Stage 4: Facilities & Insurance
Step 18: Consider Your Location
The Concept:
Finding the best location for your business is critical to your success.
What you need to know:
An old adage in real estate is "location, location, location." This applies to virtually all businesses. If your business is retail, you need to be located where your customers shop. If you have a manufacturing company, being located near suppliers or distributors may be more important. The successful entrepreneur considers searching for a location only after the previous model steps are completed and only with the assistance of a commercial real estate agent.
In addition to issues of square feet required, price per square foot and accessibility, the following are also important:
- Lease vs. Buy. Is the space available for lease or purchase? Can you comfortably afford to buy? If you do lease, what are the provisions of the agreement?
- Zoning. Identifies what kinds of businesses can be located at a given site, i.e. retail, office, or manufacturing. Make sure the property you choose is correctly zoned for your business.
- Use. Is the facility built according to safety code for the proposed business usage? Considerations range from floor loads and fire ratings to electrical capacities.
- Local Building Codes & Permits. These provide guidelines for the construction or remodeling of a facility. Check with the local building authority to determine if permits are required for any changes to the facility.
- Sign Permits. Addresses signage size and location.
- Historic Preservation. Check to see if the property is located in a historic district. If so, it may affect what you may or may not do to a building.
- Prevailing Wage. Will you be or are you required to pay prevailing wages on any construction? Government funded projects may be subject to regulation in this area.
- Property Tax. Determine what your real estate taxes will be and if any planned increases are pending.
- Environmental Issues. Are there currently or have there ever been buried tanks or other environmental contamination at the proposed site? Who is responsible for cleanup? What improvements do you need to make to accommodate any toxic materials used in your business?
- Occupancy Costs. Real estate taxes, property insurance, utilities and interior and exterior maintenance costs should be calculated for use in preparing budgets and cash flow statements.
Points to consider:
- Does the location add value to the business? Does it hit your target market?
- Does the business need a high profile, high-traffic facility? Could the business function well in a low-traffic, lower-cost facility?
- Do you know what the traffic count is for the area? You can find this information at local traffic engineering or planning offices.
- Is the parking adequate for your employees and customers?
- Is the facility large enough to accommodate your business as it grows?
- If you need to alter the building for your purposes, have you estimated the costs and timeline for completion?
- What are the overall costs associated with your location selection?
- What are the best locations for your business given the considerations above?
Step 19: Identify Insurance Issues
The Concept:
You need to be adequately insured to protect your business and yourself.
What you need to know:
Although the expense of having adequate insurance adds to the cost of doing business, it's worth the money and peace of mind. Insurance policies are available to cover virtually everything connected with your business, including you and your employees. An insurance professional can advise and guide you in planning for all of your insurance needs. You may need insurance to cover many of the following:
- Liability Insurance
- Product Liability Insurance
- Business Interruption Insurance
- Disability Insurance
- Property Insurance
- Business Vehicle Insurance
- Equipment/Inventory Insurance
- Employee Health Insurance
- Key Employee Insurance
- Bonding
Points to consider:
- Can your insurance professional offer you a discount on an entire package of insurance?
- Have you shopped around for more than one insurance quote?
- How often are premiums paid?
- Who will be responsible for making sure premiums are paid?
- What is the procedure for making claims?
- If you or an employee were injured, or if you sustain property damage, would you be able to stay in business?
