Market Planning 101
By: Tony Ozelis

“Location, Location, Location…”

Without question, this is the oldest saw in all of Real Estate…but what if we asked you what exactly makes a great location? Not so simple, eh? Don’t feel too bad…most people don’t, including many of those involved in corporate and commercial real estate on a day-to-day basis.

It’s simply because there are way too many variables involved to be answered in a simple statement. What is a great site for a fast-food restaurant may not work for a haircutter and what makes a great location for one haircutter, may not work for another. It all depends on who and where your potential customers are.

Repeat after me:

Great sites are affordable, easy to get to
and surrounded by their customers.

Although there are a few legendary real estate “gurus” on the subject, for the rest of us mere mortals, every professional real estate person worth their salt has a checklist of items that they go through in determining exactly what makes a good location for them and their uses.  

But, what if I told you that for an investment of less than twenty bucks (plus gas) and a couple hours of your time, you could greatly increase your chances of finding a few good ones? Sound too good to be true? It's not and here’s how: $7.49 .com

The following is a cute little anecdote:

One of the first jobs that I ever had, was working in a local supermarket.
(Yes, this was before I became the humble dirt guy that stands before you today)...

On my first day there, the store manager pointed to a case of Band- Aids,
handed me a pricing gun and with a scowl that haunts me to this day,
said “Aisle Six, halfway down on the left- hand side, $1.99”.

And there I sat, for the better part of an afternoon
…dollar ninety-nine, dollar ninety-nine, dollar ninety-nine, dollar ninety-nine…
To me: a complete waste of time.

After all...I wanted to learn the supermarket business
and didn’t understand how putting stickers on boxes was going to help my career path.

But, a funny thing happened while I was pricing away…

If after a day, a week or a month some lucky shopper approached me and asked where the Band- Aids were, I was able to stare them straight in the chin and tell them with a certain youthful cockiness;
Isle six, half-way down on the left hand side…a dollar ninety-nine”.

You need to think of Market Planning in that way,
it’s just like stocking the shelves.

At first,what may seem like a boring, gas-burning waste of time, is actually an important discovery process that should help you identify the best location for your business. Even if you were born in the town you want to build in and have lived there all of your life, during this exercise you will learn things….and important things, too.

The concept of market planning isn’t new. It’s been around for quite awhile and, as funny it sounds, many national companies are only now truly starting to embrace the idea for themselves (and sometimes with pretty humorous misguided results).

It’s simply because good market development studies takes all of the
misconceptions (and ego) out of the site selection process and, with a decent one a Rhesus monkey could find a decent site (OK…closing the deal is another story, but we digress).

Historically, most companies found and developed sites as they became available; “Where the dart stuck on the map”, if you will. Either a company representative would “gut feel” a location or a real estate broker would find a site and send it along to the company (And brokers usually send the best available locations to whoever pays the most money, the fastest).

If the site did not cannibalize an existing unit and it wasn’t ridiculously priced, many times they would do the deal never giving a second thought to if it was the right place to build or where they should place the next one. It simply was a good site because it was available.

But then, believe it or not, some companies actually got smarter over time. After years of suffering through reactionary development (either that, or they ran out of darts), some folks actually got smart enough to sit back and say “Well…in a perfect world, how many units could I build in this market and where would be the best place to put them?” Way BEFORE they ever built anything.

These few brave intelligent souls ushered in a new era of enabling their companies to plan out an entire area (or market) before they started looking at sites and avoiding a few mistakes along the way. They were able to objectively look at an entire area and identify pockets that had their customer base or highly traveled intersections that would make the most out of their companies hard earned dough. You can and should do the same thing, even if you are not the Mega-Juicy-Burger Company and only planning on building a single location.

If you are committed to getting the most out of the site that you’re looking for (As if suffering through my silly anecdote was not enough), you should seriously think about creating your own market plan. It will be worth the time spent on creating it. A properly constructed market plan not only can help you identify where your potential customers live, work and shop but also help identify which neighborhoods and retailers you should be near. It can also help spot areas that may be declining in population or saturated with your competition.

A word of caution about considering “future growth areas” and I think Yogi Berra said it best; “All potential means, is you ain’t done it yet”.If it hasn’t happened yet, it may not happen for a long time…being first means nothing in development.

Next: The Tools of the trade

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