Nearby Businesses and Competitors

Business that sell their products or services to customers at the business facility have a strong interest not only in the general character of the neighborhood, but in the kind and appearance of nearby businesses and neighbors. This consideration is less important to businesses that don't have as many on-the-premises contacts (such as wholesale and manufacturing companies). However, just as a business should never completely disregard the appearance of its facility, it should not completely overlook the effect that the appearance of surrounding businesses and neighbors may have on how it is perceived.

Strictly from an appearance standpoint, what would you like your customers to see as they approach your facility? Usually, you'll want your facility and surrounding buildings to roughly fit in with each other visually. Within some settings, however, a bit of tasteful architectural difference from other buildings may make your building more visible.

Proximity to magnet stores. By deciding where to locate your business, you in effect get to pick the appearance of nearby businesses and other neighborhood buildings, and may be able to "piggy-back" on a neighbor's ability to draw customers to the area. Many small businesses may benefit by being close to a "magnet" store, that is, a large store that attracts a large number of customers. If you operate a retail or service business that depends on customers coming to your premises, you may want to position your facility on an access route to the magnet store. By doing so, you can greatly increase the number of potential customers who walk or drive by your facility.

Although any business that attracts large numbers of customers to an area can serve as a magnet for nearby stores (large grocery and department stores are common ones), whether the magnet will benefit your store will depend on whether it competes with your business, and whether its operation and target clientele are compatible with yours.

If you have determined that you will benefit from a nearby magnet store, there are other things that you can do other than just being there that can enhance these benefits.

You may wish to consider adjusting your store hours to coincide with that of the magnet. If possible, think about opening your store a little earlier and closing it a little later than the magnet. This way, your store could benefit from customers arriving before the magnet's opening, as well those who would walk or drive by your store shortly after the magnet's closing. Depending on your business, the magnet store's employees might be among your early and late customers.

You may also want to coordinate your promotional and sale activities to those sponsored by the magnet. As a small business owner, you will normally have the flexibility to make on-the-spot marketing decisions. For instance, if you see that the anchor store in the local shopping center is holding a major sales event starting on Monday, you can go in over the weekend and set up your sale. If the magnet is not a competitor, you may be able to get advanced notice of these events, and thereby have time to advertise your sale.

Competitors. For some kinds of businesses, such as wholesalers or mail order retailers, the physical closeness of competitors really doesn't matter much. Their customers usually don't go to the facility to place an order, so they'll never see a competitor located directly across the street. If this describes your business situation, you may be able to ignore the question of nearby competitors.

In certain instances, competitors may "cluster" in close proximity for the betterment of all. This may be done where several stores selling unique, but similar, items cluster so as to draw more customers than any one store could hope to. Art, jewelry, and high-fashion clothing stores are examples of retailers that may find it advantageous to locate close to business competitors for this reason. Competitors may also cluster to cut expenses. For example, two heavy construction companies are located next to each other on a private gravel road that is some distance to the nearest paved country road. Each uses the gravel road to haul their heavy machinery to the country road. By sharing the considerable costs necessary to maintain the gravel road, each of the two companies is able to reduce its cost of doing business, without giving a competitive advantage to its "neighbor."

Most retail and service businesses, however, would find the absence of nearby competitors to be a great advantage. But before you are tempted to rush into a facility based on the fact that there are no nearby competitors, consider these points: