When you are starting your own business, there are many different things that you will need to consider and plan. One of the things that you will need to make a decision on is whether your business will be operated from a single location, from multiple sites, or even just online!
In order to help you to make this difficult decision, we will explore some of the factors to consider, as well as some of the pros and cons of each approach.
What Industry is Your Business In?
The industry that your business is part of can have a significant effect on which approach is the right one for you.
For example, if you are starting a hospitality business such as a restaurant, bar, or café, you won’t be able to trade purely online! If you are in the retail industry, however, you may be able to choose any—or all—of the three approaches.
If you are offering services such as web design, graphic design, content writing, consultancy, or digital marketing, an online-only business may be the best idea as paying rent for a physical workspace may even be counter-productive.
Who Is Your Target Market?
Your target market is a vital factor when deciding where your business premises should be.
If your target market is based in a specific location—for example, students at a particular college or visitors to a certain tourist hotspot—then a single location near to your desired customers is probably best.
If you have other potential customers elsewhere, then multiple locations may be best. If you are selling to a demographic based on factors such as age, gender, etc., but not location, then operating mostly online may be your best bet.
Who Are Your Suppliers?
Depending on the type of business that you are starting, you will most likely need to use suppliers of stock and equipment needed to carry out your working operations.
If you are opening a café, you will need suppliers of coffee machines, coffee grounds, milk, condiments, and food. It is probably best to choose a location that is close to your suppliers and accessible.
If you are opening a manufacturing plant, you may want to choose premises in one or more industrial parks, as these are typically designed to be accessible to suppliers.
However, it is worth considering using online delivery, particularly for equipment that only needs to be purchased once. For example, if you are setting up a factory, many of the pieces of equipment that you need to get started can be found on sites like recyclingbalers.com and delivered to your premises.
1. Single-Location Businesses
Many businesses are run from a single location. There are advantages and disadvantages to single-location businesses, which will be explored here.
Examples of Single-Location Businesses
Single-location businesses are very common in fields such as hospitality and retail. Most pubs, bars, nightclubs, and concert venues are not part of a chain, as are most cafes and restaurants.
You can find examples of single-location businesses by just checking out the stores in your nearest town or city centre. Although you will probably find many chain establishments, there are also most likely many independent businesses based just from that one location.
Single-location businesses tend not to be as well-known all over the world as chain establishments are—even world-famous stores like Harrod’s department store in London are often owned by conglomerates with multiple other enterprises!
Advantages of Single-Location Businesses
Perhaps the most obvious advantage of running your business from just a single location is the reduced cost of renting the premises.
Single-location businesses are also usually easier to manage, and logistics are simpler, especially for small businesses. Single-location businesses also have the advantage of being one-of-a-kind, which can be a great way to bring in customers who want a unique experience.
Many of these businesses are well-loved and seen as important parts of their communities, in a way that chains like McDonald’s’ are usually much less likely to.
Disadvantages of Single-Location Businesses
The most obvious disadvantage of a business that operates from just a single location is that the customer base will almost always be significantly smaller than that of a chain establishment or an online business. This means that usually, the potential profit margin is smaller than that of businesses that run from multiple locations.
Apart from exceptional cases such as world-famous restaurants, single-location businesses usually have much lower brand recognition than multi-site businesses.
2. Multi-Site Businesses
If you want to expand your opportunities, opening up multiple sites from which to carry out business operations can be a wise choice. Here are some of the advantages and disadvantages of multi-site businesses.
Examples of Multi-Site Businesses
There are many different examples of multi-site businesses that you will no doubt be familiar with.
Chain restaurants like McDonald’s, Subway, Denny’s, Five Guys, Olive Garden, and many others can be found in shopping malls all over the world, as can retailers like Walmart, Target, Apple, Home Depot, and many more.
Outside of retail and hospitality, businesses such as estate agents, insurance brokers, and many manufacturing firms have multiple branches.
Advantages of Multi-Site Businesses
One of the main advantages of having multiple locations from which your business is run is the expanded customer base, which means expanded profit margins.
Increased brand awareness is also a benefit of running a multi-site business—everyone has heard of McDonald’s, but how many people in the world have heard of the café at the end of your street?
Disadvantages of Multi-Site Businesses
Opening up multiple locations for your business is not an easy, magic-bullet method to increase profits.
More locations mean more to manage, and the logistics of running a chain establishment are typically much more complex than those of running a single-location business. This means that you will probably have to hire more staff, such as branch managers. You will have to pay more rent for accommodation, more staff wages, and more to suppliers.
There is also the potential issue of your brand image being negatively affected by something that happens at a location far away from you that you have little to no control over!
However, despite the drawbacks, the greater risk and expense associated with running a multi-site business can lead to much greater profits if you know how to run it successfully.
3. Online-Only Businesses
Many businesses are run purely online and do not even have physical premises where they are based from. There are advantages and disadvantages to online-only businesses, which we will explore here.
Examples of Online-Only Businesses
Although many marketing, design, and consultancy companies have physical offices, these are often inaccessible to customers. Many of these businesses are also run from an entirely home-working-based model.
E-Commerce stores using the drop-shipping model are typically online only, with no need for stock or storage.
Advantages of Online-Only Businesses
One of the clearest advantages of running an online-only business is that there is no need to pay for renting premises—you may even be able to run the business from your own home!
Online-only businesses can also reduce the need for commuting to a physical workplace, which saves time and travel expenses for employees and the company. Online-only business models are often the best choice for very small businesses or one-person operations.
If you are planning on starting your own business for the first time, an online business can be a low-risk way to test out your business plan.
Disadvantages of Online-Only Businesses
Although online-only businesses are usually simpler and easier to run, there are some drawbacks to this approach.
If you are working with other employees, communication can be more difficult than if you are working in the same space, even with modern video conferencing and messaging platforms.
If part of what you enjoy about work is interacting in person with co-workers, clients, and customers, this is probably not the best approach for your business.
Another disadvantage of a business that runs entirely online is that your entire working operations are dependent on a robust internet connection—if this fails, you can’t carry out any operations!
Can You Combine Approaches?
There are advantages and disadvantages to any of these approaches. Thankfully, you do not have to choose just one approach—you may well be able to combine them!
For example, most businesses based in one or more physical locations (such as hospitality, retail, and manufacturing firms) also have a website and social media presence these days in order to take advantage of the communication and marketing opportunities that the internet offers.
There is also the option to diversify and adapt your business model in the future. For example, many initially online-only businesses have gone on to open physical premises when they could afford to, and vice-versa! You don’t have to wait until you can afford to open up a multi-location franchise in order to start doing business.
No solution is one-size-fits-all, and the most important thing to remember is to provide excellent service to your clients and customers, regardless of where your business is based.
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