Entrepreneurs, like myself, who are just starting out as business owners face all kinds of obstacles along the road to success. Many of us tend to move too fast while overlooking the importance of a solid business foundation. From my experience as a restaurant owner I have found there are a few key points that need to be given serious consideration before getting started, namely the thoroughness of your business concept and the choice of location.
Concept and location are basic factors that influence the future evolution and success of any restaurant. You could rightly say that the concept will determine the location, but you could also say that the location simultaneously determines the concept. With this in mind the two are inseparable in their objective to create demand for your product and bring value to your customers by satisfying their expectations and local needs.
There are two optimal ways to approach concept and location:
• Start from the beginning by creating a concept that satisfies the demand of a specific area and location.
• Or, identify a location and area where the target of your concept is concentrated.
Other points to take in consideration are:
• Market size and demographics: Does the location provide enough target clients to bring you sufficient business in the future?
• Is the location optimal for your business model and legal requirements or will adjustments need to be addressed?
• And, are there similar services or products and direct competitors close by?
Now, it should be clear at this point that location is going to be one of the main factors in determining the evolution of your business. Good access to your product or service is basic for its success because people are keen to look for easy access, availability, and most of the time – proximity. For this reason you must strive to bring your products and services close to your customer.
Changing Times Bring Opportunities
Over the last decade, searching out good and interesting locations was a tough job due to an often times over inflated demand compared to the offer. Also, not all locations could be used for hospitality related businesses because of zoning limitations and construction issues. In some areas they have been rejected due to the undesirable increase in traffic and noise in certain neighborhoods. And if that wasn’t enough, the astronomical rents in recent years made it impossible for many business models to survive regardless of the concept and location. However, there is good news in all of this since recently things have begun to change and owners of commercial premises are beginning to adjust their rents to fall in line with the real demand and not one based on speculation.
The current situation of the economy has brought much needed depreciation of real estate values and this has created new opportunities for entrepreneurs that were unthinkable as little as four years ago. Lower rents and fixed costs now provide access to good locations that were unviable for new business startups before the economic downturn. This has also had a negative impact on demand and the average check when eating out has also decreased. But, with some creativity these negatives can be turned into positives by considering the additional traffic you can gain from acquiring a good location and developing a concept that answers the desire of the location’s customers.
Plan for success
Long gone are the days of becoming an entrepreneur for the sake of trends and personal whims. Today, customers are more informed and selective in their choices. This means that not just any concept is going to produce success and the points previously outlined take on more relevance whereas before they were usually ignored. On the one hand, demand is no longer higher than the offer while on the other, consumption habits and consumer trends are changing considerably. This means that new business models must invest considerable time developing strong concepts and internal structures in order to stand a chance in the marketplace. Are you prepared to meet the challenge?
I hope you’ll join me in my next article where we’ll explore the topic of Business Concept in more detail with some specific models for reference. Until then, good luck in your entrepreneurial ambitions!