by Jill Hendrix #113, 28 January 2008

Part 1: Location, Location, Location In your business plan you determined whether your city or town as a whole would support your store and perhaps you even decided upon a particular section of town. Now it's time to get down to the nitty-gritty and look at specific properties. As with buying a house, the rule of thumb is location, location, location. If you can afford to purchase your building that it is usually the best long-term investment for your business, but for the purposes of this article, I will assume that most of my readers will be renting their spaces.

It's best to think of your rent expense as part of your marketing budget. If you pick a bargain-basement-priced unit way off the beaten path, you're not really saving that much money since you'll have to spend more in advertising to let people know that you exist. Whereas if you have a huge building with a gigantic sign right on the main thoroughfare, you may not have to advertise at all. The ideal location for your business is most likely going to fall somewhere in the middle of the two as you try to find a visible, easy-access spot whose rent doesn't break the bank and still leaves some money left for advertising.

Writing your business plan should have given you a general idea of the size space you need. For the average used bookstore, 1400-1700 square feet is probably adequate. My shop is 1600 square feet with 2 bathrooms, a back hall, and a back office. We could have easily gotten by with 1500 square feet with a better configuration. Keep in mind that the larger the shop, the larger the expense.

Commercial real estate is often divided into different classes. Class A is the best and usually refers to top-of-the-line new construction in the best locations. Think the Fifth Avenues of your city. My city, Greenville, South Carolina, has at least three Class A areas: Haywood Road (the city's primary enclosed mall is on this road), Woodruff Road (home to the newest open-air shopping centers), and our revitalized downtown. Class B real-estate is usually a bit older and in a commercial retail area, but not on the very main drags. For example, my shop is located on a 4-lane street that runs for a couple of miles from an older, affluent neighborhood to our downtown; I'm near its intersection with Haywood Road (a class A area) in a small shopping center anchored by a well-known restaurant that's been around for 10 years. Class C real estate is the bargain-basement stuff that's offered at a discount price for a good reason - it's impossible to turn in and out, it's not visible from the road, it's on a little-traveled road, it needs major repairs, etc.