CHOOSING THE RIGHT CHOOSING THE RIGHT LOCATION AND LAYOUTLOCATION AND LAYOUT

Choosing a LocationChoosing a Location

The right region of the countryThe right state in the regionThe right city in the stateThe right site in the cityWhere is the growth potential????

Dr. Jerry Kudlats

Choosing the Region:Choosing the Region:Sources of InformationSources of Information

Census data◦ http://www.census.gov/◦ http://factfinder.census.gov

ZoomProspector◦ www.zoomprospector.com

Population Reference Bureau◦ www.prb.org

STAT-USA ◦ http://www.statusa.gov

Dr. Jerry Kudlats

Choosing the Region:Choosing the Region:Sources of InformationSources of Information

Commercial Atlas and Marketing Guide

Zip Code Atlas

Geographic Information Systems (GIS)

◦U.S. Census Department’s TIGER

Dr. Jerry Kudlats

(continued)

Geographic Information Systems Geographic Information Systems (GIS)(GIS)

Computerized programs combining map-drawing with database management capability.

Search through virtually any database and then plot the results on a map.

Visual display reveals otherwise hidden trends.

Dr. Jerry Kudlats

Choosing the StateChoosing the State Proximity to markets

◦ reduces distribution costs

Proximity to needed raw materials

◦ Closer to suppliers the better - Reduces costs to make product

Wage rates

◦ Wages very state to state affecting cost of doing business

Labor supply needs

◦ 2 factors - # of workers available and their level of education

Business climate

◦ City/state restrictions – ie blue laws (Sunday closings)

Tax rates

◦ Special tax rate incentives – Kia in Georgia, or Mercedes in AL.

Internet access

◦ Make sure hi speed access – DSL or T1 is available

Total operating costs

◦ Wages, taxes, utilities, rent all affect the business ventureDr. Jerry Kudlats

State Evaluation MatrixState Evaluation Matrix

State Weighted Score (Weight x Score)

Location Criterion Weight

Score (Low = 1, High =

5) State 1 State 2 State 3

Quality of labor force          

Wage rates          

Union activity          

Property/building costs          

Utility costs          

Transportation costs          

Tax burden          

Educational/training assistance          

Start-up incentives          

Raw material availability          

Quality of life          

Other:          

Other          

Total Score      Dr. Jerry Kudlats

TABLE 14.1

Choosing the CityChoosing the City

Population trendsCompetitionClusteringCompatibility with communityLocal laws and regulationsZoning regulations – commercial

vs. residentialDr. Jerry Kudlats

Choosing the CityChoosing the City

Appropriate infrastructureCost of utilities and public servicesIncentivesQuality of life

Dr. Jerry Kudlats

(continued)(continued)

Location Criteria for Retail and Location Criteria for Retail and Service Service

Trade area size – the region from which a business can expect to draw customers

Retail compatibilityDegree of competition

Dr. Jerry Kudlats

Retail & Service Location OptionsRetail & Service Location Options

Central Business Districts (CBDs)Neighborhood locationsShopping centers and malls

Dr. Jerry Kudlats

Shopping Centers and MallsShopping Centers and Malls

Neighborhood shopping centers◦ 3 to 12 Stores; anchor is supermarket or drugstore;

serves up to 40,000 people – usually within 10 minutes travel time.

Community shopping centers◦ 12 to 50 stores; anchor is department or variety

store; serves 40,000 to 150,000 people.Power centers

◦ Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.

Dr. Jerry Kudlats

Shopping Centers and MallsShopping Centers and Malls

Theme or festival centers◦ Employ a unifying theme, often involving

entertainment, to attract tourists. Outlet centers

◦ Feature manufacturers’ and retailers’ outlet stores selling name-brand goods at discount prices; usually follows “open air” design.

Lifestyle centers◦ Located near affluent residential neighborhoods;

designed to look more like a central business district than a shopping center or mall.

Dr. Jerry Kudlats

(continued)

Shopping Centers and MallsShopping Centers and Malls

Regional shopping malls◦ 50 to 100 stores; anchor is one or more major

department stores; draws customers from a large trading area, often 5 to 15 miles or more.

Super-regional shopping malls◦ Similar to a regional mall but bigger; trading area is

25 miles or more in all directions.◦ Examples

Mall of America (Bloomington, MN), the largest mall in the U.S.

West Edmonton Mall (West Edmonton, Canada), the largest mall in North America.

Dr. Jerry Kudlats

Dr. Jerry Kudlats

FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers.

Retail and Service Location Retail and Service Location OptionsOptions

Near competitors

Inside large retail store

Outlying areas

Home-based businesses

◦Low cost to set up

Dr. Jerry Kudlats

(continued)

Location Decisions for Location Decisions for ManufacturersManufacturers

Foreign trade zones◦Area in or near a U.S. customs port of

entry.

Dr. Jerry Kudlats

Dr. Jerry Kudlats

FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works

Manufacturing Locations

Dr. Jerry Kudlats

Foreign trade zones

Empowerment zones

Business incubators

Business IncubatorsBusiness Incubators

Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents.

More than 1,100 in operation across the U.S.They work!

◦ Companies that “graduate” from incubators have a success rate of 87%.

◦ 84% of graduates stay in the local community, creating local job opportunities.

Dr. Jerry Kudlats

FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association. Dr. Jerry Kudlats

LayoutLayout

The logical arrangement of the physical facilities of a business that contributes to efficient operations, increased productivity, and higher sales.

Study: Employees believe that the quality and quantity of their work would increase by an average of 25% with better workplace design.

Dr. Jerry Kudlats

Layout: External FactorsLayout: External Factors

The size must be adequate to accommodate business needs.

The appearance must create the proper image or “personality” for the business in the customer’s eyes.

The entrance must invite customers to come in.

Dr. Jerry Kudlats

Must comply with Americans with Disabilities Act (ADA).

Pay attention to the business sign, the most direct method of reaching potential customers.

Dr. Jerry Kudlats

((continued))

Layout: External Factors

A Business SignA Business Sign

Tells potential customers who you are and what you’re selling.

Contrasting colors and simple typeface.

Should be visible, simple, and clear.

Should be legible both day and night.

Must be maintained properly.

Must comply with local sign ordinances.

Dr. Jerry Kudlats

Building InteriorsBuilding Interiors

Ergonomics is an integral part of any design.Proper layout and design pays off in higher

productivity, efficiency, or sales.Proper lighting is measured by what is ideal for

the job being done – the use of natural light can increase retail sales.

Sound and scent should appeal to all customers and can boost sales.

Environmental-friendly design for efficiency and appeal.

Dr. Jerry Kudlats

Layout GuidelinesLayout Guidelines

Know your customers’ buying habits and plan your layout accordingly.

Display merchandise as attractively as your budget will allow.

Display complementary items together.Recognize the value of floor space; never

waste valuable selling space with non-selling functions. High mark up items = prime space!!

Dr. Jerry Kudlats

Three Retail Layout PatternsThree Retail Layout Patterns

Grid◦Rectangular with parallel aisles;

formal; controls traffic flow; uses selling space efficiently.

◦Supermarkets and self-service discount stores.

Dr. Jerry Kudlats

In addition to the text

Three Retail Layout PatternsThree Retail Layout Patterns

Free-Form◦Free-flowing; informal; creates

“friendly” environment; flexible.◦Small specialty shops.

Dr. Jerry Kudlats

In addition to the text

Three Retail Layout PatternsThree Retail Layout Patterns

Boutique◦Divides store into a series of individual

shopping areas, each with its own theme; unique shopping environment.

◦Small department stores.

Dr. Jerry Kudlats

In addition to the text

Layout for ManufacturersLayout for Manufacturers

Type of productType of production processErgonomic considerationsEconomic considerationsSpace availability

within the facility

Dr. Jerry Kudlats

Manufacturing LayoutsManufacturing Layouts

Analyzing production layouts: Avoid the 7 forms of waste◦Transportation◦Inventory◦Motion◦Waiting◦Overproduction◦Processing◦Defects

Dr. Jerry Kudlats

ConclusionConclusion

Location is an important decision for businesses in the areas of:

◦Retail ◦Service◦Manufacturing

The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs.

Dr. Jerry Kudlats