If I was given $1 every time I heard somebody say, “There are three important things in business: location, location, location…” I’d be a very rich man!
But the reality is that today, the whole location, location thing is a load of rubbish!
You see, for many years I used to nod my head in agreement at these words of wisdom from up-and-coming entrepreneurs, eager to bestow their knowledge on younger businessmen such as myself.
The words sounded so logical, and I was ready to listen and agree at the drop of a hat, nodding knowingly to confirm my understanding. Before long, I found myself eagerly repeating these words when I was presenting or coaching and felt quite righteous in sharing such words of obvious wisdom.
The only problem with the whole concept is that it is flawed: and it took a recession to prove it.
Although the GFC is becoming a distant memory, the aftermath is still very much with us and there is a very valuable business lesson to be learnt from it.
We just need to look at some of the big names that went bankrupt during the recession. From high-end lingerie companies like La Senza to smaller retailers and, of course, salons. We saw some very well-known retailers fail under the adverse economic conditions.
This got me thinking! Some of these brands were located in the most popular shopping strips! They commanded fabulous locations and yet still were not strong enough to withstand the very cold winter of recession. So what is the truth? How was it that despite having a great location these businesses failed anyway?
Well, the answer is really quite simple. They just weren’t profitable enough!
Despite having a great location, their business model was flawed. Their margins were too small and their rents were too high, and this led me to believe that there should be a new business mantra to replace that old saying about location.
The new age mantra should now be: “There are three important things in business: profit, profit, profit.”
So in hindsight, and having spoken to many salon owners over the years who have expanded their already successful businesses only to find themselves working for the landlord. I would always advise being realistic when it comes to anticipating the benefits of being in a prime location.
My personal belief is that although a good location has a lot of benefits, it comes at a price and a price that has to be lived with for the length of the lease or mortgage irrespective of how your business is doing.
Traditionally good location are becoming less important for the modern-day customer. Fantastic online exposure and marketing combined with a great customer experience will keep customers coming through the door and coming back for more, regardless of where you are positioned.