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2021-05-21 18:47:54Starting a New BusinessEnglishOpening a physical location for your business is a big decision. Here’s how to decide if it’s time, and what you should look for.https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2021/05/opening-a-physical-location-small-business-owner-feature-au.jpghttps://quickbooks.intuit.com/au/resources/starting-a-new-business/opening-a-physical-location/Opening a physical location: six things to consider | QuickBooks Australia

Is it time to open a physical location? Six things to keep in mind

11 min read

Picture this: you, in your very own bricks-and-mortar shop! Customers are there in person, experiencing everything you’ve worked so hard to build and getting to know you and your product. No anonymous purchases from someone you never meet. No shipped returns because something doesn’t suit.

It’s a far cry from a URL and an “add to cart” button.

There’s no denying that shopping online is an important convenience—and sometimes even preferred. But if your business has found its legs in e-commerce, you may be wondering: Is it time to open a physical location?

Expanding into a physical space is a big decision, and it’s also a personal one. Much like anything else, it’s up to the business owner to weigh the pros and cons and land on the best choice for their business.

What sorts of things should you consider when making this decision? And, if you do want to open a physical shop, what should you look for? Here’s what you need to know.

Should you open a physical location? Three questions to ask yourself

The most difficult part of this decision is figuring out if now is the right time to open a bricks-and-mortar shop. Is your business ready?

Ask yourself these three questions, and really take the time to think through your responses. Grab a notepad and write out your thoughts if you need to. These questions will help you consider all of the factors that should play an important role in your decision.

1. What are your future plans for the business?

Purchasing a building or paying rent is a big expense, so moving to a physical space should be a long-term decision for your business. With that in mind, where do you envision your business heading in the next year? What in your business plan for the next five years? Or 10 years?

Maybe you’re happy with the current state of your business and don’t anticipate aggressively chasing growth. If you’re perfectly satisfied maintaining your existing business, then a physical location might be more than you’ll need.

But maybe your mind is swimming with big ideas to grow and take over the world. Let’s say you’re a jewelry maker who has sold your products primarily in online marketplaces, but now you’re ready to have your own boutique. You want to have a space where customers can try your jewelry on in person. Not only that, but you’d also love to host jewelry-making workshops and other events. Those goals will require some extra space.

The future is impossible to predict, but it’s worth thinking about what’s on your roadmap. That will help you make the right decision not just for the business you have today, but the business you’ll have next year.

2. Does a physical space make financial sense?

You can’t make any sort of business decision without considering finances. Sure, you might want a physical location—but that ultimately doesn’t matter if you can’t afford it.

In fact, many small business owners feel stressed because of their company’s cash flow. So, you’ll want to be mindful of the large expenses you’re adding to your profit and loss statement.

Take a look at your budget. Do you have enough left over each month to increase your overhead costs this way? Keep in mind that there are a number of ways you could pay for your location, including:

  • Rent: you’ll pay monthly, and rental agreements are typically shorter term (e.g. 30 days at a time).
  • Lease: you’ll pay monthly, but lease agreements are longer term (usually at least one year).
  • Purchase: you’ll pay monthly on a commercial property loan or commercial mortgage to work toward owning the property.

Your rent, lease or loan will be the bulk of your expense, and renting office space costs anywhere between  metre. However, it’s also worth considering the other costs associated with moving into a physical space, including:

  • Utilities: you’ll likely need everything from internet access to heating.
  • Furnishing and supplies: if the space doesn’t come equipped or furnished, you’ll need to invest money to purchase all the furniture, materials and decor needed to complete the space.
  • Amenities: some spaces charge extra for amenities like a shared mailroom or security measures.
  • Insurance: you’ll want the peace of mind of your own business liability insurance In fact, your landlord might require it.
  • Commuting: this won’t be as big of a deal in less urban areas. Still, keep in mind that commuting to a building will require an added investment in both time and money when compared with working from home.

The cost of these things will vary based on a variety of factors, like your geographic location and the type of your business. Do some research to assign estimates to each of them. The more realistic you are about your expected costs (and whether you can afford them), the more confident you’ll feel making a decision for your business.

3. What other options could you explore?

Moving to a physical space is an exciting proposition, as it’s yet another thing that proves your business is growing. But keep in mind that getting your own location isn’t the only option when you’re eager to move beyond your home office.

It’s worth considering what other possibilities exist—especially since some of them might be more cost-effective or a better fit for your business model. For example, you could:

  • Sign up for a coworking space that gives you a conference room to meet with clients and access to other equipment and amenities
  • Participate in a local business incubator or accelerator that offers office space
  • Research other shared options like commercial kitchens
  • Purchase or rent a space where you can have a smaller presence, like a kiosk in a shopping centre or a booth at a farmer’s market
  • Partner with other businesses that have their own physical space, such as by selling your pottery in a local boutique

You might decide that you want to pursue some of the above options and also secure your own physical location. That’s great! The important thing is that you consider all of the choices that are available to you.

Six considerations to make when location scouting

You’ve reflected on your answers to the three questions, and you’ve landed on your decision: You’re going to make the move to a physical location. Congratulations!

Now the fun part begins: finding the perfect spot. If you’re lucky, a huge assortment of different options will be available to you. So how do you choose? Here are six criteria to consider.

1. Space

First things first, you need to consider how many square metres you’ll need. Remember: don’t think only about your current business, but also about what your plans are for the future. If you plan to add a dozen new team members in the next year or so, you’ll need room for them.

It’s also important to think about the type of space you need. Perhaps you need a shopfront, but you’d also like it to include a private office where you can shut the door and handle administrative tasks. Or maybe you need some included warehouse space to store your inventory.

Think through the size and functionality of your desired space. That alone will help you weed out a number of options.

2. Features

Next, it’s time to get specific about the features that you need. What unique attributes should your physical location have?

Do you need a car park that can accommodate large trucks for deliveries? Plenty of natural light to take your product photos? Is it important to you that you’re on the first floor?

Those are all things that you should add to your list. It’s also smart to distinguish between your must-haves and the things that would be nice but aren’t absolutely necessary. Finding real estate always involves some compromise, so it’s helpful to know where you’re willing to bend.

3. Location

You’ve probably heard the “location, location, location” cliché. There’s a reason it’s repeated so often: it’s true. The location of your new space is going to carry a lot of weight.

Where do you want to be located? Do you want to be on the main street of your CBD to get a lot of customer foot traffic? Do you want to be close to your manufacturer or supplier to reduce transportation costs and logistics problems? Do you want to be near where your target customers are—like putting your sandwich shop near an office park?

Don’t forget to consider your competition, too. You probably don’t want to put your barbershop next door to another barbershop. When you find a location that you think could be suitable, make sure you really get to know the area. You need to be familiar with everything around you and how it might impact your business.

4. Restrictions

Understanding the various restrictions and limitations of a space isn’t exactly fun. Still, it’s important to make sure that you aren’t setting yourself and your business up for headaches and potential problems.

Are there zoning rules or disputes that could impact your use of the space? Ask your real estate agent or the building’s owner what you should know.

Additionally, are there restrictive covenants or rules about the types of customisations you can make to the space? Those could have a big impact on your decision, so make sure that you ask to review any paperwork or guidelines so you know what you can and can’t do.

5. Reputation

Business owners work hard to cultivate a brand—you’d hate for the reputation and location of your first physical space to undermine all of that.

For that reason, consider what the potential space says about your overall business. If you’re allowed to make changes, look past any cosmetic problems (a little bit of paint goes a long way!). Instead, evaluate the aspects that can’t be easily changed—like the qualities of the area itself.

For example, say you’re looking for an office space for your marketing agency. Renting a space in a strip mall between a tobacconist and a cash advance loan store might not be the right presentation for your brand. Or does the area have a reputation as being unsafe? You might want to rule that one out too.

It’s also worth asking about the history of the space itself. Has there been a revolving door of businesses similar to yours that have quickly folded or vacated from that space? You don’t want to be unnecessarily superstitious, but it’s smart to figure out why they haven’t stuck around.

6. Budget

You might find a space that fits all of your criteria, but you still need to use your budget to make responsible decisions for your business.

It can be tempting to toss those numbers aside when you find a dreamy space that ticks every single box on your list. However, it needs to be a financial reality for your business. Getting into a space you can’t afford will only cause more stress and hardship. And that’s the exact opposite of what you’re trying to accomplish by moving into a new location.

Treat your budget as a hard rule, rather than a suggestion. Save yourself a lot of heartache by avoiding looking at any spaces that don’t fit what you’re willing to spend. There’s no point in torturing yourself by considering unaffordable properties.

Find the right spot for your business

When you’re outgrowing your home office or your garage, it could be time to open a physical location. But making your decision and then finding a suitable space can feel overwhelming.

Like any business decision, this one deserves some careful thought and consideration. Perhaps you’ll find that your business is best suited for a fully digital environment that you run from your kitchen bench—and that’s OK! There isn’t one right or wrong way to do things.

Use this as your guide, and your business will land in the place it’s meant to be.


This content is for informational purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state/territory or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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