The a B C’S of Site Selection: How to Pick Winners and Avoid Losers

By Frank Raeon

The A B Cs of Site Selection is about helping you succeed. It provides you with the tools you need to make smart location decisionsthe kind that will enable you to consistently pick home run locations for your retail or restaurant business. Readers will especially benefit from learning about the importance of the Six Keys and why using a Site Selection Scorecard is highly recommended.
Site selection is neither an art nor a science. Rather, it is a combination of both. It is a process which involves doing homework. In the long run doing homework is the only way to justify making what will surely turn out to be a
major financial investment.
If you want to succeed it is absolutely imperative that you understand that site
selection is all about employing a systematic and disciplined approachone which is intended to minimize mistakes and maximize opportunities.

• Language: English
• Publisher: Xlibris US
• Release date: Aug 28, 2010
• ISBN: 9781453541425

Frank Raeon

Frank Raeon has been helping clients find high volume retail and restaurant locations for more than twenty five years. Examples of national, regional, and local market leading companies he has helped include Blockbuster, Buffalo Wild Wings, Dewey’s Pizza, Donatos, First Watch, Graeter’s Ice Cream, Izzy’s, McDonald’s, Pier 1 Imports, Servatii’s Bakery, Subway, United Dairy Farmers, Walgreen’s, and Wendy’s. Frank is also the principal of Location Decision Advisors, a Cincinnati based real estate advisory company which helps companies better understand how to pick winners and avoid losers. He is currently working on his second book: Inside Site Selection. It is based upon interviews he is conducting with people from throughout the United States who are responsible for making retail and restaurant location decisions.

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Copyright © 2010, 2013, 2015 by Frank Raeon.

Second Edition

www.locationdecisionadvisors.com

Library of Congress Control Number:   2010911794

ISBN:   Hardcover            978-1-4535-4141-8

            Softcover               978-1-4535-4140-1

            eBook                     978-1-4535-4142-5

All rights reserved. No part of this book may be reproduced or transmitted

in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system,

without permission in writing from the copyright owner.

Rev. date: 03/23/2015

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CONTENTS

Preface

Introduction

Chapter One

The Six Keys To Making Smart Site Selection Decisions

Chapter Two

Primary Site Selection Factors

Chapter Three

Secondary Site Selection Factors

Chapter Four

Selecting The Type Of Location Which Best Suits Your Business

Chapter Five

Other Important Site Selection Influences And Related Factors

Chapter Six

Estimating Retail And Restaurant Sales

Chapter Seven

Creating A Site Selection Scorecard

Chapter Eight

The Importance Of Demographics And Psychographics

Chapter Nine

Short And Long Form Customer Surveys

Chapter Ten

Location, Location, Location

Conclusion

About The Author

Book Audience

DEDICATION

This self help guidebook is dedicated to the seemingly endless legions of men and women who have a strong desire to go into business for themselves, already operate one or more small businesses, or, have tasted success and are thinking about franchising. They are the real entrepreneurs—the people who have not only a dream, but a strong drive to succeed in spite of the many obstacles and risks they will encounter.

PREFACE

The idea for this guidebook originated many years ago. Going back to the Alibi, the mom-and-pop restaurant which my parents operated, I have always been intrigued with why businesses either succeeded or failed at their respective locations.

Before becoming involved in commercial real estate I had the good fortune to work as a City Planning and Development Director at the municipal level. This provided me with the opportunity to ask anyone and everyone who came into my office what was it that made them decide on a particular location?

As a result of working with national retail and restaurant companies, I learned that making location decisions always originated with a set of site selection criteria—something which I have observed over many years is little-known to almost every start-up businessperson as well as to many of the businesspeople who operate one or perhaps only a small number of retail stores or restaurants. In addition to being either in or very near the action, I have found that cheap rent, vacant space, a sense of urgency, and proximity to home are major influences that many small businesspeople cite when explaining how they go about making location decisions.

After establishing a working relationship with McDonald’s real estate representatives, I was taught to never bring them a site which I would not personally invest my own money in. Ever since then this has been the gold standard that I have used to guide me in making site selection recommendations.

In the future, businesses will continue to open and close. This is one prediction that is extremely easy to make. It is also a statement that no one ever disagrees with because it is factual as opposed to being based upon opinion. The hope of this guidebook and the inspiration for the information which follows is to be able to help decision makers minimize mistakes and maximize opportunities.

We live in an impatient world, one where getting things instantly has become the new mind-set. Quick and fast are well established buzzwords. However, when it comes to making smart location decisions nothing could be further from the truth! The sooner you understand that site selection is a process, one which requires hours and hours of making site visits and analysis, the better off both you and your pocketbook will be.

My primary goal in writing this guidebook is to educate you about site selection; what you learn will better position you to succeed. Another of my goals is to help you become more financially secure. These are both achievable if you are willing to dedicate yourself to employing a systematic approach to site selection.

I hope you understand that disappointment, disillusionment, and failure are preventable. However, to insure that none of these negative consequences come to dominate your future vocabulary you will always need to do your homework. You need to build a strong foundation. Giving you the tools to make smart location decisions is what this guidebook is all about. If you ignore my advice, especially what I refer to as The Six Keys, you may end up having either a short and unproductive business career, or, you may never achieve the store or restaurant expansion that you once envisioned.

The inspiration for this guidebook comes from three sources: the authors of various site selection books which I have read over many years, the companies who I have helped find home run locations during the past nearly thirty years, and the large number of entrepreneurs I have talked with and periodically assisted.

The former group indirectly acted as my early mentors and provided me with a strong and continuing interest in learning more about site selection and location decision analysis—something which I expect will continue to interest me for the rest of my life.

The second group taught me that a systematic approach was essential to making smart location decisions. These were people who left no stone unturned in completing their field work and their research. They are the people who understood exactly which sites had the potential to become home run locations.

As for the latter group, I quickly observed that the great majority had very little understanding of site selection. These were people who were much more likely to make independent decisions rather than rely on the advice and expertise of one or more professionals. Thus, I realized there was a need for the types of services which I pride myself on providing. In the end, these are the people who prompted me to form my consulting company—Location Decision Advisors.

To each and all of these groups I am deeply indebted and very thankful.

INTRODUCTION

This guidebook is directed at each and every person who is involved in making retail and restaurant site selection decisions. Anyone who owns a small business, is interested in starting their own business, or advises people on buying or leasing commercial real estate should become familiar with not only its terms, but with the methodology which it identifies for selecting profitable locations.

Over a long period of time I have learned that for many small businesspeople site selection is more about emotion, convenience, and cheap rent than it is about working with a commercial realtor or real estate consultant and employing a systematic and disciplined decision-making approach. Indeed, this simplistic rationale helps explain why so many small businesses fail within a relatively short period of time.

Site selection is neither an art nor a science. Rather, it is a combination of both. It is a process which involves doing a significant amount of homework—something which a few people are willing to invest a lot of time doing while most others are only interested in spending a little time on. In the long run, doing your homework is the only way to justify making what can turn out to be a very significant monetary investment.

This guidebook is intended to be comprehensive in scope while being basic in its description of terms. It is meant to give you, the small businessperson as well as the person who is contemplating opening a new business, the insights which are required to make smart location as well as smart site selection decisions. Indeed, if you understand and employ the terms which I have identified you will greatly increase the likelihood of being able to select one or more home run locations.

The small size of this guidebook is intentional. It has been designed to be kept in a briefcase, a purse, or even the glove compartment box of the vehicle you drive rather than on some book shelf or desk top at your home or place of business. As a result, it can much more easily and repeatedly be referenced.

This guidebook has been written in an alphabetical format similar to what you would find in a dictionary or an encyclopedia. As a result, the terms which are identified can very easily be looked up.

As you look through this guidebook you will see that I have divided it into ten chapters. Understanding and subsequently applying the few fairly detailed terms which are capitalized and appear in bold print in Chapter One is absolutely essential to the future success of your business. Ignore them and you may as well forget about not only staying in business for any length of time, but, ever having the opportunity to add future retail or restaurant locations. In short, they are the real keys to selecting what I like to call home run locations.

The words which are described in Chapter Two play a very strong support role in making smart location and smart site selection decisions. Understanding them will increase the probability that your business will turn out to be a success story. Collectively, these important words comprise what I like to call primary site selection variables.

Chapter Three contains a significant number of terms. While simply described they should not be dismissed as being unimportant. Each of these words plays a valuable support role in the site selection decision-making process. As such, I look upon them as being secondary site selection variables.

Chapter Four identifies the many, many different types of locations which exist—some of which you will end up investigating during the site selection process. While some types of locations definitely offer more advantages than others they are not listed in any hierarchy. This is because certain types of locations might be perfect for some business uses but not for others.

Chapter Five includes far and away the greatest number of terms, or, what I prefer to call information nuggets. There is really no way to adequately classify the significant number of terms which are described. Suffice it to say that some offer technical advice while others are approached from a common sense perspective. There is no doubt, however, that they can be influential in building retail and restaurant sales and should be regarded as important contributors to the overall profitability of your business. Accordingly, they play what I like to think of as a very significant tangential role in the future success of your business.

Chapters Six, Seven, Eight and Nine contain four very important illustrative items: How to Estimate Retail and Restaurant Sales, Creating A Site Selection Scorecard, The Importance of Demographics and Psychographics, and, Short Form and Long Form Customer Surveys.

Chapter Ten explains the most popular and arguably least understood phrase in real estate: Location, Location, Location. Whether you are a member of the real estate profession, a small business person, or an entrepreneur with the desire to start your own business, it is absolutely essential that you understand that while the same word is being repeated three times each word means something different. If that sounds confusing don’t be alarmed. You’re not alone!

Briefly, each and every business owner needs to be able to develop a system for projecting future sales. In addition, understanding anything and everything there is to know about customers as well as surrounding trade area characteristics is critical. And last, but by no means least, learning how to evaluate and subsequently rate individual sites is important. If you choose to ignore any of these items then be forewarned: you are gambling with the future success of your business.

Before proceeding further it is necessary to offer a few words of caution, especially to the many people who are use to looking for shortcuts. It would be a mistake to rely solely on the terms which are identified in Chapter One when conducting your site evaluations. Similarly, it would be a big mistake to depend primarily upon the contents of Chapter Two for direction. While these chapters collectively form a strong foundation for making informed decisions, the real value of this book lies in being able to recognize and understand the comprehensive nature of the site selection process. As such, you will find yourself much better educated and much wiser if you read through the entirety of my book.

There are two very important caveats that you need to know about prior to making a decision to open a business. The first has to do with build out and improvements. Remember that it costs the same amount of money to finish space and to purchase and install FF&E (Furniture, Fixtures and Equipment) in a good location as it does to complete your build out and install FF&E in an average or a poor location. If you plan on staying in business for a long time and you are looking forward to maximizing your return on investment then it is an absolute no brainer that you should focus your efforts, your energy, and your money on finding and securing only one type of location—the home run location!

The second caveat is even more important to remember. If there were one secret to site selection success it would be good operations. Indeed, nothing, I repeat nothing, not lack of visibility, inadequate parking, or poor ingress and egress, etc. is capable of making or breaking a location faster than poor operations.

Each chapter of my book can be read as a stand alone chapter. As a result, if you decide that you would like to read one or more chapters in a different order than they appear please feel free to do so. That’s perfectly OK.

In conclusion, I hope that you will come to the realization that making smart location and smart site selection decisions is much more akin to running a marathon than it is to running a sprint. Unfortunately, completing the extensive preparation that goes into a marathon isn’t something everyone is willing to commit to. There are lots of people who have only prepared themselves for a sprint. Consequently, many of them will see their businesses become casualties within a relatively short period of time. What an unfortunate waste of two precious resources: time and money.

I hope you enjoy reading the information which is contained in the ABC’s of Site Selection. And, I would like to take this opportunity to wish you the best of luck in applying the information which it contains.

CHAPTER ONE

The Six Keys To Making Smart

Site Selection Decisions

Throughout my real estate career I have tried to be a quick study as a result of continuously asking the people with whom I was working a series of questions starting with why? The answers which they provided gave me a good understanding for the processes which were used in order to make smart site selection decisions and reinforced what I already knew: there are no short cuts.

The six keys which follow should be committed to memory as soon as possible. If you do so, I can guarantee you that you will be saving yourself a lot of time, a lot of anguish, and, a lot of money.

ACCESS. Every business needs to be easily accessible to its customers. Today’s consumers demand convenience. Sites which are hard to get into or out of will not only end up jeopardizing repeat business but will have a strong negative impact upon both customer counts and sales volumes. As a result, the likelihood of your business succeeding will be greatly diminished!

When you visit a prospective business site make sure that you get out of your car and walk around. Then, start recording your observations either with a recorder or on paper. In addition, taking a series of photographs from different vantage points is recommended. Start by counting how many curb cuts there are and exactly where they are located in relationship to the space or the property which you are interested in leasing or buying. In addition, you should note whether they accommodate full or limited turning movements.

Be careful about choosing a site which is restricted exclusively to right turns