STRATEGIES
ease, and markets need to be accessible in order to
meet demand.”
Reid says supply and demand are influenced by
many factors, including awareness of the product
or service on offer. “However, location has a major
impact on all these, even to the extent whereby
having good exposure or visibilit y to passing
traff ic provides an ideal marketing opportunity
which can save on advertising costs. Being in an
acceptable location close to suppliers and customers
or clients, having ease of access to highways and
key transport routes, close proximity to public
transport - particularly for staff, good overall
security and having sufficient secure parking, all
play a significant role in the choice of location.”
He says depending on the type of business and
its target market, comfort factors such as general
aesthetics and quality of the building may be
relevant. Furthermore, it may be advantageous to
be situated close to destinations that have synergies
or something in common with the business, for
example businesses offering f inancial services
tend to be within easy reach of each other, in
well-known nodes. This depends on the business,
and some businesses may prefer to be close to
their competitors because of these nodal factors.
Consideration should also be given to whether
competitors situated close by can be bypassed by
customers, so ease of communication with target
markets is an important factor.
“You may f ind banks for example in the same
node, or retail businesses choosing to be in high
traffic shopping centres,” says Reid. Restaurants
and distribution centres are good examples of
businesses which need to be in the right location.
“The immediate and long-term consequences of
being situated in the wrong location for the business
should be considered. This can result in customers
38
Commercial Handbook 2013
reviewing their source of supply ie going elsewhere,
staff may experience transport problems or there
may be a lack of suitability on the part of the new
location, resulting in low morale, and a danger that
not all the factors that affect the feasibility of the
business are taken care of.
“In the long run, if the business location proves
over time to be a bad one, sound advice is to rather
get out sooner than later – if you are an owneroccupier put the property on the market even if it
means a loss and do what is right for the business
and its long term sustainability. If you are renting
you need to consider the length of the lease
and what your options are for relocation. Some
businesses prefer to rent rather than purchase
as it affords them far greater f lexibility should
their business expand or if their requirements
may change in the future. A courier company, for
example, may well prefer to rent space - a factor
which gives them the flexibility in order to relocate
if needed, in order to be in the right location,” says
Reid.
He adds that if your business is situated in an area
that has become run down owing to a lack of service
delivery, you need to try and mitigate the problem.
“If service delivery is poor, get together with other
businesses in the area and be proactive in trying to
find a solution. In rejuvenating a location, one may
find a number of landlords in an area or precinct are
willing to join forces and perhaps set aside some of
their proceeds from rentals for rejuvenation. Good
examples of this are The Main Street precinct
in Johannesburg and Braamfontein, while the
successful pedestrianisation and rejuvenation of
Cape Town’s central city is a further case in point,”
concludes Reid.
RESOURCES
JHI
www.reimag.co.za