October 15, 2003
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Chicagoland Retail: Finding the best spot
for your small business |
By Chuck Thompson
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Location. Location. Location. Sure, it's important, but if you're looking to establish a niche in today's competitive market, the best location for your business may surprise you. Many small businesses in the Chicagoland area are finding out the potentially profitable communities may be smaller than they think. And sitting right under their noses.
So where are the hot retail spots in the Chicagoland area right now? J. Kelly Bufton, a partner at Seyfarth Shaw here in Chicago, thinks there are many bargains for the industrious retailer in the budding suburban communities. These established areas, much like long-term homeowners, are deciding to work on their existing assets as opposed to rebuilding. Main Street is once again becoming a main street, much to the delight of retailers and consumers alike.
"These are the areas that are renovating by returning to the more traditional downtown format." Bufton, with more than 20 years of experience representing developers, institutional investors and investment advisors on land acquisitions and real estate syndications, understands the potential. "Low interest loans, as well as lower tax rates, are genuine incentives offered by these towns that will make a difference."
Some local refurbishing communities, such as a Palatine or Downers Grove, offer lower overhead than malls and high-end city locations, as well as heavy traffic. With suburban sprawl creeping ever outward, small towns are turning into big centers for commerce and convenience. On the other hand, Bufton explains, bargain locations can still be discovered in the downtown Chicago area, but will probably not be able to offer the same tax incentives and competitive pricing as the suburban areas.
But many businesses are opting not to be tied to a zip code. For example, Nancy Ludkowski, owner of The Wild Rose in Arlington Heights, dreamed of opening an antique and interior design store in the best location she could find. She scouted her present location – close to the downtown train station – by sitting in her car across the street and counting the commuters who walked by the storefront she had her eye on. "We get a few thousand people to pass the store on their way to work each week. It's the best free advertising you can imagine."
Ludkowski offers consulting and design work not only to new homeowners, but also those who are putting an addition on their existing home – another trend that is not monopolized by urban addresses. Her low advertising budget is due in a large part to the foot traffic, but she works hard helping out local schools and other organizations as well. "The town has been so encouraging. Festivals, concerts – they want you and your business to succeed."
"Word of mouth out here is very important. And that's vital when you are offering an atmosphere, someplace where they feel welcome." Ludkowski looked into some of the larger malls, but was turned off by not only the asking price, but the "generic" atmosphere. "You never see an individual boutique in a mall anymore. In fact, some of the malls seem resistant to that sort of originality."
Garo Kholamian, of Chicago's GK development, understands Ludowski's energetic and profitable philosophy. "There are many opportunities in both the city and the suburbs. Most of these areas are tired of the national chains, and are willing to encourage the unique, upscale stores to settle in their neighborhood. Of course, it always helps your financial picture if you have a track record, but it's not impossible for new businesses."
Kholamian should know. His company has built a 12 property, 1.1 million square foot portfolio of commercial space since its start in 1995. He agrees that retail owners should remained focus on a niche market in today's climate. "What are you trying to sell in retail that is not sold in other places?" In addition, he believes that every retailer should remain a student of the market. Be persistent with your business plan, and know your competition, he advises. And always know your numbers.
"If you have to stay in the city, you should remember that sales numbers within the Clyborne corridor, for example or Armitage and North – may actually be greater than some Michigan Ave. locations." Kholamian explains. "The Michigan Ave. stores tend to be more of showcases than high volume retail producers."
So, what are the main points you should keep in mind in looking for your retail location?
- Suburban storefronts may be more profitable over the long-term than an urban location. Why? As well as lower taxes, lower rents, and less red tape, your retail volume may be higher if you're growing in the right spot.
- Remember that local economic or community development municipalities are a great resource. Prospective small business owners should feel free to ask questions, understanding that these departments freely offer retail and demographic statistics that would otherwise cost you time and money.
- Focus on the basics. People often start out with a big idea, and get discouraged too easily. Devote as much time to the operating side versus the retail side. Do you have a solid accounting, marketing, production and financial plan in place for the month? The quarter? The year? It seems obvious, but retail sales will never take off without a solid business plan, regardless of the location.
- Plan to boost your volume over time. Retail can be a tough industry, and careful long-term planning is essential if you want to be around in the next twelve months. Choosing a community that is on the rise, however, is your best bet for continued growth.
- Look before you leap. Although there are some great finds in smaller markets, moving into a saturated market could end up costing you more than that posh urban location you had your eye on. Know as much as you can about the location before you call the movers. In the end, it could save you time and energy that you could have spent on your business.
Chuck Thompson is a freelance business copywriter who lives and works in Chicago. He can be reached at 773.381.6364 or at
sharpwriting@yahoo.com.
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