Chapter ppt_14.pptx

2. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Essentials of Entrepreneurship and Small Business Management Ninth Edition Chapter 14 Choosing the Right Location and Layout

3. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objectives (1 of 2) 1. Explain the stages in the location decision: choosing the region, the state, the city, and the specific site. 2. Describe the location criteria for retail and service businesses.

4. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Learning Objectives (2 of 2) 3. Outline the location options for retail and service businesses; central business districts, neighborhoods, shopping centers and malls, retail competitors, shared spaces, inside large retail stores, nontraditional locations, at home, and on the road. 4. Explain the site selection process for manufacturers. 5. Describe the criteria used to analyze the layout and design considerations of a building, including the Americans with Disabilities Act. 6. Explain the principles of effective layouts for retailers, service businesses, and manufacturers.

5. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing a Location • Having the right location for a business can be an important source of competitive advantage. • Consider: – The right region of the country – The right state in the region – The right city in the state – The right site in the city

6. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the Region: Sources of Information (1 of 3) • Census data – www.census.gov – http://factfinder.census.gov • Zoom Prospector – http://zoomprospector.com/ • Population Reference Bureau – www.prb.org/DataFinder.aspx

7. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the Region: Sources of Information (2 of 3) • Zip Code Atlas and Market Planner • Lifestyle Market Analyst • Site Selection • Editor and Publisher Market Guide • The American Marketplace: Demographics and Spending Patterns

8. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the Region: Sources of Information (3 of 3) • Small Business Development Center – http://sba.gov • Population Reference Bureau – http://prb.org/ • Euromonitor International – http://euromonitor.com/ • OECD – http://oecd.org/

9. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the State (1 of 4) • Proximity to markets • Proximity to needed raw materials • Wage rates • Labor supply needs • Business climate

10. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Table 14.1 Most and Least Small-Business- Friendly States States Most Friendly to Small Businesses Blank 1. Nevada 6. Washington 2. Texas 7. Indiana 3. South Dakota 8. Arizona 4. Wyoming 9. Alabama 5. Florida 10. Ohio States Least Friendly to Small Businesses Blank 41. Oregon 46. Vermont 42. Iowa 47. Minnesota 43. Connecticut 48. New York 44. Maine 49. New Jersey 45. Hawaii 50. California Source: Based on Raymond J. Keating, Small Business Policy Index 2017, Small Business & Entrepreneurship Council, 21st Annual Edition, February 2017, p. 2.

11. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the State (2 of 4) • Proximity to markets • Proximity to needed raw materials • Wage rates • Size and quality of labor force • Business climate • Tax rates

12. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Figure 14.1 State Business Tax Climate Index Source: Jared Walczak, Scott Drenkard, and Joseph Henchman, 2017 State Business Tax Climate Index, Tax Foundation, September 28, 2016, p. 1.

13. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the State (3 of 4) • Proximity to markets • Proximity to needed raw materials • Wage rates • Labor supply needs • Business climate • Tax rates • Internet access

14. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Internet Download Speeds Figure 14.2 Average Internet Peak Download Speeds (Mbps) by State Source: Based on data from “Internet Connection Speed Map,” FastMetrics, 2017, www.fastmetrics.com/internet-connection-speedmap-usa.php#average-speeds-by-state.

15. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the State (4 of 4) • Proximity to markets • Proximity to needed raw materials • Wage rates • Labor supply needs • Business climate • Tax rates • Internet access • Total operating costs

16. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Table 14.2 State Evaluation Matrix State Weighted Score (Weight * Score) Location Criterion Weight Score (Low = 1, High = 5) State 1 State 2 State 3 Quality of labor force Blank Blank Blank Blank Blank Wage rates Blank Blank Blank Blank Blank Union activity Blank Blank Blank Blank Blank Property/building costs Blank Blank Blank Blank Blank Utility costs Blank Blank Blank Blank Blank Transportation costs Blank Blank Blank Blank Blank Tax burden Blank Blank Blank Blank Blank Educational/training assistance Blank Blank Blank Blank Blank Start-up incentives Blank Blank Blank Blank Blank Raw material availability Blank Blank Blank Blank Blank Quality of life Blank Blank Blank Blank Blank Other: Blank Blank Blank Blank Blank Blank Blank Total Score Blank Blank Blank

17. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Table 14.3 Best and Worst States for Doing Business (1 of 2) Top 10 States for Doing Business Overall Rank* State Taxes and Regulations Rank Based on Workforce Quality Living Environment 1 Texas #6 #5 #10 2 Florida 7 23 9 3 North Carolina 15 10 3 4 Tennessee 4 8 8 5 Indiana 10 4 17 6 Arizona 12 14 11 7 South Carolina 11 19 6 8 Georgia 14 9 7 9 Nevada 3 22 21 10 Ohio 24 7 23

18. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Table 14.3 Best and Worst States for Doing Business (2 of 2) Bottom 10 States for Doing Business Rank* State Taxes and Regulations Workforce Quality Living Environment 41 Rhode Island #44 #37 #39 42 Mississippi 33 48 50 43 Maryland 45 45 41 44 Hawaii 43 49 4 45 Massachusetts 47 16 38 46 Connecticut 48 36 37 47 New Jersey 42 40 48 48 Illinois 46 44 45 49 New York 49 38 47 50 California 50 35 26 *Rank is the result of a survey by Chief Executive magazine that asked 650 business leaders to rank the states on factors such as taxes, regulatory burden, quality of workforce, and quality of life. Source: Based on “2016 Best and Worst States for Business,” Chief Executive, May 6, 2016, http://chiefexecutive.net/2016-best-and-worst-states-forbusiness-full-list/.

20. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Table 14.4 States with the Most Top Micropolitan Areas State Number of Top 100 Micropolitan Areas Ohio 19 Kentucky 9 Indiana 6 North Carolina 6 Georgia 5 Illinois 5 Tennessee 4 Alabama 4 Nebraska 4 Michigan 4 Source: Based on Ron Starner, “The Findlay Formula Effect,” Site Selection, March 2016, pp. 115–129.

21. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the City (2 of 3) • Population trends • Competition • Clustering • Compatibility with community • Local laws and regulations – Zoning laws – Variance

23. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Choosing the Site • Test the suitability of potential locations by opening “pop-up” stores. • Consider downsizing outlets to lower start-up and operating costs and to allow for more location options that are not available to full-sized stores. – Example: Burger King

24. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Location Criteria for Retail and Service Businesses (1 of 3) • Trade area size: – The region from which a business can expect to draw customers. • Retail compatibility • Degree of competition • Index of retail saturation (IRS)

25. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Index of Retail Saturation C ×RE IRS = RF Where: C = Number of customers in the trading area RE = Retail expenditures equals the average expenditure per person for the product in the trading area RF = Retail facilities = the total square feet of selling space allocated to the product in the trading area

26. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Location Criteria for Retail and Service Businesses (2 of 3) • Trade area size: – The region from which a business can expect to draw customers. • Retail compatibility • Degree of competition • Index of retail saturation (IRS) • Reilly’s law of retail gravitation

27. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Reilly’s Law of Retail Gravitation 1+ = b a d BP P P where BP = the distance in miles from location A to the break point d = the distance in miles between locations A and B Pb = the population surrounding location B Pa = the population surrounding location A

28. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Location Criteria for Retail and Service Businesses (3 of 3) • Transportation network • Physical and psychological barriers • Customer traffic • Adequate parking • Reputation • Visibility

29. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Retail & Service Location Options (1 of 2) • Central Business Districts (CBDs) • Neighborhood locations • Shopping centers and malls

30. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Shopping Centers and Malls (1 of 5) • Strip shopping centers – The smallest of all shopping centers, but make up the bulk of all the centers in the United States. • Neighborhood shopping centers – 5 to 20 stores; anchor is supermarket or drugstore; serves up to 40,000 people.

31. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Shopping Centers and Malls (2 of 5) • Community shopping centers – 15 to 40 stores; anchor is department or variety store; serves 40,000 to 150,000 people. • Power centers – Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.

32. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Shopping Centers and Malls (3 of 5) • Theme or festival centers – Employ a unifying theme, often involving entertainment, to attract tourists. • Outlet centers – Feature manufacturers’ and retailers’ outlet stores selling name-brand goods at discount prices; usually follows “open air” design.

33. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Shopping Centers and Malls (4 of 5) • Lifestyle centers – Located near affluent residential neighborhoods; designed to look more like a central business district than a shopping center or mall. • Regional shopping malls – 40 to 80 stores; anchor is one or more major department stores; draws customers from a large trading area, often 5 to 15 miles or more.

34. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Shopping Centers and Malls (5 of 5) • Super-regional shopping malls – Similar to a regional mall but bigger; trading area is 25 miles or more in all directions. – Example:  West Edmonton Mall (West Edmonton, Canada), the largest mall in North America.

35. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Evaluating a Location • Is there a good fit with other products and brands sold in the mall or center? • Who are the other tenants? • Demographically, is it a good fit? • How much foot traffic does it generate? • What is the average sales per square foot? • How much vehicle traffic does it generate? • What is the vacancy rate? • How much is the rent, and how is it calculated?

36. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Retail & Service Location Options (2 of 2) • Near competitors • Shared spaces • Inside large retail store • Nontraditional locations • Home-based businesses • On the road

37. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Location Decisions for Manufacturers (1 of 2) • Foreign trade zones: – a specially designated area in or near a U.S. customs port of entry that allows resident companies to import materials and components from foreign countries; assemble, process, manufacture, or package them; and then ship the finished product while either reducing or eliminating tariffs and duties.

39. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Location Decisions for Manufacturers (2 of 2) • Foreign trade zones • Business incubators: – an organization that combines low-cost, flexible rental space with a multitude of support services for its small business residents. • Accelerator: – an organization that provides business start-ups a range of valuable support services in return for a share of equity, typically 2–10% of the company’s stock, usually in a “boot camp” experience that lasts only a few months.

40. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Business Incubators • Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents. • More than 1,500 in operation across the United States. • They work! – Companies that “graduate” from incubators have a success rate of between 75% and 87%. – 84% of graduates stay in the local community, creating local job opportunities.

41. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout • Layout: – The logical arrangement of the physical facilities of a business that contributes to efficient operations, increased productivity, and higher sales. • In the United States, 23% of workers are dissatisfied with their work environments.

42. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Figure 14.4 Work Space Design Characteristics in the United States (part a) and Globally (part b) Source: Based on Steelcase Global Report, 2014, p. 212.

43. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (1 of 6) • Size and adaptability – The size must be adequate to accommodate business needs. • Construction and appearance – The appearance must create the proper image or “personality” for the business in the customer’s eyes.

44. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Window Displays That Sell • Tips for window displays that sell: – Keep displays simple. – Keep displays clean and current. – Change displays frequently. – Get expert help if necessary.

45. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (2 of 6) • Entrances – The entrance must invite customers in. • The Americans with Disabilities Act – Must comply with Americans with Disabilities Act (ADA). • Signs – Pay attention to the business sign, the most direct method of reaching potential customers.

46. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Business Signs • Tell potential customers who you are and what you’re selling. • Should have contrasting colors and simple typeface. • Should be visible, simple, and clear. • Should be legible both day and night. • Must be maintained properly. • Must comply with local sign ordinances.

47. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (3 of 6) • Building interiors – Ergonomics: the science of adapting work and the work environment to complement employees’ strengths and to suit customers’ needs.

48. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Building Interiors • Ergonomics is an integral part of any design. • Proper layout and design pays off in higher productivity, efficiency, or sales. • Proper lighting is measured by what is ideal for the job being done – the use of natural light can increase retail sales. • Sound and scent should appeal to all customers and can boost sales. • Environmentally friendly design for efficiency and appeal.

49. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (4 of 6) • Building interiors – Ergonomics • Drive-through windows – Can be a relatively inexpensive way to increase sales. – Account for 60–70% of sales in quick-service restaurants.

50. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (5 of 6) • Sight, sound, and lighting – Support brand and image using colors and visual cues. – A business’s “soundscape” can have an impact on the length of time customers shop and the amount of money they spend. – Use scent as a sales tool. – Study: Stores using natural light experience sales that are 40% higher than similar stores using fluorescent lighting.

51. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout: External Factors (6 of 6) • Sustainability and environmentally friendly design – Recycled materials; high efficiency lighting, fixtures, and appliances – LEED principles

52. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout for Retailers • Know your customers’ buying habits and plan your layout accordingly. • Display merchandise as attractively as your budget will allow. • Display complementary items together. • Recognize the value of floor space; never waste valuable selling space with non-selling functions.

53. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Figure 14.6 Space Values for a Small Store Source: From Dale M. Lewison, Retailing, 6th ed. Copyright © 1997 by Dale M. Lewison. Reprinted with permission.

54. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Layout for Manufacturers • Type of product • Type of production process • Ergonomic considerations • Economic considerations • Space availability within the facility

56. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Designing Production Layouts Avoid the seven forms of waste: 1. Transportation 2. Inventory 3. Motion 4. Waiting 5. Overproduction 6. Processing 7. Defects

57. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved. Conclusion • Location is an important decision for businesses in the areas of: – Retail – Service – Manufacturing • The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs.

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