Chapter 12: Choosing the Right
Location and Layout
Objectives |
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Upon completion of this chapter, you will be able to:
- Explain the stages in the location decision: choosing the region, the state,
the city, and the specific site.
- Describe the location criteria for retail and service businesses.
- Outline the location options for retail and service businesses: central
business districts (CBDs), neighborhoods, shopping centers and malls, near
competitors, outlying areas, and at home.
- Explain the site selection process for manufacturers.
- Describe the criteria used to analyze the layout and design considerations
of a building, including the Americans with Disabilities Act.
- Explain the principles of effective layouts for retailers, service
businesses, and manufacturers.
- Evaluate the advantages and disadvantages of building, buying, and leasing a
building.
Chapter 12: Choosing the Right
Location and Layout
Chapter Overview
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- Explain the stages in the location decision - choosing the region,
the state, the city, and the final site.
- The location decision is one of the most important decisions an entrepreneur
will make, given its long-term effects on the company. An entrepreneur should
look at the choice as a series of increasingly narrow decisions: Which region of
the country? Which state? Which city? Which site? Choosing the right location
requires an entrepreneur to evaluate potential sites with her target customers
in mind. Demographic statistics are available from a wide variety of sources,
but government agencies such as the Census Bureau have a wealth of detailed data
that can guide an entrepreneur in her location decision.
- Describe the location criteria for retail and service businesses.
- For retailers, the location decision is especially crucial. Retailers must
consider the size of the trade area, the volume of customer traffic, number of
parking spots, availability of room for expansion, and the visibility of a site.
- Outline the basic location options for retail and service businesses.
- Retail and service businesses have six basic location options: central
business districts (CBDs); neighborhoods; shopping centers and malls; near
competitors; outlying areas; and at home.
- Explain the site selection process for manufacturers.
- A manufacturer's location decision is strongly influenced by local zoning
ordinances. Some areas offer industrial parks designed specifically to attract
manufacturers. Two crucial factors for most manufacturers are the reliability
(and the cost of transporting) raw materials and the quality and quantity of
available labor.
- A foreign trade zone is a specially designated area in or near a United
States customs port of entry that allows resident companies to import materials
and components from foreign countries; assemble, process, manufacture, or
package them; and then ship the finished product while either reducing or
eliminating tariffs and duties.
- Empowerment zones offer businesses tax breaks on the investments they make
within zone boundaries.
- Business incubators are locations that offer flexible, low-cost rental space
to their tenants as well as business and consulting services. Their goal is to
nurture small companies until they are ready to "graduate" into the business
community. Many government agencies and universities offer incubator locations.
- Describe the criteria used to analyze the layout and design
considerations of a building, including the Americans with Disabilities Act.
- When evaluating the suitability of a particular building, an entrepreneur
should consider several factors: size (Is it large enough to accommodate the
business with some room for growth?); construction and external appearance (Is
the building structurally sound and does it create the right impression for the
business?); entrances (Are they inviting?); legal issues (Does the building
comply with the Americans with Disabilities Act? If not, how much will it cost
to bring it up to standard?); signs (Are they legible, well-located, and easy to
see?); interior (Does the interior design contribute to our ability to make
sales? Is it ergonomically designed?); lights and fixtures (Is the lighting
adequate for the tasks workers will be performing? What is the estimated cost of
lighting).
- Explain the principles of effective layouts for retailers, service
businesses, and manufacturers.
- Layout for retail stores and service businesses depends on the owner's
understanding of her customers' buying habits. Retailers have three basic layout
options from which to choose: grid, free-form, and boutique. Some areas of a
retail store generate more sales per square foot and are, therefore, more
valuable.
- The goal of a manufacturer's layout is to create a smooth, efficient work
flow. Three basic options exist: product layout, process layout, and fixed
position layout. Two key considerations are worker productivity and materials
handling costs.
- Evaluate the advantages and disadvantages of building, buying, and
leasing a building.
- Building a new building gives an entrepreneur the opportunity to design
exactly what he wants in a brand new facility; however, not every small business
owner can afford to tie up significant amounts of cash in fixed assets. Buying
an existing building gives a business owner the freedom to renovate as needed,
but this can be an expensive alternative. Leasing a location is a common choice
because it is economical, but the business owner faces the uncertainty of lease
renewals, rising rents, and renovation problems.
Chapter 12: The Foundations of
Entrepreneurship
Small Business
Assignments |
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Answer 6 of the following questions:
1. How do most small business owners choose a location? Is this
wise?
2. What factors should you consider when evaluating a region in which
to locate a business? Where is this data available?
3. What are zoning laws? How do they affect the location
decision?
4. What types of information can the entrepreneur collect from census
data?
5. Why may a "cheap location" not be the best location?
6. What function does a small firm's sign serve? What are the
characteristics of an effective business sign?
7.. Explain the American with Disabilities Act. Which businesses
does it affect. What is its purpose?
8. What are some of the key features that determine a good
manufacturing layout?
9. Summarize the advantages and disadvantages of your building, buying,
layout and leasing of that building.
Chapter 12: Choosing the Right
Location and Layout
Small Business Links
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Home-Based Businesses
Location and Layout