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Picking the perfect spot for your business
Q: I started my accounting business from nothing, and now it’s very successful. I have nine employees and a healthy cash flow.
Now I want to take the business to the next level. As part of that process, I’d like to move to a better location that enhances my credibility and attracts quality clients. Is this a good idea?
— Waheed Rehman
It’s great to hear your business is doing so well, Waheed. Employing nine other people is a fantastic achievement. And now you’ve found yourself in a situation that many other entrepreneurs eventually face: Do you stay in your established location, or is it time to go and grow?
There is no right or wrong answer, and every situation is different, but there are some important factors to consider.
When we started Virgin Records, picking the right location for our shop was vital to its success. We were a new brand and had no marketing budget, so we had set up shop where our customers would be. We wanted a location that people walked past in order to attract them on impulse, so we set our sights on two of London’s busiest thoroughfares: Oxford Street and Kensington High Street. We actually spent a morning counting people walking up and down each street and eventually decided on the cheaper end of Oxford Street.
On Oxford, we found a shoe shop that had an empty first floor. At first, the owner told us we’d never be able to pay the rent, but we pointed out that some of the customers who came into our shop were likely to also buy shoes, earning him some more money. So he agreed to let us have the first floor for no rent until another potential tenant came along. From this small shop, we went on to build the Virgin brand, which has spun into trains, planes and rockets. It turned out that choosing that location was a hugely important decision.
However, if we were starting that business again now, I’m not sure we’d place such high importance on location. It can be more cost-effective and easier to build a new business online and market directly to your target audience through social media. Nowadays, when people are searching for a business, the first thing they do is turn to Google. So it’s important that your business has a strong online presence.
But, of course, there are some industries where a shop presence is still essential, and yours may be one.
You did the right thing by starting small in a less glamorous location. It’s important to prove the viability of the business before branching out. One of the biggest mistakes entrepreneurs often make is committing to big leases or contracts even when they’re not sure they can fulfill them.
If you’ve determined that moving your business to a new location is the next step, there are a few key things you can do to help get the best deal.
First, try to negotiate a rent-free period, like we did with our first Virgin Records shop, as this is when you’ll be ironing out any teething problems. We did this by attracting more customers to our landlord’s shop. A common way to agree on a rent-free period is by refurbishing the premises, which increases the property value for the landlord.
Another strategy is to negotiate the rental terms. In the U.K., we support entrepreneurs through Virgin StartUp, our nonprofit, and our mentors often recommend negotiating to pay rent monthly rather than quarterly, as this tends to be easier when it comes to managing cash flow — and cash flow is the biggest killer of startups.
Another important point is to make sure that the other businesses close to your new location complement the service you’re offering, and that your new location is still easy for your current customers to access. It sounds like you’ve already built a small but engaged following, so you don’t want to neglect your current clients and have to start over with a new customer base. Taking good care of your current customers is the best marketing tool out there because word-of-mouth recommendations are the most valuable type of promotion.
The final piece of advice I would offer for opening a new location is to engage with the community. When we opened the first Virgin Hotel in Chicago in 2015, we put on a parade and supported the city’s NBA team, the Chicago Bulls. Show people you’re pleased to be there, and be willing to foster community spirit. The community will repay you with support, promotion, affection and kindness; and may become the best business advocates you have.
When all is said and done, opening a new location is one of the most exciting times you’ll experience as an entrepreneur. I wish you all the best!
(Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson. To learn more about the Virgin Group: www.virgin.com.) (Questions from readers will be answered in future columns. Please send them to Richard.Branson@nytimes.com. Please include your name, country, email address and the name of the website or publication where you read the column.)
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