Distribution & Location Explore Potential Location Sites 7-1Copyright © 2011 Nelson Education Ltd. Prepared by Ron Knowles Algonquin College & Jennifer

Distribution & LocationExplore Potential Location SitesExplore Potential Location Sites

7-1Copyright © 2011 Nelson Education Ltd.

Prepared byRon Knowles

Algonquin College& Jennifer Rouse Barbeau

Canadore Collegechap

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Chapter OverviewChapter 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


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Learning OpportunitiesUnderstand the contribution of location to

small business success.Begin to develop a multiple distribution

strategy.Understand the uniqueness of your business

location needs.Focus on customer needs when evaluating a

location.Develop a checklist for evaluating potential

sites for your business.


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Learning Opportunities

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.


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Business LocationA business location is:A business location is:

The place where you distribute the goods and services for your business.

A business location is A business location is important for both your important for both your marketing and operational marketing and operational strategies.strategies.


Business LocationYour location decision location decision will depend to a

large extent on 2 major factors:1. What your customer believes is the

“best location”2. Your distribution channel—the method

or way in which a producer makes a product or service available to the consumer


Distribution Channels

2 broad channel options:1.1. Direct distributionDirect distribution

2.2. Indirect distributionIndirect distribution


Direct DistributionSelling of goods and services directly to

the consumer or end user.

Two types of retailing channels:Two types of retailing channels:1. store

2. non-store


Indirect DistributionWholesalingWholesaling

selling of products to retailers for resale to the end user

FranchisingFranchising a special kind of distribution system in

which one company/individual (the franchisor) grants the right to sell its products/services to another company/individual (the franchisee)


Distribution StrategyYour distribution strategy will depend Your distribution strategy will depend

on a number of factors, such as:on a number of factors, such as:Customer needsType of business (B2C or B2B)Type of product/serviceTransportation costsCompetition


Distribution StrategySuccessful entrepreneurs take

advantage of more than one distribution channel.

Your physical location should depend on a multiple distribution strategy.


The “Best” LocationA location filter will help you zero in on the “perfect” location.Rate the importance of each listed item (1 to 10).Note the highest numbers -- anything above 5.

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___Local/municipal licensing___Neighbourhood mix___Competition___Security, safety___Labour pool___Services___Costs___Ownership___Property owner/landlord___Past tenants___Space___Accessibility___Professional advice

___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

___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

Copyright © 2011 Nelson Education Ltd.

The Rise of the Gold-Collar WorkerWorking at home has become a major trend.10 Major reasons for the home-based trend:

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Increased EfficiencyIncreased Efficiency

Growth of Service Industry

Growth of Service Industry

ComputerizationComputerization

Higher ProductivityHigher Productivity

Two-Income FamiliesTwo-Income Families

CocooningCocooning

Vigilant ConsumerVigilant ConsumerImproved ServiceImproved Service

MobilityMobilityDownsizingDownsizing


Is Home the ‘Best’ Place?

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Potential Disadvantages

Potential Advantages

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


A Location Checklist for Home-Based Business

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Consider these items when operating a business out of 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


Choosing a Home-Based Business

The best home-based business depends on your ability to connect your values, experience and knowledge with current market trends.


Home-Based Business Trends

Current trends include:Current trends include: Technology coach Upmarket travel advisor Catering for a healthy lifestyle Eco friendly cleaning service provider Elder services provider Concierge service agent Personal health or fitness trainer Pet sitting/grooming provider Life balance, personal or business coach Financial or advisor Energy efficiency contractor/consultant Home improvement/décor contractor/advisor


Sources of Information

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Secondary Sources of Location InformationSecondary Sources of Location Information Census Market Research Handbook Statistics Canada website Industry Canada website Local and regional governments Local resource centre or library Potential suppliers Private research companies Commercial real estate agents


Sources of Information

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Primary Sources of Location InformationPrimary Sources of Location Information To find the right location, practice new-eyes research.

Textbook examples of this type of research are provided for the following businesses:

Dry cleaningGift store RestaurantTravelHome renovation


Before You Sign: Checklist

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Escape clause Escape clause

Option to renew Option to renew

Right to transfer Right to transfer

Cost-of-living Cost-of-living

Percentage lease Percentage lease

Floating rent sale Floating rent sale

Start-up buffer Start-up buffer

Improvement Improvement

Restrictive covenants Restrictive covenants

Maintenance Maintenance


The Language of Leases: Key Terms

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Net rentNet rent

Gross rentGross rent

Rentable areaRentable area

Common areaCommon area

Usable building areaUsable building area

Building gross areaBuilding gross area

Loss factorLoss factor


Chapter 7 helps you prepare an important part of your business plan:

LocationLocation


Business Plan Business Plan Building Block

What is your distribution strategy?

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 answer all the questions in Box 7.3.

Define the importance of location for your target customer.


Checklist for Your Business PlanYour Business Plan

Checklist for Your Business PlanYour Business Plan

Do you have a plan for your store layout?

If you operate 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.


QuestVestGloria Brookstone ran a successful “QuestVest” business out of her home.

Answer the Chapter 7 case study question to learn: What “E” skills and personality traits helped Gloria start

and grow her business. What market trends helped Gloria grow her business. The QuestVest multiple distribution strategy. The major advantages of the QuestVest home-based

strategy.


CaseStudy

Documents

Distribution & Location Explore Potential Location Sites 7-1Copyright © 2011 Nelson Education Ltd. Prepared by Ron Knowles Algonquin College & Jennifer