1. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-1 chapter Distribution and Location 7 7 Prepared by Ron Knowles Algonquin College

2. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-2 Business Plan Building Block Chapter 7 will help you select a distribution strategy and location that is best for:  The customer  Your type of business  The options that are available chapter 7 7

3. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-3 Learning Opportunities  Understand the contribution of location to small business success.  Understand the uniqueness of business-location needs.  Focus on customer needs when evaluating a location.  Develop a checklist for evaluating potential sites for a business.  Think about if and when you should locate your business out of the home.  Use both secondary and primary sources of information in locating your business.  Understand and negotiate a lease contract.

4. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-4 Distribution Strategy Your distribution strategy will depend on a number of factors, such as:  Customer needs  Type of business (B2C or B2B)  Type of product/service  Transportation costs  Competition Successful entrepreneurs take advantage of more than one distribution channel.

5. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-5 Distribution Strategy Successful entrepreneurs take advantage of more than one distribution channel. Your physical location should depend on a multiple distribution strategy.

6. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-6 The “Best” Location ___Local/municipal licensing ___Neighbourhood mix ___Competition ___Security, safety ___Labour pool ___Services ___Costs ___Ownership ___Property owner/landlord ___Past tenants ___Space ___Accessibility ___Professional advice ___Parking ___History of the property ___Physical visibility ___Life-cycle stage of the area ___Image ___Hours of operation ___Utilities ___Local zoning by-laws ___Taxes ___Approvals ___Transportation ___ Your target customers A location filter or checklist will help you zero in on the “perfect” location Use a scale of 1 to 10 to rate the relative importance of each item on this list. When you finish scoring, go back and note the high numbers  anything above 5.

7. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-7 The Rise of the Gold-Collar Worker Working at home has become a major trend and is one of the golden industries of the 21st century. 10 Major reasons for the home-based trend Increased Efficiency Growth of Service Industry Growth of Service Industry Computerization Higher Productivity Two-Income Families Cocooning Vigilant Consumer Improved Service Mobility Downsizing

8. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-8 Is Home the “Best” Place? Potential Disadvantages Potential Advantages  Low risk of expensive mistakes  Opportunity to use household resources  Low overhead  Gradual start-up and growth  No commuting time or expense  Tax advantages (with deductions allowed for part of the house)  Relatively inexpensive way to test a market  Reduced child-care costs  Increased quality time with family  Isolation and lack of contact with colleagues  Increased family stress  Need for self-discipline  Local by-laws and regulations  Less established or refined image  Conflict with neighbours  Parking problems

9. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-9 A Location Checklist for Home-Based Business A consideration of the following items may help you determine if you should operate your business out of the home. Target market Neighbourhood mix Physical visibility Competitors Life-cycle stage Image Local/municipal licence Local zoning by-laws Space/physical requirements Approvals Insurance Utilities Work habits/behaviour Lifestyle

10. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-10 Sources of Information Selected Secondary Sources of Location Information  Census  Market Research Handbook  Statistics Canada catalogues  Statistics Canada Web site  Industry Canada Web site—Strategis  Local and regional governments  Local resource centre or library  Potential suppliers  Private research companies  Commercial real estate agents  + Your New Eyes Research (Primary Research)

11. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-11 Sources of Information Primary Sources of Location Information Finding the right location is a real opportunity to practice new-eyes research. Textbook examples of this type of research are provided for the following businesses:  Dry cleaning  Gift store  Restaurant  Travel  Home renovation

12. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-12 The Language of Leases Key Terms Net rent Gross rent Rentable area Common area Usable building area Building gross area Loss factor

13. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-13 Before You Sign a Lease Checklist Before You Sign a Lease Checklist  Escape clause  Option to renew  Right to transfer  Cost-of-living  Percentage lease  Floating rent sale  Start-up buffer  Improvement  Restrictive covenants  Maintenance

14. Copyright © 2007 by Nelson, a division of Thomson Canada Limited. Chapter 77-14 Plotting Your Future Checklist qWhat criteria are important to your location? qWhat secondary research do you need to make a decision about location? qIf you plan to operate a home-based business, be sure to complete your location analysis checklist. qDefine the importance of location for your target customer. qIf you are a home-based business, how have you separated work from home? qWhy have your chosen the site that you have selected? qIf you have a home-based business, identify any zoning issues you face.