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CHAPTER 9 LECTURE NOTES

1

Identify the factors affecting choice of a business location.

PPT 9-1

Chapter 9

Selecting a Location and

Planning the Facilities

PPT 9-2

Chapter 9

Learning Objectives

A.    The location decision

1.    Importance of the location decision

·          Begin by appealing to the common-sense notion that the best product at                  the lowest price will not sell if it is inaccessible.

·          Emphasize the difficulties associated with changing locations.

·          If several students live off campus, ask them to relate their location concerns relative to the campus. (Some probably wish they lived closer to campus, others farther away.)

PPT 9-3/TM 9-1

Finding an Optimum

Location for a Small

Business

[Acetate 9-1]

PPT 9-4/TM 9-2

Leasing vs. Buying

[Acetate 9-2]

2.    Key factors in selecting a good location

a.     Customer accessibility. See if you have a student seated next to a boyfriend or     girlfriend. If so, point out that location selection is related to accessibility.

b.     Environmental business conditions. Referring again to seating in the class, ask if                 seat selections were made to avoid street noise near a window or otherwise to      improve environmental conditions.

c.     Resource availability (including closeness to raw materials, suitability of labor supply, availability of transportation). If you have a left-handed student, point out that he or she may have chosen a desk (location) designed for a left-hander.

3.    Personal preference of the entrepreneur.  Continue with the seating example.  Ask whether students chose their class seating location simply because they had a personal preference for the front or back row.

4.       Availability and costs of sites.  Suppose it cost $1 to sit in the front row, $2 to sit in the second row, etc.  Where would students choose to sit?

2

Describe the attraction and challenges of a home-based business.

PPT 9-5/TM 9-3

Needs That Home-Based

Locations May Not Fill

B.     Home-based businesses

1.    The attraction of home-based businesses

                a.    Financial considerations (reduced costs)

b.     Family lifestyle considerations (desire to spend more time near family)

2.       Challenges of operating a business at home

a.      Family and business conflicts

       i    Discuss potential conflicts between business and family interests in the home setting. Is this conflict similar to that between students’ study responsibilities and personal interests in a residential setting?

b.     Business image

c.      Legal considerations

·          Zoning ordinances

·          Tax issues

3.    Technology and home-based businesses (advances such as personal computers, fax machines, voicemail, and E-mail help home-based businesses to compete with commercial-site businesses).                               

                i    Ask students to cite examples of home-based businesses and their strengths and weaknesses.

3

Explain how efficiency can be achieved in the layout of a physical facility.

PPT 9-6/TM 9-4

Building Layout

[Acetate 9-3]

C.    Designing the physical facilities

1.    Functional requirements—these depend on the type of business

PPT 9-7/TM 9-5

Grid Pattern of Store Layout

2.    Building layout

                a.      Factory layout—process layout vs. product layout

PPT 9-8/TM 9-6

Free-Flow Pattern of

Store Layout

             b.     Retail store layout—free-flow layout vs. grid layout. Use the college or university bookstore to illustrate the effect of layout on customer traffic or shopping habits during the peak times when students are purchasing textbooks and during off-peak times.

4

Understand the equipment needs of small firms.

PPT 9-9/TM 9-7

General-Purpose vs.

Special-Purpose

Equipment

[Acetate 9-4]

D.    Equipping the physical facilities

1.    Manufacturing equipment. Generally speaking, it is difficult to get students interested in the subject of manufacturing equipment.

                a.  General-purpose equipment

                b.  Special-purpose equipment

2.    Retail store equipment. You may choose to stress retail equipment, especially recent advances in supermarket checkout technology.

3.        Office equipment

a.        Fax machines

b.       Copiers and printers

c.        Telephone systems

d.       Computers and e-mail

4.        Building image

·

Using BIZPLANBUILDER and BIZPLANEXPRESS

PPT 9-10

BizPlanBuilder on

Considerations for

Site Selection

Decisions regarding location and physical facilities are often critical to the success of a business.  The questions below will help the aspiring entrepreneur navigate through this part of the business plan.

Location Questions:

1.        How important are your personal reasons for choosing a location?

2.        What environmental factors will influence your location decision?

3.        What resources are most critical to your location decision?

4.        How important is customer accessibility to your location decision?

5.        How will the formal site evaluation be conducted?

6.        What laws and tax policies of state and local governments have been considered?

7.        What is the cost of the proposed site?

8.        Would a home-based business be a possibility?

9.        What are the advantages and disadvantages of a home-based business?

10.     Is an enterprise zone available in the area where you want to locate?

Physical Facility Questions:

1.        What are the major considerations in choosing between a new and existing building?

2.        What is the possibility of leasing a building or equipment?

3.        How feasible is it to locate in a business incubator?

4.        What is the major objective of your building layout?

5.        What types of equipment do you need for your business?