Where Are You Going Next? Choosing the Right Location for Business
Getting ready to expand? Congratulations. This is a momentous time, but it can also be a disastrous one. The right location for business can make or break a company’s bottom line for years to come.
Getting here from there: how business location strategy has changed
Business location strategy has evolved dramatically. In the past, real estate brokers drove the decision. Where to locate a business was a question that was answered through superficial factors and cursory examination of neighborhoods. And with commissions and kickbacks influencing the inventory showcased, business owners just had to trust that real estate brokers were acting in their best interest.
Demographics helped change the decision-making process.
Once demographics entered the picture, the right location for business became easier to determine. Owners and executives could evaluate the basics like household income, family size and homeownership rates. Once a site was under consideration, those demographic factors could be used to identify factors that may present a stumbling block to success.
Now, however, demographic analysis has been supercharged with the addition of psycho-demographics. We know so much more about neighborhoods than we did even 10 years ago. Psycho-demographics tell us interests, habits, preferences, and attitudes. These factors are much more predictive of which business location will be successful.
Using your current successes – and failures – to predict future success
Curating a list of potential locations may seem like the first step for finding a new business location, but if you want to supercharge your chances for success, it should not be your site selection analyst’s first step.
If you are looking to open a new store, restaurant or entertainment center, you already have the information needed to predict your success. To a data scientist, your existing locations are a treasure-trove of data points and discovery, where the reasons for success – and failure – can not only be revealed but can also be used to create a blueprint for the future.
By determining what works – and what doesn’t – the right data team can create a predictive model that your company can use for years to identify the cities, communities and neighborhoods where your future success is much more likely.
Creating a system that serves you for the long-term
A good site selection analysis starts with the performance of your existing locations and develops an actionable model.
- Site Selection Inputs: Cross referencing an array of 100s of data points with your best and worst performing locations determines which factors are indicators for success. Isolating those success factors eliminates distractions and focuses efforts on the variables that matter.
- Create a model: Once success factors have been identified, machine learning develops an algorithm that can be used to predict future revenue potential.
- Scoring for success: Now is when that list of potential locations comes into play. Applying that site evaluation model to your list lets you prioritize which ones make the most sense based on data-driven science. You can also winnow down that list and eliminate those that least align with the success factors your site selection model identified.
Site selection analysis creates a model that can be used for years
The economy is constantly changing and if you want to be profitable you need to be nimble enough to change with it. Once a site selection model has been developed, you’ll have the tools you need to successfully adapt to an economy in flux for years to come.
Want to find out more – for free?
Are you ready to explore the powerful data-driven site selection process at OpenDoorData? Click here to learn more and schedule a complimentary 30-minute consultation.