult to make money with its current leases and labor costs.  CNN also reported  that the company suffered a $12.5 million operating loss in the fourth quarter of 2023, despite its " Ultimate Endless Shrimp " promotion.

LIST: Red Lobster locations in Texas at risk of closing

If the court approves the company's plan, the following 12 Texas locations are at risk of closure:

• Austin − 3815 S Lamar Blvd
• Austin − 109 W Anderson Ln
• Corpus Christi − 5825 S Padre Island Dr
• Duncanville − 603 S Cockrell Hill Rd
• Frisco − 3056 Preston Road
• Lubbock − 5034 50th St
• San Antonio − 5815 North Loop, La Cantera, 1604 West Access Road
• San Antonio − 17415 US-281
• San Marcos − 100 I 35 N Frontage Rd
• Shenandoah − 18446 North Fwy
• Texarkana − 3002 St Michael Dr
• Wichita Falls − 4401 Kemp Blvd

MAP: National Red Lobster closures

Who owns red lobster restaurants.

Thai Unio n  Group  − which is based in Thailand − has been the largest shareholder since 2020, owning 49% of the company.  Darden Restaurants  originally sold off Red Lobster to private equity firm  Golden Gate Capital  in 2014 for about $2.1 billion.

— USA TODAY contributed to this report.

Red Lobster could close up to 129 more restaurants amid bankruptcy filing

June 7 (UPI) -- Red Lobster has identified an additional 129 restaurant locations across the United States it could shut down, if a bankruptcy court approves the company's plan.

In bankruptcy documents filed earlier this week, the Orlando-based casual dining chain said it has a total of 228 rejected leases it plans to close and sell. Advertisement

The company said those locations will continue to lose money if they continue to operate as things currently stand.

• Red Lobster files for Chapter 11 bankruptcy protection after restaurant closures
• Red Lobster closes dozens of restaurants amid bankruptcy reports
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Several of the already-closed restaurants have already had their kitchen equipment stripped out and sold at auction as the company looks to pay off around $1 billion in debt compared to just $30 million in cash on hand, according to the bankruptcy filing in the Middle District of Florida.

The court filings last week listed the locations that could face closures including the 56-year-old chain's iconic location in New York City's Times Square, which it has occupied for 22 years.

Owners want $2.2 million in annual rent for the space, the New York Post reported . Advertisement

"Recently, the debtors have faced a number of financial and operational challenges, including a difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry," Red Lobster CEO Jonathan Tibus said in court documents obtained by USA Today.

Tibus said the chain is also dealing with a 30% drop in guests since 2019.

Red Lobster first announced the closure of around 50 restaurants in early May while publicly considering the Chapter 11 bankruptcy proceedings.

Last year, the restaurant attempted to boost business by offering its "Ultimate Endless Shrimp" deal for $20. However, orders exceeded expectations, causing the seafood chain to lose $11 million in the third quarter of last year.

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How to Choose a Business Location: 8 Factors to Consider

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Choosing a business location is not something that can be done on a whim—it's a crucial step in starting a business. First things first, the business location you choose will depend on the type of business you operate. Business parks, shopping malls, strip malls, professional buildings, and others are all designed to meet the specific needs of various businesses. If you’re expanding from online-only to online and brick-and-mortar, for example, your needs will be much different than if you’re an accountant looking to grow your firm and bring in new clients.

A business location strategy takes planning and research and a willingness to thoroughly vet all of your options. With these helpful tips, you can identify the best place to locate your expanding business.

1. Decide on a business location type

Here are five common types of business locations, but more creative options, like co-working spaces, are popping up all the time. Be on alert for these and other location types that would meet your specific needs.

Home-based business - If you work from home but need more space, you might consider moving to a new home or adding on to your existing home to create the office space you need.

Retail business - Don’t limit yourself to downtown storefronts and strip malls. You can also find retail space in airports, free-standing buildings, and special event kiosks.

Mobile business - It used to be that the only businesses that moved around were circuses and festival vendors. But today with mobile card readers, your restaurant can add a roaming food truck location and your used book store can open a new pop-up shop near the beach.

Commercial business space - Commercial business spaces offer flexibility for even more growth down the road, but are typically best for businesses that don’t rely on heavy consumer traffic.

Industrial site - If you operate a manufacturing or distribution business, you’ll have special needs and will likely have limited choices when it comes to opening a new location. Industrial sites are needed for companies that require large amounts of warehousing space, for companies that need access to major transportation routes, or for companies that may produce pollutants as part of the manufacturing process.

In almost every case, where you can locate your business will be dictated by local zoning ordinances in your community. Don’t sign on the dotted line until you’re sure it’s legal for you to operate your business in your desired location.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

2. Make sure the business location is within your budget

Of course, one of your major priorities will be finding a location that fits within your company’s budget. However, that’s not all you need to examine when it comes to money. There often other location-specific costs to consider beyond the purchase price or monthly rent. Almost every location has different hidden costs that you need to account for: taxes, renovations, utility upgrades, minimum wage requirements, and economic incentives. Even mobile businesses need to consider the cost of permits and vehicle licensing when choosing a new business location.

Considering all the above will help you make a well-educated choice for your next business location. Before committing to anything, be sure to speak with other business owners in the area to make sure they’re happy with the location. Although you can never predict if a new location will be successful, you can do as much research as possible beforehand to ensure it is the best available fit for your growing business.

3. Consider your brand

Keep your brand in mind when developing your business location strategy and looking at options. For instance, you probably wouldn’t want to plant your new office supply location right in the middle of a high-end, boutique shopping district. Likewise, an upscale restaurant might not fare so well in the middle of a college town or rural area, where customers are used to spending less money on cuisine.

4. Think about vendors and suppliers

You'll need to secure a location that makes it easy for you to connect with your vendors and suppliers; otherwise, you might experience significant delays or run into frequent issues with inventory levels. When considering your options, ask yourself which location site makes it easier and cheaper for you to get the raw goods you need to operate.

5. Find a safe location

Operating a business where you feel safe and protected should not be underestimated. And besides your own safety and the safety of your employees, also consider your business's safety as well. This is especially important for businesses with inventory that may be at a higher risk for burglary and theft or if you'll frequently be running your business alone at night.

6. Go where there is demand

Ideally, you want to secure a business location that’s not saturated by your competition. Look for areas where your product or service is in high demand or where your competition is fairly low. If at all possible, you’ll want to expand to a location where the other businesses on the block are complementary, to ensure your business fits into the local market.

7. Think about recruiting efforts

If you'll be hiring employees and managers for your business, you'll want to make sure you open in an area where there's good access to public transportation or where potential employees will be attracted. Finding high-quality employees is crucial to your business success, so plan your location around where employees want to work.

8. Look for sites with parking options

No matter how attractive your business is, sufficient parking should be a key consideration. Does your business location have a convenient parking lot, or will your customers need to pay for parking—and will they be willing to? If paid parking is your only option, you'll also want to consider if your business will offer validation. And don't forget about your employees here—they'll also need somewhere to park.

The bottom line

There are several business location factors to consider, from pricing and availability to parking and market appeal. Choosing the best location for your business is crucial to your overall success, so it's important to do the necessary research before committing to a location. Be sure to think about your location not only as a business owner, but also from the point of view of an employee and potential customer. A well-informed business location strategy will ensure you find the best place to set up shop and open your doors for business.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Reporting by Angela Christy, Disha Mishra, Pritam Biswas and Jaiveer Shekhawat in Bengaluru, Saqib Iqbal Ahmed in New York and Ross Kerber in New York Additional reporting by Gursimran Kaur and Manya Saini in Bengaluru Editing by Varun H K, Nivedita Bhattacharjee, Shinjini Ganguli and Matthew Lewis

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