Is it the developer pushing to gain the maximum revenue from the development? Or is it the council thinking they will be helping the community with more retail?

Around the Camberwell/Box Hill area in Melbourne, we have vacant spaces that have already cost people a fortune. Many of us think we are already overstocked with coffee shops and quick service restaurants. Yet this is what keeps coming up on offer. Unfortunately, the developers or their agents always find a small entrepreneur who thinks they can make a go of it. And then the problem just becomes bigger.

Case study #1

Opposite our office in Surrey Hills [Melbourne], a new three storey apartment block was built. Below it, the developer placed two large cafe/QSR food outlets facing Canterbury Rd and on the ingress side of the road. This meant that you pass them as you are heading into the City of Melbourne.

I have run many training courses for Site Selection for the FCA, and one of my basic rules is that food is more often purchased on the way home, rather than on your way to work!

Once the apartments were built, the first two tenants were a burger shop and a Greek yeeros shop – both very expensively fitted out. The yeeros shop lasted three months, and the burger shop around six months. The burger shop then became a coffee shop, which lasted another three months, and now both are vacant.

What has this cost the tenants, and the owners of the shops?

Case study #2

Maling Rd in Canterbury [Melbourne] is a trendy shopping “village”-style shopping strip with quirky retailers and independent coffee shops.

Recently, a set of apartments were built at the end of the strip. These have had a terrible history (leaks and other defects) and include two large retail shops below. So far, these have never been occupied, and it looks unlikely to change.

A decade ago, every new development seemed able to support a coffee shop below. But this is no longer the case. Post-covid, amid an economic downturn, the vacancy rate in shops has been growing.

Don’t think that just because your business is in a new development, demand will be built in.

How to pick a store location based on demand

To open a successful retail business, demand for the product needs to be proportional to the competition.

In the cases above, there is likely too much competition – i.e. from other hospitality venues in the area – and too little demand in the area. The assumption made by the developers and naive small-business owners is that the tenants living above the shop will all become customers. But of course, this is not necessarily the case.

One of the metrics we often use in area analysis for our customers is population/competition. In the case of a “coffee and cake” type of store, we often use the metric:

We can compare locations by dividing population by competitors. This does vary depending on what you are selling. For instance, say you own a “destination” business (i.e. a wedding dress retailer) that people are more willing to travel to. In this case, you are going to be looking at a larger population and competition radius.

In summary, do not think that just because a few people live above your new business opportunity, that is automatically going to supply the demand for your projected sales. Think about a much wider audience, and how competitive your product is to what else is available.

If you’re currently selecting a site for your small business, this article has more factors to consider.

The post Why small businesses should rethink retail spaces under apartments appeared first on Inside Small Business.

Unfortunately, site selection can be a mysterious process. To ensure you’re getting bank for your buck, it’s important to evaluate each location’s potential through structured processes that weigh essential factors such as demographics, visibility, and access.

This article outlines a systematic approach to site selection, offering insights into how to align your retail goals with the right location.

Demographics

Ideally, you would like to have information so you can match up the potential customers with the resident population. What this means is that if you know who the potential customers are, you can look to where they live and consider that area for locating your business.

In Australia, you just need to search for “Quickstats,” which should take you to the ABS website, where you can look up all sorts of demographic information for your area of interest. This includes population, age, income, ethnicity, and many other pieces of relevant information to help you understand the local area. 

For example, if you were going to open a Mercedes dealership, you would be seeking a higher socio-demographic area, probably with an older population. If you were selling very cheap children’s sandals, you would be looking for a lower socio-economic area, with a high percentage of children, or a lower-than-normal average age cohort.

Physical location

Once you have at least drawn conclusions on what areas best suit what you are retailing, how do you look for the retail site? Try to think in terms of whether your product is Impulse or Destination, and that will give you some ideas on where to look. 

Impulse products are those things people buy on a whim and need on a regular basis. Think cigarettes, milk, and other items from a convenience store. 

Destination products are much larger purchases, where customers will make a conscious decision to seek out that product and go to the destination where it is located. Think in terms of a new car, a high-priced restaurant for your birthday or anniversary, or renovating your house.

The more you are at the impulse end of the line, the more you need to pay high rent for a top site with lots of passing traffic. The more you are focused on a destination product, the more you can be off the main road and pay less for a quality place that suits your needs.

What you are normally weighing up (along with the rent) are the following factors:

• Traffic – road, pedestrian, and bicycles
• Visibility
• Access and parking
• Space (square meters)
• Suitability of the physical facility
• Who are your neighbors?

You might also consider what traffic flow you are on (and whether competitors are also present there).

Building a process to make better decisions

If you are only opening one store, then this decision is normally a one-off, or not something being done on a regular basis. If you want two or more stores, or are a franchisor or a large company with many retail outlets, then this becomes a regular event, and you should have a process to make the best possible decisions.

My recommendation for small businesses is to stop thinking of site selection and retail site analytics as an unwarranted expense. Instead, think of money spent on choosing a winning commercial site as a long-term investment. These are normally the most important decisions in your retail business for your long-term survival.

The post How to choose a winning commercial site for your small business appeared first on Inside Small Business.

Whether you are a small business, a franchisor or a franchisee, a ‘let me make it right for you’ solution can be either an effective fix or an expensive exercise for your business.

Many of the big names of retail and franchising, in their semi-retirement, hang out their shingle to offer their services to anyone who believes their story, and they also become a ‘consultant’. Interesting how their views on consultants can change.

Consultants are often seen as a strange breed by many in franchising: experts, boffins, propeller heads, conmen, something in between all of the above, or someone who can really help your business. Most come with experience and ideas, and it is their responsibility to perform for you – or else.

There are many different varieties of consultants in this industry including:

• franchising consultants 
• marketing consultants
• brand consultants
• demographic consultants
• management consultants
• security consultants.

And a heap of professions that are, in my view, consultants as well:

• accountants
• lawyers
• architects
• financial advisers.

How do you pick a consultant to assist you, and how do you work with them to achieve your goal?

The first thing I say is that you are not hiring a consultant by the hour, but rather for the years of experience they bring to the issues with which you need assistance. Most good consultants come with the necessary experience and reasonable academic qualifications. On top of this, there are qualifications issued by groups such as the FCA (Franchise Council of Australia), AIM (Australian Institute of Management) and the IMC (Institute of Management Consultants), to name a few.

“Good consultants, like lawyers, should be both qualified and keeping up to date with their area of expertise.”

When you go to a doctor, lawyer, accountant or surgeon, you know they have achieved a professional level to be allowed to work in their field. Unfortunately, there is no such requirement of consultants across Australia. Anyone can hang out a shingle, whether they have experience and qualifications or have just run a hot dog stand.

Good consultants, like lawyers, should be both qualified and keeping up to date with their area of expertise. The FCA runs programs aimed at professional development for the ‘suppliers’ to the industry, and offers qualifications to recognise this, including the Certified Franchise Executive (CFE) credential.

Similarly, a qualification issued by the IMC (worldwide) is Certified Management Consultant (CMC), and it is held in comparable esteem to the CFE in franchising. It is granted only to experienced consultants who demonstrate correct process in the projects they undertake.

How do you choose a consultant?

Value is the key to engaging a consultant – what they can deliver to you in terms of benefits, compared with what they will cost you. In my view, you want to engage a person who has the qualification, expertise and experience to solve your issues. If all you are concerned about is the cost side of the equation, then remember, you get monkeys if you pay peanuts. If you wish to ask for a quote, just make sure you are comparing like to like. It is very easy for someone to claim they are a low-cost consultant and can do everything.

I also suggest you think of your lawyers and accountants as consultants. It amazes me how we will be talking to a client, and when asked about their lawyers, we hear they are using their local suburban lawyer. This, to me, would be similar to asking a divorce lawyer to handle your commercial franchise agreement. Specialist lawyers and accountants are there to handle franchise and other small-business issues. Would you have your local doctor undertake brain surgery for you because he was entitled to be called doctor?

Another area you may want to ask a consultant about is whether they have suitable professional indemnity insurance and public liability insurance. If there is a problem based on advice or actions you have taken following a consultant’s recommendations that have cost you a large amount of money, you may want to take legal recourse.

How do you brief a consultant?

My suggestion is to have a list of what you wish to achieve. That may include broad things like:

• Suitable locations to open new stores.
• New marketing image.
• Develop our strategic plan.
• Improve revenue.
• Improve our website.
• Implement a process for site selection.
• Reduce risk from legal issues.
• Online operations manual.

These may come from your business plan, a SWOT analysis, or just areas that you see are causing problems in your business.

Once you know the areas where you need assistance, construct a simple brief, possibly with some measurable achievements:

• Implement a local marketing campaign where we expect five per cent coupon returns.
• Improve revenue by 20 per cent within 12 months.
• Achieve 10 per cent improvement in mystery shopper score for my site.

This is often more about educating yourself on what you want to achieve, rather than just telling a consultant to fix everything.

How do you engage a consultant?

Once you are clear on what you wish to achieve, then it is the consultant’s job to convince you that they can meet your expectations in a timely, cost-effective manner.

This may involve replying to your brief, forwarding a proposal that may include references, relevant experience, and who would be involved in your project and their experience and qualifications.

Once you are satisfied that the plan will achieve your aims, you engage the consultant to undertake the specified work.

Summary

Choosing a consultant means striking a balance between benefits they can achieve for your business, and cost or risk for your business. With a clear idea of what you want to achieve, you can brief the consultant and measure their performance. Don’t be misled by low costs, or under-qualified and inexperienced consultants. 

Select well, as they can make good money for your business, and in some cases turn it around completely for the better.

This article first appeared in issue 43 of the Inside Small Business quarterly magazine

The post How do I find the right consultant to help grow my business? appeared first on Inside Small Business.

I have been a sailor since I was nine years old, and I think there is a great comparison between sailing and small business in many areas. The paths to success in both have many parallels, which leads me to suggest that small-business owners should start scouring the sailing clubs and maybe join a boat crew.

Some of the areas I will use in my comparison are:

• The need for a race plan, or maybe a business plan.
• The need for good equipment.
• Good leadership (the skipper).
• The need to build a consistent team (regulars).
• The ability to celebrate successes.

I am a glutton for punishment, my wife says, and I happen to sail at two clubs. Whilst we see it as very serious, I was privy to attending the America’s Cup in San Francisco in 2013, and that was a level approaching perfection – one that every businessperson dreams of achieving. These boats were approaching 100km/hr up on foils and were being raced by the best professional sailors in the world.

As much as we may dream of reaching this level on the beautiful Couta boat I sail on, we do not quite achieve such performance or perfection – but we try hard. Here are some ways our efforts parallel those of a successful small business.

Having a race plan or business plan

The day before a race, our skipper decides how many people he wants to take as crew, depending on the forecast wind. Often we sail with seven, or down to five on a light day. I would compare this to looking at the economic climate and having a feel for what may be coming in the near future. All businesses should be doing this regularly, possibly in the form of a SWOT (strengths, weaknesses, opportunities and threats) analysis.

Before we start a race on the Couta boat, we normally have a small meeting where we discuss the weather, who will do which jobs, and who is to support them. Some jobs take two people in a specific order and all this is agreed upon. The equivalent in business would probably be a team meeting, where the jobs are allocated, and everyone can see the big picture and know the jobs they need to do.

Having good equipment

Whether in business or sailing, you need good equipment. If a business is skimping on fitout and equipment required to service the customer – and just looks tired – the performance will probably mirror that look. During my days at Caltex, it was essential that we brought a new image into the service stations every so often, to keep them competitive. Otherwise, they just lost their shine and performance followed.

In sailing, this is reflected in having a good boat that will be consistent and reliable. The America’s Cup boats were the most consistent I have ever seen, relying on technical innovations to achieve superiority over their competition, which Team USA accomplished halfway through the regatta. In the Couta boats, this comes down to good design, regular maintenance and even getting the bottom cleaned every couple of weeks by a diver (not me).

Good leadership (the skipper)

A good boat needs a good skipper to win. The skipper must have a great understanding of the vessel, and be able to understand and participate in the decisions that have to go on around him or her. This does not mean the skipper has to do everything, it means they have to be able to delegate, and make sure all the rest of the crew do their jobs while giving as much feedback as required.

The America’s Cup demonstrated this to perfection, with Australian Jimmy Spithill leading Oracle Team USA as the skipper, yet taking in information from the tactician and all around him.

In a small business, this dynamic has to be in place between the owner and all of the staff. If the leaders are unsure what they are doing, this creates doubt down the chain and inevitably leads to poor performance.

The need to build a consistent team (regulars)

How often do we go into a business during a quiet time, or on a weekend, and get dismayed at the staff who are on hand? Whether it be poor service in a coffee shop or staff taking phone calls and chatting amongst themselves while the customer stands looking at them, it all reflects poorly on the business. This is why you need a consistent crew. In sailing, it is not always easy to get a regular crew – especially on a Couta boat, where you can require seven. So, it is the Skipper’s responsibility always to be recruiting and training a good talent pool to draw on as needed. Our success on Zephyr over the last few years probably came from a regular crew of five people, who all knew what was required, plus some others to add ballast and weight to the boat.

Be able to celebrate the successes

It’s good to be successful. This may mean just making a tidy profit, or it may come as recognition from others, such as in industry awards. It can also come from internal awards, such as Employee of the Month. Passing on acknowledgement of a job well done makes everyone feel better and more willing to give that little bit extra in performance that often makes a big difference.

In sailing it is similar, as it is usually a team event. Even if you are a solo sailor, you still probably rely on parents, a partner or a mate to assist you in your sailing endeavours. In a team like we have on Couta boats, there are about 20 different people who are on board at different times during the 20-race season.

So, if you can get your hands on the silverware, hold on to it and enjoy it.

Summary

Small business and sailing have a lot in common, as both rely on consistent performance to achieve the highest level of success. Maybe Inside Small Business needs to start a training program for readers and their staff on small boats at the various yacht clubs around Australia, to build up resilience.

Good luck with your business.

This article first appeared in issue 40 of the Inside Small Business quarterly magazine

The post Lessons from sailing to help your SME tack toward success appeared first on Inside Small Business.

The first thing you learn is all real estate agents are optimists. The reality is they will advise you that the commercial site you are seeking will be hard to find, and that they have the perfect opportunity, (normally if you sign up quickly).

Reality is that out of about 20 stores you will see, probably only one or two will truly meet your requirements. I normally recommend you write a “property guideline” that you can show agents and others what you are seeking.

We would be offered about three or four “opportunities” a week. The oil industry works to some reasonably clear parameters, and it was just a matter of filtering real opportunities from time-wasting ones.

My property guidelines to address the following types of issues:

• Size – we were looking for mid blocks of around 80m long x 40m wide. If a corner block, then around 60m x 60m.
• Physical characteristics – our preference was a flat block, or if possible slightly above the road rather than below. We would prefer to be on a flat section or slightly uphill section of the road, definitely not a steep decline.
• Side of road – we would prefer to be on the ‘going home’ side of the road, or the “neutral” direction. Inbound was not so good.
• Competition – we obviously did not want to be on the same traffic flow as any of our other sites. Even better if few or no other competitors were servicing the area.
• Road type – traffic flow was important, and the more, the better in general.
• Visibility – we would want good visibility for our signage.
• Access – you had to be able to come in and out easily. Not much good if you could not come in off the main road.
• Demographics – in Australia probably the highest fuel users are medium-income people, living in outer suburbs of the capital cities.
• Suburbs or areas – we would nominate suburbs or specific areas we were actively seeking new sites in, and not be afraid to mention areas we were not looking at, either because we were well serviced in the area, or we knew the land cost would be prohibitive.

Once this was all formed in the property guideline, it was willingly sent to all agents, developers and other interested parties we knew.

If you are looking for a store in a shopping centre or a strip, you can make out your own list of what you are seeking, and then I suggest you be strong, and stick to it until you find the suitable commercial site for your business.

There is no magic formula to selecting a commercial site, rather a process you need to follow and a line of thinking to make sure the site you finally select meets all the criteria that YOU feel is essential for your new business venture.

I cannot tell you to look at the left-hand side compared to the right-hand side of the road, or look for the busiest, most expensive store in a shopping centre compared to the $2 discount store at the back.

What I can tell you is think on what your business is about and try and match, as best you can, the commercial sites being offered to yours and your customer’s needs. There will always be the attraction of a better/bigger site – at more rent – and you have to evaluate that to your real needs, not the sales pressure being placed on you by a leasing agent.

Peter Buckingham, Managing Director, Spectrum Analysis

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