Are you having trouble choosing a business location for your company? Depending on your product or service, it may make sense to start a new business in a particular state, city or town—or to not have a physical business location at all. And although it seems like digital shopping has reached a new high and e-commerce is king, data from the Census Bureau of the Department of Commerce reveals that in Q1 2016, about 93 percent of all U.S. retail sales came from traditional brick and mortar stores.
I spoke to four small-business owners about what went into their decision to select a physical or virtual business location, and what they’ve learned in the process. Here, Peter Awad, co-founder of Mission Meats in Decorah, Iowa; Lindsay Tanne, co-founder of LogicPrep in Armonk, New York; Brian Podwinski, owner of Blue Blood Brewing Company in Lincoln, Nebraska; and Ismael Wrixen, co-owner of brokerage firm FE International in Boston, Massachusetts, sound off.
What factors went into deciding on a physical or virtual business location for your company?
Peter Awad: I'm 100 percent focused on flexibility, so it is important to have the ability to operate my companies from anywhere with an internet connection. The most important factors are [having] people and groups in the area I can identify and collaborate with; beautiful, quiet co-working spaces where I can plug in easily; and outdoor amenities like the beach and hiking.
Lindsay Tanne: LogicPrep cultivates a motivational space that encourages learning. For this reason, we seek locations that are well-lit, well-designed—clean lines, modern aesthetic—and well-located relative to our clients’ daily routines. We want to make ourselves a convenient respite, a space outside of one’s home and school to learn from inspiring instructors.
—Lindsay Tanne, co-founder, LogicPrep
Brian Podwinski: We had to look not only [for] manufacturing space but also [for] a good retail environment to interact directly with our customers. We needed a location that would be cost-effective for the manufacturing operations as margins are low and the space requirement high. On the other hand, we required an easily accessible location for customers where margins are significantly higher.
Ismael Wrixen: Expanding from the U.K. into the U.S. was a big decision. The U.S. has many great locations, so we first established a shortlist of five potential cities based upon a heat map of our client base and conference activity. We then worked with attorneys in the U.K. and U.S. to determine which states offered the greatest opportunities over the long-term. We chose Boston primarily for its business-friendly laws, nationally ranked colleges, thriving entrepreneurial tech community and, importantly, the convenient time zone that allows our team to service both European and West Coast clients.
What do you use your physical business location for?
Tanne: While we do a large percentage of our instruction online, our physical location is meant for teaching and practice testing, staff training and curriculum development.
Podwinski: We brew, package, ship and serve beer.
Awad: We need a physical address to receive mail and packages, and to visit with clients.
Wrixen: Housing our growing teams in physical locations has proven to be a successful strategy over the past six years. We are able to ensure that team leaders and team members are aligned and clear on the short- and long-term goals and the objectives of the firm. While many incumbents and new startups are opting for remote locations, the physical location model has helped develop and consistently maintain best-in-class standards and services, providing a big advantage over the competition.
As a small-business owner, what has been your biggest takeaway about the relative importance of location?
Podwinski: Location can define you. We started in an industrial park, nothing special. While rent was very affordable, we spent time and money letting customers know where we were.
For our second location, we re-opened a historic cave in Lincoln named Robbers Cave. Legend has it that Jesse James hid out there after robbing a bank in Minnesota, and marketing this location was easy and exciting for the community. We’ve had dozens of newspaper articles and TV interviews detailing the progress of our facility from the ground up. The publicity helped create a buzz that would not have happened without the proper location.
Wrixen: As a leading SaaS M&A [software as a service mergers and acquisitions] advisory firm, we rely heavily on our staff as well as technology and processes to deliver service to our clients. Hiring the very best talent is integral to our ongoing success. By having a friendly, professional office, we are able to show potential new hires and clients that FE International is a strong and reputable firm that has stood the test of time.
Awad: I believe it is important to be in a location that feeds the entrepreneurial drive and spirit. Find that place and locate your business there. Once you are surrounded by this support system, business will follow in ways you can’t imagine.
Tanne: When opportunities arise, don’t be afraid to chase them—regardless of location. When we started discussing plans to scale our New York location, we never anticipated that our second office would be in Latin America. But after we assessed the potential market and performed our due diligence, we didn’t let the distance act as a deterrent.
What are some initial steps all entrepreneurs should take when considering a new business location?
Wrixen: It’s important to have a long-term goal in mind when making any big decision, so picture your company in 10 years and detail how the organization will look once you get there. If staff and key stakeholder communities are part of that vision, take the time to research business-friendly areas within a close proximity to both. As the business and client base grows, time zones will also become more critical, so choose a location that is well-positioned globally and has strong national and international transport connections.
Awad: Travel to the location you’re considering and live like a local. Plug into community activities and get a feel for the place. This will allow you to make a more educated guess whether the location is right for you.
Tanne: Consider the competition, but don’t be scared away by it. It’s important to be knowledgeable about the other players when considering a location, but if you can truly offer a differentiated service, the presence of competition is not necessarily a bad thing. Just know that you have to do it better than anyone else out there. Also, be sure to choose a space that feels full from the outset—it creates a good energy. However, it’s also wise to design the space with an eye toward potential growth.
Podwinski: First, define what you need in a space. We found that the lack of an initial definition led to decisions based on emotion. The second step is simple: find a space that meets your needs. Nothing more, nothing less.
Read more articles on planning for growth.