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Distribution and Location. 7. chapter. Prepared by Ron Knowles Algonquin College. Business Plan Building Block. Chapter 7 will help you select a distribution strategy and location that is best for: The customer Your type of business The options that are available. 7. chapter.

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  1. Distribution and Location 7 chapter Prepared by Ron Knowles Algonquin College Chapter 7

  2. Business Plan Building Block • Chapter 7 will help you select a distribution strategy and location that is best for: • The customer • Your type of business • The options that are available 7 chapter Chapter 7

  3. Learning Opportunities • Understand the contribution of location to small business success. • Understand the uniqueness of business-location needs. • Focus on customer needs when evaluating a location. • Develop a checklist for evaluating potential sites for a business. • Think about if and when you should locate your business out of the home. • Use both secondary and primary sources of information in locating your business. • Understand and negotiate a lease contract. Chapter 7

  4. Distribution Strategy • Your distribution strategy will depend on a number of factors, such as: • Customer needs • Type of business (B2C or B2B) • Type of product/service • Transportation costs • Competition • Successful entrepreneurs take advantage of more than one distribution channel. Chapter 7

  5. Distribution Strategy • Successful entrepreneurs take advantage of more than one distribution channel. • Your physical location should depend on a multiple distribution strategy. Chapter 7

  6. The “Best” Location • A location filter or checklist will help you zero in on the “perfect” location • Use a scale of 1 to 10 to rate the relative importance of each item on this list. When you finish scoring, go back and note the high numbers anything above 5. ___Local/municipal licensing ___Neighbourhood mix ___Competition ___Security, safety ___Labour pool ___Services ___Costs ___Ownership ___Property owner/landlord ___Past tenants ___Space ___Accessibility ___Professional advice ___Parking ___History of the property ___Physical visibility ___Life-cycle stage of the area ___Image ___Hours of operation ___Utilities ___Local zoning by-laws ___Taxes ___Approvals ___Transportation ___ Your target customers Chapter 7

  7. Cocooning Computerization Two-Income Families Growth of Service Industry Higher Productivity Increased Efficiency Improved Service Vigilant Consumer Downsizing Mobility The Rise of the Gold-Collar Worker • Working at home has become a major trend and is one of the golden industries of the 21st century. • 10 Major reasons for the home-based trend Chapter 7

  8. Is Home the “Best” Place? Potential Advantages Potential Disadvantages • Low risk of expensive mistakes • Opportunity to use household resources • Low overhead • Gradual start-up and growth • No commuting time or expense • Tax advantages (with deductions allowed for part of the house) • Relatively inexpensive way to test a market • Reduced child-care costs • Increased quality time with family • Isolation and lack of contact with colleagues • Increased family stress • Need for self-discipline • Local by-laws and regulations • Less established or refined image • Conflict with neighbours • Parking problems Chapter 7

  9. A Location Checklist for Home-Based Business • A consideration of the following items may help you determine if you should operate your business out of the home. • Target market • Neighbourhood mix • Physical visibility • Competitors • Life-cycle stage • Image • Local/municipal licence • Local zoning by-laws • Space/physical requirements • Approvals • Insurance • Utilities • Work habits/behaviour • Lifestyle Chapter 7

  10. Sources of Information • Selected Secondary Sources of Location Information • Census • Market Research Handbook • Statistics Canada catalogues • Statistics Canada Web site • Industry Canada Web site—Strategis • Local and regional governments • Local resource centre or library • Potential suppliers • Private research companies • Commercial real estate agents • + Your New Eyes Research (Primary Research) Chapter 7

  11. Sources of Information • Primary Sources of Location Information • Finding the right location is a real opportunity to practice new-eyes research. Textbook examples of this type of research are provided for the following businesses: • Dry cleaning • Gift store • Restaurant • Travel • Home renovation Chapter 7

  12. Building gross area Rentable area Usable building area Gross rent Common area Net rent The Language of Leases Key Terms Loss factor Loss factor Chapter 7

  13. Escape clause • Option to renew • Right to transfer • Cost-of-living • Percentage lease • Floating rent sale • Start-up buffer • Improvement Before You Sign a Lease Checklist • Restrictive covenants • Maintenance Chapter 7

  14. Plotting Your Future Checklist • What criteria are important to your location? • What secondary research do you need to make a decision about location? • If you plan to operate a home-based business, be sure to complete your location analysis checklist. • Define the importance of location for your target customer. • If you are a home-based business, how have you separated work from home? • Why have your chosen the site that you have selected? • If you have a home-based business, identify any zoning issues you face. Chapter 7

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