Starting a Small Business in Oakland County

Selecting a Location for Your Business

There are many factors to consider when determining where to locate your new business. The wrong location may almost guarantee failure; the right location may determine success. Permit approval of a site for business use is made by each individual community.

Demographic Characteristics

You must learn the demographic profile of your potential customers in order to properly evaluate a community for location. Professionals, business executives and their families differ from blue-collar workers in their purchasing interests and needs; a suburban clientele usually will differ from one that comes from a densely populated urban center; families have different interests and needs than singles; etc.

Demographic studies, such as the U.S. Census, report the characteristics of a population; for example, the size, growth, density, age, race and average incomes of a targeted group.

As noted in the previous chapter, there are commercial demographic data companies who will provide market information for a fee. They provide data based on a one or more mile radius from a specific intersection.

Target Market

First, define who will buy your product or service. This target market group is likely to have similar characteristics. See the previous chapter and evaluate:

• Do they have a need that your product or service will satisfy?
• What is the age, sex and income of your target market?
• What are their leisure and lifestyle habits?
• What values are important to them?
• Where do they work and reside?
• Any other similarities?

Trading Areas for Retail or Consumer Services

In addition to defining your target market, you need to determine 1) where the greatest concentration of these customers is located, and 2) how far they will travel to buy your product or service.

Effect of Traffic Counts and Patterns

• Volume of traffic passing location.
• What is the speed of the traffic? Can drivers read signs at high speed?
• Do people buy your particular product/service on their way to or from work?
• How close can customers park to the store? Is it easy in, easy out of the parking lot?
• On-site observations of traffic flow, age of cars, types of people, extent of shoppers carrying packages and many other circumstances can add to your feel for the site.

Too often the importance of the volume of traffic is overstated. Trade associations and other industry groups can help you put this factor in perspective.

General Considerations in Selecting a Retail Site

• Contact all the chambers of commerce serving the areas you are interested in studying. See Appendix F.
• Contact the Community Development Office of the local communities to learn what local information they can provide.
• Locate all your competitors on a large map and code by letter, color or number based on some variation in size, service, etc.
• Contact several commercial realtors to evaluate their properties.
• Rent is a function relative to sales volume; high rent could be economical and low rent can be expensive. High rent could also reflect the level of the community income and resulting higher expected sales.
• Visit similar, but non-competing, businesses in areas of your interest and find out whether they would again locate where they did. What studies did they do? If they would do it differently, why and where?
• Why did the last tenant leave a vacant store you are considering? Ask former tenants and neighbors.
• Read proposed leases. Is rent tied to sales volume? How are tenants organized? Does the tenant have the option of renewing?
• Do they have group promotions and how are the costs assessed? Have an attorney review your lease. The Oakland County Bar Association can assist. Call 248-398-3937.
• Spend time walking in and out of the stores you are interested in and watch the flow of cars and people and see if it all feels right.
• How do the products/services of nearby tenants complement your proposed business? Foot traffic may also be a factor if you sell "impulse" goods. Coffee or yogurt shops may provide walk-in customers from surrounding businesses.

You should also inquire about controls over hours of operation, water/sewer connections, noise and taxes or fees. Most communities have some form of local licensing except where occupations are regulated by the state. Ask the Clerk's Office about licenses and occupancy permits.

Local Ordinances

Regardless of whether you operate your business from home, lease an existing commercial space or build a new facility, you must comply with local zoning ordinances and building codes. Contact the clerk, community development office, engineering or building department where you plan to locate.

When leasing an existing space, you may be subject to different requirements than the current or previous tenant. Do not rely on zoning code interpretations from leasing agents, landlords or contractors.

When considering any type of construction, have the local community building department review any architectural drawings or plans before you commit to them. As the business owner, you are legally responsible for code compliance even if you hire designers and contractors.

Anticipate the following topics when planning your facility:

• Floor, site and landscaping plans
• Trash facilities and outdoor storage
• Heating, electrical, plumbing plans
• Fire protection (including doors)
• Signs, entrance and parking
• Accommodation of disabled
• Interior and exterior modifications
• Hazardous materials or fumes

Help in Choosing a Location

Choosing a location is, at best, a risky undertaking. Considering the consequences of choosing a location that proves to be unsuitable, it pays to get as much assistance as possible. You could plan to hire a consultant to analyze two or three locations that you have selected. You will save money by providing the consultant with preselected potential locations rather than to have him or her initiate an open-ended search for a location. Bankers, lawyers and realtors may also provide information on possible locations.

It would be wise to have an experienced real estate attorney review proposed leases to clarify any questions about insurance, utilities, hours, assessment and who has the option of renewing the lease.