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Small Business Center

How to Choose Where to Open

March 15, 2024

“Ninety-four percent of adults either shop at or spend time at or use the services of small businesses,” said moderator Davon Barbour, president and CEO of New Orleans Downtown Development District. “That really speaks to the power of these small businesses.” For those who are just starting or are looking to expand their small business, there are tried and true tips to optimize location success. From understanding where your customer lives and shops to understanding construction and buildout time lines, here are strategies from Barbour and other speakers on an ICSC webinar called Essential Site Selection Tips for Small Businesses.

Understand Your Customers’ Shopping Preferences

“Before you start with any site research, you need to really understand what your concept is and who your customer is,” said Pierson Commercial broker Robert Mackowski. He’s working with fellow webinar speaker Rico Macaraeg, who is CEO of NJ Sweat, on the expansion of infrared and plunge therapy studio SweatHouz. NJ Sweat is a franchisee of SweatHouz.

That means understanding the demographics — age, gender, income, education and marital status — and shopping preferences of your target shopper. Are your customers, for example, more inclined to shop in a bustling downtown area with significant foot traffic — likely for a bakery, for instance — or do they prefer driving to a destination — such as for a sporting goods store? Are they more likely to shop at a regional mall or a neighborhood center?

And most important, said Macaraeg, do not assume that if you open a store, customers simply will find you. “We create this amazing cup of coffee, and we think: ‘Oh my God, this is the best cup of coffee we’ve ever had,’” Macareag said. “And we think that the coffee is going to pull customers over to us.” The reality is that customers won’t alter their behaviors to seek you out; instead, you must proactively reach out to them and meet them where they are.

One effective way to gather demographic information about a particular area is by collaborating with a broker. Lean on that person to understand if your concept fits and what incentives are available, said Bobby Boone, founder and chief strategist of real estate planning and economic development consulting practice &Access. If you prefer conducting your own research, a wealth of demographic information is accessible through Google searches into income levels, daytime population and ZIP code details. For more detailed analyses, look at U.S. Census Bureau data or reach out to your local Small Business Development Center, which provides complimentary market research and business resources for site selection.

MORE FROM THE ICSC SMALL BUSINESS CENTER: The Power of Data: How SBDCNet Supports Small Business Growth

Consider Visibility and Ease of Access

No matter how great your store is, if people can’t get to it easily, they’re likely to avoid going. Optimal locations, especially for first-time small business owners, offer easy accessibility, central positioning and high traffic. “You don’t want customers thinking about the headaches of parking every time they want to come to your studio,” says Mackowski.

Also consider what real estate professionals term ingress and egress — that is, how people enter and exit a property. Avoid unnecessary hindrances to reaching your business. And take traffic patterns into account. For instance, if you’re opening a coffee shop, seek a location with slow-moving traffic, making it easier for customers to stop and park. It’s also crucial that your business is visible from the road. “You want your signage out there big and bright for everyone to see. as opposed to microscopic signage,” emphasized Torrence Law Office founder and principal attorney LaVonne Torrence Berner, who has worked with tenants and landlords on lease transactions for more than 20 years.

Look at Trends

Think beyond shoppers’ current residences or workplaces. Anticipate future trends, said Boone. “You want to know: Where is residential growth occurring within a specific geography.” Also understand where there are gaps in the market. “It's very hard to say: ‘Hey, I've been living here for 50 years and now I'm going to go to this new grocery store that just popped up,” added Boone. “Humans are very habitual by nature.” Macaraeg explained: “If you put your coffee shop in a place where there’s already a row of coffee shops, it’s going to be very tough.” However, if you choose a location near numerous tea shops but no coffee shops, you’ll have a much easier time establishing your business.
In addition, locating near businesses that cater to a similar customer base can lead to a ripple effect. To get that spillover benefit, Mackowski said, “think about: ‘Where are the other brands that we want to be around? Where are they located?”

Estimate Time Lines

A lease is a major contractual obligation. Before signing, think about time lines. How long, for instance, do you estimate construction will take? If there’s already a tenant in the space, how long will it take to terminate that tenant’s lease, get them out of the space and get the space turned over to you? Are there things like zoning permits that you need to secure before opening?

“Often, tenants don't have a good grasp on the time that it takes to do those things,” said Berner. “I've worked on deals where from letter of intent to execution to opening the doors, it can take two years. That’s not every deal, but under certain circumstances, that can be the situation. So it’s a matter of planning for the time that it takes to get open.”

The speakers also advised giving yourself a grace period for each phase in your time line.

Trust the Experts

There’s no substitute for experience, particularly when working with brick-and-mortar spaces. From construction challenges to navigating complex lease provisions, mistakes in this realm can be very, very expensive. “That’s one thing I learned very quickly,” Macaraeg said. “Rob and I have butted heads a couple of times, but I always take his guidance for really making tough decisions around real estate.”

Research the Owners and Landlords of the Sites Your Considering

“When you’re signing a lease with the landlord, it’s almost like you’re getting into a marriage with them,” Berner said. “It’s not a sale. You’re not selling an asset or buying an asset and then the relationship is gone. You’re just starting the relationship.” Just as when dating, you need to do your homework. What is the reputation of the landlord? Are they flexible? Do they respond quickly to issues with the building?

Talk to other small business owners in the property. You might be surprised how open they are to sharing their experiences. “We’ve had an opportunity to work with landlords of very different types, from very large institutional REITs all the way down to mom and pops and,” said Macaraeg. The key is “really understanding that they bring different levels of resources to the table.”

Be Clear on Terms

A letter of intent is a preliminary document that outlines the key terms and conditions intended to be included in a formal lease agreement, Barbour explained. This document preempts disagreements down the road, particularly when attorneys are involved in drafting your leases. “If you don’t know what should be in a letter of intent,” Berner said, “it’s helpful to talk to people who have gone through the process to get a grasp on: ‘What should I be asking as I go? What do I need from the landlord?’”

Here are some things to clarify before signing a lease.

Maintenance responsibilities: Clearly define the responsibilities for maintenance and repairs. Who is responsible for routine maintenance, and how are major repairs handled? Macaraeg gave the example of electrical work. “You want to know how old it is and who’s going to replace it. Those are two different worlds with two different dollar signs attached to them.”

Space delivery time line and conditions: How is space coming to you as a tenant? What additional improvement will you need to do? What is the exact date of delivery? Possession is important, said Berner, because that’s the starting date for rents to start.

Common area maintenance, or CAM, fees: If the property has common areas, understand the CAM fees and how they’re calculated. This can impact your overall operational costs, and transparency in these fees is crucial.


Rent per month: Clearly define the agreed-upon rent amount and any specific terms related to payments.

Renewal options and terms: Discuss the renewal options and terms upfront. Know if there are provisions for extending the lease and under what conditions.

Dedicated parking: “With a lot of mixed properties, you want to know: ‘Do I have dedicated parking as a retail tenant, or is this solely dedicated to residential uses?’” Mackowski said. If there isn’t a dedicated parking, you want to know where the closest parking is available.

Termination clause: Clearly outline the conditions under which either party can terminate the lease. This includes considerations for early termination, penalties and notice periods.

Dispute resolution: Include a section on how disputes will be resolved between the landlord and the tenant. This can help avoid legal complications and provide a structured approach to conflict resolution.

Signage: Define the specifics related to signage for your leased space. Clearly articulate the parameters governing the size, placement and design of signage to ensure brand visibility. Discuss any property-specific regulations or local ordinances related to signage to avoid misunderstandings and maintain a cohesive aesthetic. “Sometimes it’s not the municipality that’s going to have the challenges but more the landlord because they might have a conforming design for that space. They want everything to be uniform,” said Berner.

Know What Resources Are Out There

Often, communities have programs to alleviate certain costs and bridge financial gaps. “I’ve seen a lot of façade-improvement grant programs out there,” Boone said, “and I’ve seen some communities that have built or created a tenant-improvement-allowance program, as well.”

But success depends on relationships and networking. “As a small business owner and entrepreneur, especially in the retail space, you’ve got to get your boots on the ground,” said Macaraeg. When he was launching his first couple SweatHouz locations in New Jersey, for instance, he spent a lot of time at local city halls. “One of the cities I was in, the person at the zoning desk was like: ‘I’m not the right person that can help you, but we do have a business improvement district office here in the city offices that runs all of the city BIDs. Let me introduce you,” he recalled. It’s these sorts of soft connections that are invaluable.”

Macaraeg added: “The biggest thing that I've learned through this process is to stay curious, stay humble and be friendly, and people are willing to help you.” And remember that “the towns and cities and townships around the country — they really want you to come and enhance their community with your business.”

By Rebecca Meiser

Contributor, Commerce + Communities Today and Small Business Center

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