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1. Chapter 9 Selecting a Location and Planning the Facilities In the Spotlight: AMT Component, Inc. www.accessmicro.com • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-1

2. Learning Objectives: Chapter 9 1. Identify the factors affecting choice of a business location. 2. Describe the attraction and challenges of a home-based business. 3. Explain how efficiency can be achieved in the layout of a physical facility. 4. Understand the equipment needs of small firms. • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-2

3. Personal Preference • Work at home • Friends and • relatives nearby • Lifestyle advantages Finding an Optimum Location for a Small Business Customer Accessibility • Convenience • for target • customers Environmental Conditions Resource Availability Site Availability and Costs • Laws and taxes • Weather • Competition • Raw materials • Transportation • Labor supply • Incubator or • leasing options • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-3

4. Leasing vs. Buying Advantages of Buying 1. Freedom to design or modify structure 2. Guaranteed location 3. Hedge against inflation Advantages of Leasing 1. Conserving cash 2. Minimizing risk Lease • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-4

5. Need to “Team” Individual members contribute to the work of others. Need for Speed Separate locations can slow down collaboration. Need to Serve Customers Promptly Quick consultation with others is often required to resolve customer problems. Need to Focus Home locations have distractions. Need for Personal Haven Having the business down the hall makes it hard to relax. Needs That Home-Based Locations May Not Fill • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-5

6. Building Layout Factory Layout Retail Store Layout Process layout Product layout Grid pattern Free-flow pattern • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-6

7. Grid Pattern of Store Layout Display Racks Display Racks Racks Display Racks Door Check-out Door Storage Office Restrooms • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-7

8. Racks Office Storage Door Display Check-out Door Table Storage Display Racks Free-Flow Pattern of Store Layout • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-8

9. General-Purpose vs. Special-Purpose Equipment HANDLE WITH CARE • General-PurposeEquipment • Low purchase cost • Flexible production • Good resale value • Special-PurposeEquipment • Low labor cost • High hourly output • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-9

10. BizPlanBuilder on Considerations for Site Selection (p. 94) • Room and cost for expansion • Land and construction costs • Transportation cost and route access for common carrier • Risks and insurance • Packaging and material costs and availability • Labor pool availability, skills, costs • Local ordinances, licensing and permit requirements • Government assistance (roads, training, exemptions, etc.) • Government restrictions and requirements (OSHA, NLRB, etc.) • Community attitudes toward business and manufacturing • Continued operating costs (utilities, communications, etc.) • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 9-10