One of the first decisions that any Nigerian entrepreneur who wants to launch their own business must take into account is where to work. Doubts about the location of your business premises, the type of premises to invest in and, above all, deciding whether to buy or lease the space for this, are common.
It often happens that entrepreneurs fearful of high rents choose to land on little-traveled streets, which translates into difficult survival, in the best of cases. Now, how do you go about finding the right place to be successful?
What should you take into account to decide whether to rent or buy a place? Where should this be located? The answers to these questions can be found today. Keep reading!
5 steps to find the right place for your business
Before starting the search for a business location, it is necessary to consider that the location is part of the corporate image: it is the place where customers will approach, the first contact they will have with the company and, in many cases, the first opportunity to impact the customer.
Choosing the most suitable location for our business is a vital decision for its success. So, before signing the lease or purchase of the business premises, take some time to analyze these five questions in depth.
1. Who is my potential customer?
You’d be surprised how many Nigerian entrepreneurs fail because they overlook this obvious question. Because, even if you have a company in the most “trendy” area of the city, it will not be the best option if your future clients do not live or stay near there.
To bet on a store, you must do a preliminary analysis where you specify in detail who will visit your store: age, socioeconomic level, education, interests, aspirations, purchasing habits, what will make them fall in love with your brand, how often they will visit your business and what will be the average purchase of your store. The idea is to select the image of this person and give it a name and in this way, create your buyer persona.
2. Will the location be close to my clients?
Once you have identified the profile of your consumer, the next step when looking for a business location is to find out where you are moving. It’s not just about where they live, but also about their studies, work and hobbies.
For example, if you sell inexpensive fashion accessories, a store near a university entrance might be a good option. If you provide services, it is essential that your business is accessible to customers and you must take into account factors such as opening hours and where your customers can park.
3. What is the environment of the venue?
It is very important that you analyze the brands, companies and other ventures that are operating near your possible business premises. And this includes the competition, which is not always against you: have you noticed how many cafes are open near the branches of the major brands?
Buying based on an idea or for very special occasions is a good example of competition between businesses. A clearer example: for a bridal shop, the proximity to companies in this segment is an attraction, since customers visit many stores before buying, and competitors practically increase visits, which will surely also affect sales. sales.
4. Will I be able to serve my consumers well?
It is important that before you go looking for a business premises, you have the design of your store, the planning of the space and all the information you need to make the right decision. For example, if you are going to open a cafeteria, you need to know how many meters will be reserved for the tables, where the kitchen space will be, the bathroom and where you will have a parking lot.
Without this data, you can get excited about a place just because of its location and end up making a big mistake. Does the perfect place exist? Any business has certain needs intrinsic to the process: the need for one or more rooms, warehouses, toilets, windows, etc.
It’s hard to find an “out of the box” location. The repair takes time, it takes time from the company and, if it is too much, it can become a big expense. Ideally, focus on a type of space that meets the minimum requirements for the type of activity: number of sites, storage space, restrooms, and more.
5. Can my business plan support the cost of ownership?
In addition to worrying about the rent of business premises, you should also take into account the security deposits that are required in some high-demand areas. Even many properties require additional payments for property transfers.
This can make this investment very expensive and increase the risk of business bankruptcy. If you believe in the potential of your product or service, it is better to start with a good but more profitable location, which also allows you to make the necessary adjustments according to your business model and, in this way, win more customers.
What are the characteristics that you must evaluate for the location of a commercial premises?
It is useless to have an innovative idea with great potential to create a business if we do not locate the facilities in an ideal way to ensure success. Many entrepreneurs make the mistake of not paying attention to one of the most important decisions when starting a business: where is the business located?
For this reason, although it is difficult to prioritize the decisions that are made when starting your project, we want to present you with 10 key aspects to take into account when choosing the best location for your business premises in Nigeria;
One of the first issues to consider when choosing the best location for a business premises in Nigeria is the competitors.
It is best to settle in an area where your commercial offer is unique and exclusive and where there is no other option for the target audience. However, being surrounded by rival companies is not always a bad thing, and in some cases we have to fall back on the saying “if you can’t beat the enemy, join him”.
2. Influx of the public
The more people pass through your area, the more likely it is that you can attract their attention to enter your premises. So, keep in mind that you have to be in busy areas where there is a lot of pedestrian congestion.
It does not matter if it is in the middle of the street or part of a shopping center, the important thing is that it is a place where your potential customers walk frequently.
3. Easy to park
Another additional aspect that increases accessibility to your business premises is the ease of parking. If you are located in a commercial area that has a lot of traffic, but it is not possible to park, then, depending on the type of business, you will not be able to reach the target audience correctly.
4. Demographic data of potential consumers
In addition to locating your facilities in outstanding areas with a large influx of visitors, you should also be interested in making sure that the latter are part of your company’s target audience.
Therefore, when starting the search for a business location, it is very important to know the demographics of the audience in the area to know their gender, age, purchasing power and occupation. This information is necessary to assess whether your product or service will operate there.
5. Close to suppliers
If your business depends on suppliers that supply all the raw materials or other materials, it is very important to take into account the proximity of the loading, unloading and transport areas. If you are too far away, providers will increase the prices of their transportation services.
One of the important characteristics in the search for business premises is the amount of visibility that we can obtain, since the easier and faster it is to see your facilities, the greater the opportunity for consumers to enter like this, just to get to know.
In general, corner businesses tend to be highly visible because they are often the first to be seen when walking through the area. Also, leasing commercial premises in high-traffic areas will help you not go unnoticed, so it is necessary to obtain visibility through other aspects of marketing, such as posters or colored notices.
7. Close to public transportation
One aspect that we can consider as an added advantage when setting up a business is the proximity to public transport. If your facility is near a train station, bus stop, or taxi area, more people are likely to come to the location and visit your facility.
8. Environment of the area
When thinking about a business premises in Nigeria, we must take into account the environment and apply logic and common sense. It makes no sense to set up a fast food restaurant in a neighborhood where people with high purchasing power live.
This type of public will not be interested in going to this kind of restaurant for a culinary experience. Similarly, in an affordable area, you cannot set up a brand-name clothing store at very high prices, as people cannot afford such luxuries.
9. Permissions and site rules
You should quickly review the regulations that govern your area of interest. So find out about opening and closing times, holidays. On the other hand, if you have a bar or restaurant, when choosing a business premises, according to the law of terraces, make sure that you can adapt your premises.
Also, make sure you get the open license you need to open a business. Even if you see companies competing in the same field, this does not mean that you cannot find problems doing it yourself.
10. The cost of buying or renting
Finally, one of the priorities for anyone interested in acquiring a business location in Nigeria is the cost of buying or renting a space. Remember that the more central a neighborhood is, the greater the budget to rent or buy the establishment. Therefore, you must have alternatives if you cannot afford that cost.
Rent or buy?
When looking for a space for your business, you may be torn between seeing a property for rent ad or focusing on a space for sale. The choice between buying or renting will depend on several factors: the type of business you want to start, the amount of initial capital we have, the risks we are willing to take… so no option is better than another, it all depends on these aspects. Now, what are the advantages and disadvantages of choosing one or the other option?
Advantages and disadvantages of renting a business premises in Nigeria
The normal thing is to start by renting a business premises due to the economic limitations of the vast majority of new entrepreneurs. This also helps to check the viability of the business before choosing to buy. The purchase decision can be made when setting up the company or for speculative reasons in the face of a good real estate opportunity.
Advantages of renting a business premises
- Commitment: The rental of a business premises will result in a maximum lease term of one year, and even the prior negotiation can be as little as 6 months. This is not a high financial risk because if your business fails, you won’t have to borrow money like you would when buying.
- Flexibility: On the other hand, many times we do not find the right location for our business. In the case of renting a house, there is a simple solution: at the end of the contract, you change the place of residence.
- Responsibility: Renting a room means less responsibility, both for maintenance and security, since the owner of the property will have to take care of these things.
- Initial investment: The initial investment to rent a premises compared to the purchase is much less. Also, not being tied to a mortgage significantly lowers future risks.
Disadvantages of renting a business premises
- Unless you get a lease in your favor, you’ll be forced to pay the minimum for a few months, even if it means leaving the premises early.
- You cannot increase the assets of your business, because unlike the purchase of a business premises, you will constantly have to pay a large amount, such as rent for a property that will never belong to you.
- You retain part of the responsibility for equipping the premises. This responsibility will depend on what is agreed in the lease.
- If you plan to renovate or upgrade the venue, you will lose your investment once you are no longer there.
- Commercial tenant regulations are sometimes very strict, and on top of that, commercial leases can be long and difficult to negotiate.
Advantages and disadvantages of buying a business premises
If you are still not convinced of the advantages of leasing a business premises in Nigeria due to its drawbacks, we will tell you about the advantages of buying a property to start your business. However, before making this decision, you need to decide how much you can afford to take on, as well as how much risk you are willing to take.
Advantages of buying a business premises
- Possession of one’s own assets that can be considered a long-term investment.
- If the commercial premises are purchased by your company, they must be registered as company assets. In this case, the total value of the company increases and allows you to obtain loans from banks more easily.
- You have a fixed cost that will not increase at the beginning of the year as it happens with rents.
- Avoid unwanted transfers (commercial lease that expires without the possibility of resuming).
- Freedom to rent it in case your business fails or you have to move to another location.
- Modification of the space and structure without having to ask the owner for permission.
Disadvantages of buying a business premises
- You will be responsible for all necessary repair and maintenance expenses on the premises.
- In case of purchase with a mortgage, you must assume a monthly fee for a longer period.
- You are responsible for the monthly (community) and annual (property and waste tax).
- More cash is needed to be able to pay expenses related to the purchase of assets such as property registration, district tax or VAT.
Renting or buying a space for your business in Nigeria or any part of the world isn’t something to take with levity.
In short, the best solution is to analyze the needs of the business to make the decisions that will make your business grow and survive over time. If you do decide to rent, study the lease carefully before you sign it . On the other hand, if you decide to buy a commercial space, always think long term.
It must be taken into account that when making this important decision to rent or buy a business premises, the different conditions and circumstances must be evaluated, all the costs that each activity entails must be taken into account, depending on the existing economic possibilities. Remember that a decision on the best option will make your business grow and prosper.