We’ve all heard that axiom in so many different forms that it’s become a cliché. But phrases become clichés because there’s a strong element of truth to them. That’s true in the case of a small business as well. Where you do business can, in fact, make or break your business. Today there are so many ways, or I should say, places to do business. Do you need a storefront? Where should it be? How much can I afford to pay in rent? What about on-line marketing? E-bay? Craigslist? What about your own website? The choices are both exciting and daunting.
Before you select a location, there’s a good bit of homework to do first. Many times, answering these questions will point the way to a perfect location! In no particular order, they are:
What product am I selling? I know that last time I said that YOU were the product, but in this case, we have to look at what you produce and/or sell in a more conventional way. For instance, if you are growing herbs for cutting and drying, you’ll need more space to grow the herbs. If you purchase all the plant material you use to produce tinctures, you’ll need less outdoor space, but might need warehouse space for all the bottles.
Will you be selling retail or wholesale? A retail business sells to the end user of the product. Wholesale businesses sell to another business that will then sell to a consumer. Traditionally, retailers take the wholesale price for a product, and “mark it up” (increase the price) by 2 to 3 times or more. You can make money in either situation, even with the lower prices you get for wholesale operations. Wholesalers don’t need any retail outlet, be it a storefront, website, or table at a festival or farmers’ market. You can work in your kitchen or spare bedroom if you like! And the cost of marketing your product can be quite low, as well. Maybe just the time it takes to make a phone call or send an e-mail. So the costs of wholesale tend to be MUCH lower.
What do you like to do? Another consideration here is your own personality. If you love working with your product, but tend to be introverted, you might have more success with wholesaling your product. If you are a more social creature, then retail is probably more to your liking. If you’re in the start-up phase of your business, you have to essentially do it all, but if you like what you’re doing, you’ll tend to do it better.
Where do you find your customers? I’m not necessarily talking marketing here. Where do your customers shop? If your product is usually sold on-line, then there’s no sense in investing in a store. If your customers like to sniff and fondle before purchase, then a storefront is a must. You could certainly do both, but if start-up cash is tight, then answering this one question might make your business a success.
One tip here – just because most products are sold in a particular way, doesn’t mean that all products of that type must be sold that way. A lot of successful businesses have gotten off to a rapid start by looking at a product in a different way.
Is online marketing for you? You can have a virtual storefront with very little money. While that’s good for you, it also means lots of other folks have gotten into the game just as easily and cheaply as you have. So all the rules on competition still apply. Targeting the right market, being the “expert” in that market, and great customer service will help you succeed in online marketing. But that’s true for brick and mortar stores, too.
Do you have the knowledge to create an online “platform”? Platforms, or each of the elements of online selling, are all the rage now – FaceBook, Twitter, YouTube, websites. And a good-looking site that is easy for your customer to use is essential! If you have to pay for all that, the savings of online selling goes away fast! But a clunky, slow site that looks like it’s put together by an amateur is a quick way to failure. That’s one of the reasons all the sites like Craigslist have proliferated.
Where’s the competition? Ever wonder why big stores are neighbors? Because that’s where the customers are! If you know who your customer is, i.e., you have your customer demographics well in hand, then you might find a great location right next door to your biggest competitor! For instance, large natural food retailers often have a decent selection of herbal products. So locate just down the street with a GREAT selection! And make sure you get to know the herbalists at that store. You might end up with traffic generated by your competition.
Can you afford that storefront? I know it’s a big ego boost to have that funky herb shop in the arts district in the city. And feeling good about your business is really important. But will you generate the cash you need to pay for it? Could you get by with that kiosk until your cash flow improves?
Do you need a professional? Real estate business is complicated. That’s why real estate agents exist. And why real estate law is a legal specialty. There’s another set of questions to ask that we just don’t have the space for in this column. We’ll look at that in the future. Til then, work on answering the questions posed here, and you’ll start to see a pattern emerging that will steer you in the direction that will work for you.
*Note: This column first appeared in the NC Herb Association Newsletter in 2013