The Location Plan
Part 3 Developing the New
Venture Business Plan
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Copyright © 2006 Thomson Business & Professional Publishing.
All rights reserved.
Looking Ahead
After studying this chapter, you should be able to:
1.
Describe the five key factors in locating the brick-andmortar startup.
2.
Discuss the challenges of designing and equipping a
physical facility.
3.
Understand both the attraction and the challenges of
creating a home-based startup.
4.
Understand the potential benefits of locating a startup
on the Internet.
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
9–2
Locating the Brick-and-Mortar Startup
• Brick-and-Mortar Store
–The traditional physical store from which businesses
have historically operated
• The Importance of the Location Decision
–High cost of constructing a physical location
–Effect of poor location on eventual success of the firm
–Type of business affects the importance of business
location to customers
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9–3
Location Options for the Startup
Exhibit 9.1
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9–4
Five Key Factors in Determining
a Good Business Location
Exhibit 9.2
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9–5
Key Factors in Selecting a Good Location
• Customer Accessibility
–Customer convenience (high traffic)
–Access by targeted customers (niche market)
–Avoidance of shipping costs (local markets)
• Business Environment Conditions
–Climate-related factors
–Business environment factors
• Presence of established competitors
• Regulations, legal requirements, and restrictions
• Tax structure, exemptions, and incentives
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9–6
Key Factors in Selecting a Good Location
• Availability of Resources
–Nearness to raw materials
–Availability of a suitable labor supply
–Access to adequate and reliable transportation
• Personal Preference of the Entrepreneur
–Familiarity with home community environment
–Support of entrepreneur by the community
–Desire for a particular lifestyle
–Contribution to the community
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9–7
Key Factors in Selecting a Good Location
• Site Availability and Costs
–Difficulty of locating a good site
• Business incubator: provides shared space, services, and
management assistance for new businesses
–Buying: large costs and commitment required to
purchase site outright
–Advantages of leasing:
• Avoids a large cash outlay
• Allows the owners to postpone
committing to the site before
the business becomes a success
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
9–8
Other Factors in Selecting a Location
• Neighbor Mix
– Who’s next door?
• Security and Safety
– How safe is the
neighborhood?
• Services
• Past Tenants’ Fate
– What happened to them?
• The Life-cycle Stage of
the Area
– Is the site in the embryonic,
mature, or declining stage?
– Is there municipal trash
pickup?
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
9–9
Designing and Equipping
the Physical Facilities
• Design Requirement Challenges
–Physical facilities should be of adequate size and
accommodation; not too large or too luxurious.
–Considerations
• Age and condition of building
• Fire hazards
• Heating and air conditioning
• Entrances and exits
• Lighting and restroom facilities
–The ideal building meets the functional requirements
of the business and projects the appropriate image to
customers and the public at large.
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9–10
Equipping the Physical Facilities
• Manufacturing Equipment
–General purpose equipment
• Machines that serve many
functions in the production
system
–Special-purpose equipment
• Machines designed to serve
specialized functions in
the production process
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9–11
Manufacturing Equipment
General-Purpose
Equipment
Special-Purpose
Equipment
• Low purchase cost
• Low labor cost
• Flexible production
• High hourly output
• Good resale value
•Limited resale value
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9–12
Retail Store and Office Equipment
• Retail
– Display racks
– Sales counters
– Cash registers/
POS systems
• Image
• Office Equipment
– Computers
– Fax machines
– Copiers and printers
– Telephone systems
– Filing cabinets
– Luxury/utilitarian
customer furnishings
– Lighting
– Displays
– Signage
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9–13
Locating the Startup in the
Entrepreneur’s Home
• Home-Based Business
–A business that maintains its primary facility in the
residence of its owner
• Attraction of a Home-Base Business
–Low start-up and overhead costs
–Convenience for family and lifestyle
–Technology
• Advances in office equipment allow
home-based business to compete
with commercial sites.
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9–14
Home-Based Businesses
• Challenges
–Business image of a home-based business
• Professional image is difficult to maintain in a home
environment.
–Family and business conflicts
• There is a need to observe regular business hours and
establish spatial boundaries (specific work areas) to avoid
distractions.
–Legal considerations
• Local laws and zoning ordinances prohibit many types of
home-based businesses.
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9–15
Entrepreneurs’ Reasons for Operating a
Home-Based Business
Source: “Home-Based Business: The Hidden Economy,”
The Small Business Advocate, Vol. 19, No. 2 (Spring 2000), p. 6.
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
Exhibit 9.3
9–16
Locating the Startup on the Internet
• E-Commerce
–The paperless exchange of business information via
the Internet
• Internet
–A huge, loosely connected computer network that links
smaller networks all over the world
• World Wide Web (WWW)
–A system of Internet servers
accessible with browsers,
which navigate via hypertext links
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9–17
Benefits of E-Commerce to Small Firms
• Provides the opportunity to compete with larger
firms in larger markets
• Helps with cash flow problems by compressing
the sales cycle
• Builds better customer relationships through
better service
–Electronic Customer Relationship Marketing (eCRM)
• An electronically based system that emphasizes customer
relationships
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9–18
E-Commerce Business Models
• Business Model
–A group of shared characteristics, behaviors, and
goals that a firm follows in a particular business
situation
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9–19
E-Commerce Business Models
Exhibit 9.4
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9–20
Types of Customers Served
• Business-to-Business (B2B) Model
–A business model based on selling to business
customers electronically
• Business-to-Consumer (B2C) Model
–A business model based on selling to final customers
electronically
• Auction Sites
–Web-based businesses offering participants the ability
to list products for bidding
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9–21
Degree of Online Presence
• Content/Information-Based Model
–A business model in which the Web site provides
information but not the ability to buy or sell products
and services
• Transaction-Based Model
–A business model in which the Web site provides a
mechanism for buying or selling products or services
• 24/7 E-Tailing: electronic retailing providing round-the-clock
access to products and services
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
9–22
Key Terms
brick-and-mortar store
enterprise zones
business incubator
general-purpose equipment
special-purpose equipment
home-based business
zoning ordinances
e-commerce
Electronic Customer Relationship
Marketing (eCRM) business model
business-to-business (B2B) model
business-to-consumer (B2C) model
24/7 e-tailing
auction sites
content/information-based model
transaction-based model
Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.
9–23