1. Locate and Set Up Your Business
8.1 Choose a Location
8.2 Obtain Space and Design the Physical Layout
8.3 Purchase Equipment, Supplies, and Inventory

2. Lesson 8.1 Choose a Location
Goals
Identify options for locating a retail business.
Discuss factors to consider when choosing a location for a nonretail business.
Identify the benefits of locating a business online.
Describe steps to take in selecting a site.
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3. Vocabulary industrial park enterprise zones e-commerce trade area
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4. Locating a Retail Business
The right location for your business depends on:
the kind of business you plan to operate
the type of customer you want to reach
Also consider whether you will have
inside sales
outside sales
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5. Downtown Areas Positive features of a downtown location include:
easy accessibility
convenient access for downtown workers
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6. Negative features of a downtown location include:
higher crime rate
traffic jams
a lack of
free or convenient parking
customers in the evening
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7. Neighborhood Shopping Centers
consist of 3 to 15 stores
good for stores selling goods or services that people need to purchase frequently
rent is usually low
convenient for local shoppers
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8. Community Shopping Centers
larger than neighborhood centers
serve residents from many neighborhoods
large anchor stores can increase customer traffic
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9. Regional Shopping Centers
designed to attract customers from an entire region
have 40 to 100 stores
anchored by two or more large department stores
focus on apparel
rents are high
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10. Super-Regional Shopping Centers
largest classification of shopping centers
more than 100 stores
anchored by three or more department stores
very high rents
not recommended for new businesses
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11. Stand-Alone Stores
may be located just outside of shopping centers or far from other businesses
depend on drive-by traffic
less expensive rent
advertising is often necessary
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12. Warehouses among the cheapest rent few frills
often charge customers lower prices
heavy advertising required
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13. What are the main options for locating a retail business?
Chapter 1

14. Locating a Nonretail Business
Service Businesses
If offering an inside service, location is very important as customers will visit the business.
restaurants or hair salons
If offering an outside service, location is less important as customers will not visit the business.
plumbing or carpet cleaning
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15. Industrial Businesses
Manufacturing and wholesale companies ship their products directly to customers.
do not rely on customer traffic
industrial park
a section of land that is zoned exclusively for industrial businesses
space is less expensive
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16. enterprise zones
areas that suffer from lack of employment opportunities
businesses can qualify for favorable tax treatment depending on the number of jobs they create
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17. Home-Based Businesses
Benefits of home-based businesses include:
cost savings
more freedom
convenience
Challenging aspects of home-based businesses include:
lack of space can limit expansion
it can be hard to separate business and family life
a feeling of isolation can arise
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18. What are some of the factors to consider when selecting a location for a nonretail business?
Chapter 1

19. Starting a Virtual or Online Business
e-commerce
buying and selling products or services over the Internet
Chapter 1

20. Benefits of Virtual or Online Businesses
an immediate presence
business costs are less
a global customer base is possible
time restrictions are not a problem
can electronically manage information about customer behavior
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21. Virtual or Online Business Precautions
Buy your own domain (web address).
Use a creative website design that appeals to customers.
Be sure your website has a fast loading speed.
Keep your website current.
Chapter 1

22. What are some benefits of having a virtual or online business?
Chapter 1

23. Selecting Your Site trade area
the area from which you expect to attract customers
identify the location of
competitors
businesses that would attract a similar customer base but that would not compete directly with you
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24. Location Type and Availability
Determine which type of location is best for your business.
Determine what spaces of this type are available in your trade area.
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25. Evaluate the Location
Factors to consider when picking a location include:
safety
attractiveness
Does the location attract your target market?
Is parking adequate?
Are surrounding businesses thriving?
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26. What are some of the factors you should consider when selecting a site for your business?
Chapter 1

27. Lesson 8.2 Obtain Space and Design the Physical Layout
Goals
Compare purchase and lease options.
Describe layout considerations for different types of businesses.
Chapter 8

28. Vocabulary tenant landlord gross lease net lease percentage lease
visual merchandising
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29. Lease or Buy Space Buying advantages include:
You can receive a tax deduction on the loan interest for the building.
The loan payment may be no larger than a lease payment.
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30. Disadvantages of buying include:
Most entrepreneurs lack the money to purchase property for their business.
You are locked into a specific location.
You are responsible for building maintenance costs.
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31. Commercial Leases tenant landlord
the person who pays rent to occupy the space owned by someone else
landlord
the person who owns and rents out the building or space
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32. There are three types of commercial leases.
gross lease
tenant pays monthly rent
landlord pays property expenses
net lease
landlord pays building insurance
tenant pays rent, taxes, and other expenses
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33. percentage lease the tenant pays a base monthly rent
the tenant also pays a percentage of monthly revenue as rent
most common for prime retail locations
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34. You should always consult with an attorney before signing a commercial lease.
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35. Compare Costs of Doing Business
When deciding where to locate your business you should calculate how much rent you will pay per customer.
Rent per customer =
Rent per month ÷ customers per month
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36. Chapter 8

37. Name three kinds of commercial leases.
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38. Design the Layout of Your Business
Your layout needs to include space for:
employees
customers
merchandise
equipment
restrooms
stockroom/storage
offices
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39. Create the Floor Plan
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40. Layout of a Retail Business
visual merchandising
the process of combining products, environments, and spaces into an appealing display to encourage the sale of products or services
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41. The goal of your layout should be twofold:
It should attract customers to your store and keep them coming back.
It should meet the needs of your business.
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42. Layout of a Service Business
For businesses where customers visit the site, the layout should be considered as carefully as a retail business.
As customers do not visit on-site service businesses, organization of supplies should be the focus of the layout.
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43. Layout of a Wholesale Business
focus on price and quality
Layout should be efficient and well-organized to facilitate shipping and receiving.
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44. Layout of a Manufacturing Business
The layout should facilitate the production process.
Work teams should be close together.
Supervisors should be in close proximity to the people they supervise.
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45. Exits should be clearly marked and easily accessible.
Hazardous materials should be safely stored.
Equipment and machinery should be positioned in a way that minimizes the potential for accidents.
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46. What are the major considerations for choosing a layout for a business?
Chapter 1

47. Lesson 8.3 Purchase Equipment, Supplies, and Inventory
Goals
Explain how to find and choose vendors for your business.
List factors that determine the needed level of inventory.
Chapter 8

48. Vocabulary
inventory
vendors
quote
reorder point
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49. Obtain Equipment and Supplies
inventory
the products and the materials needed to make the products that a business sells to its customers
When starting a business, order the minimum quantity you need right now.
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50. Chapter 8

51. Identify Suppliers vendors
companies that sell products and services to businesses
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52. Evaluate Proposals quote
an estimate for how much you will pay for the merchandise or service
Other information to seek when obtaining quotes includes:
quality of merchandise
financing terms
quantity discounts
shipping and handling charges
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53. What should you consider when selecting vendors for your business?
Chapter 1

54. Purchase Inventory For retailing and wholesaling: For manufacturing:
Inventory is a finished product purchased with the intent of reselling it to customers.
For manufacturing:
Inventory includes:
raw materials
finished goods
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55. Purchase Inventory for a Startup Business
As it is difficult to forecast actual sales, a startup business should order just enough stock to fill its shelves.
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56. Purchase Inventory for an Ongoing Business
reorder point
a predetermined level of inventory that signals when new stock should be ordered
Factors to consider when setting a reorder point include:
how long it takes suppliers to get merchandise to you
monthly sales of the item
how important it is for you not to be out of stock
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57. How do you determine the amount of inventory to keep in stock?
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58. PERFORMANCE INDICATORS
Identify product opportunities
Describe the use of technology in the selling function
Explain the nature and scope of the product/service management function
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59. Identify the impact of product life cycles on marketing decisions
Develop strategies to position the product/business
Explain factors affecting pricing decisions
Explain the nature of a promotional plan
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60. THINK CRITICALLY
Why must the clothing at the bookstore be unique from clothing carried in department stores and other retail outlets?
Why are scheduled merchandise markdowns important for retailers?
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61. Why should the bookstore consider Internet merchandise sales?
What types of special promotions could increase sales from fans and alumni attending football and baseball games?
Why should the bookstore consider Internet merchandise sales?
Chapter 8