DOES YOUR LOCATION SUPPORT YOUR CUSTOMER SEGMENTS?
This module has been about validating your initial assumptions and it is crucial to do a location analysis to see if your assumed customer segments support your chosen location. Let’s say you choose to work with families between the ages of 35-55 with young children but the location you choose may be an aging population and very little construction in the area for new development. Then you will need to research at a deeper level to determine if you have statistics that support your start-up.
Entrepreneurs have a tendency to go with the very first location they find. Always look at 3-5 possible locations, making sure you have gone through all the possibilities and a check list that will help you over the hurdles of choosing the right location. If you make the wrong decision it isn’t always easy to get out of a lease if you rent or if you buy, then you are in for the long term.
If you have already established deep roots in a certain community then this could work to your advantage in setting up a business and getting clients. Some entrepreneurs are entrenched in the community through activities, hobbies, sports, ethnicity, or religion. This could give you some exposure when you decide to open your business or clinic.
Customer Focus
There are a number of potential customer segments that a chiropractor can attract.
Who is your client and remember the segments you choose need to be sustainable? It is far too expensive to say you will open the doors and everyone will come. It takes strategy and focus to determine who and the demographics of the location you want to service – is it seniors and families between the ages of 35-55 with small children?
Start having conversations with people in your community to find out what opportunities exist with customer segments and possible locations. It is all customer driven. You must decide your customer segments first, which you determined in Module 1 and now are validating in this module. Keep in mind what you offer to the client, so a revenue stream, is different that choosing your customer segment. One answers the question who and the other one answers the question what.
Determine what types of patients you want to see. Is it families, athletes, pediatric, elderly, a combination? You need to be sure your area has enough of each type.
Check your Demographics
Does the customer segment you want to service in your business live in the area. Check with the city you will locate in to see if they separate the city into wards. Each ward will be listed with a set of demographics that will indicate who lives in the area and the statistics. Here is a link for the City of Toronto as an example but you will need to find the information in the city you would like to locate in.
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=2394fe17e5648410VgnVCM10000071d60f89RCRD
An entrepreneur has to do their due diligence when finding a location. You can go through a commercial real estate agent to help you seek out a location. They should send you daily notices of what is available. They might not access other reports on statistics of the population and the age, income etc. Do a complete check on the demographic you want to serve to make sure there is growth, repeat business and perhaps new construction in the area.
Also look at the traffic flow and if there are areas that are congested this will be a sore point for your business. Locating your business in the middle of nowhere will not bring in clients or foot traffic. You can go to the City office and look at traffic reports. A data catalogue is published online usually. For example, for the city of Toronto, you can find information relating to parking, traffic and business at this link,
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=7807e03bb8d1e310VgnVCM10000071d60f89RCRD
It will indicate where green P parking facilities are, Business Improvement Areas, and other traffic concerns in the area. How far are people willing to travel to get their health needs taken care of in the community?
Looking at an office building or a strip plaza will depend on many factors. Some business owners want to be located on the first floor, making it easy for patients to access the building, especially if the patient has limited mobility. Others locate on floors other than the first but are assessable by stairs or elevators. Where do you want to live? Is your clinic close to your home and if not what type of expense will it be and will it impact your quality of life by commuting to and from your location?
Once you zoom in on your preferred location and where you want to live you can start looking at detailed data.
Population Factors
To get an estimate of potential sales, count the people in a particular area. This can be obtained through city wards and of that number only a certain percentage will be customers. Not everyone will use a chiropractor but some statistics may profile medical issues or health issues the population may have.
- Estimate the number of people who may be potential clients. Here is a link on how to determine this http://www.cbsnews.com/news/estimating-your-potential-customer-base/
- Where are the competitors located? Some entrepreneurs steer clear of competition but in some cases it doesn’t hurt to be located in the same vicinity as it will create foot traffic and options for your customer base. Each province may have a link to find out where the competition is, for Ontario click here:
https://www.chiropractic.on.ca/chiropractorlocator/ - A good resource to find chiropractors across Canada you can do a search here:
https://www.chiropractic.ca/about-chiropractic/find-a-chiro/
- Who are these people
- The average income or income level
- The age range
- Average education level
- The household size will be indicated so you can see if it is single people, families, or seniors
- What schools are in the area including elementary
- What employers are in the area? Is it industrial, blue collar, white collar, professional, technical
- Do these employees have benefit care that covers chiropractic care?
- Are their health and wellness clinics in the area? What is the community response to chiropractors?
In some areas there are local business improvement areas or economic development offices that support local business and can guide a small business with information and support in the local area. Local branches of banks will have some of this information as well so they know what clients they are serving in the community.
Once you figure out if the area support your customer segments then you will also need to explore if your customer segments have the discretionary income to purchase your services? Explore the psychographics as well to see if the lifestyle of the potential customer supports the chiropractic business.
Making calculations and doing your research will boost your start-up. Going into a location when you have full disclosure and knowledge of the situation will allow you to make the best decisions for your business. Let’s say you set up your business in an area that has a population of 42,000 people and there are 13 chiropractors listed in that area. That would mean there is one chiropractor for every 3,230 people! What this gives you is an indication of the number of people available to within a geographical area. It also is not guaranteed that every percentage will be coming to you but doing the preliminary check can be useful.
Once you have compiled enough information you will also want to drive around that area and find out where the points of interest are that create a lot of traffic. Some people like to be located across from a mall to start as they know the traffic flow will be heightened. Many entrepreneurs will also look for their referral sources in the community. An entrepreneur who opened a hearing aid clinic opened up in an area near a strip mall. In the medical building the owner located housed many medical practitioners that could refer business to the owner. They also looked at being close to community centres for seniors and seniors residences as this was one of their primary targets.
A final resource would be to utilize Google Maps and do a search of all chiropractors that have businesses in your area. This will not only pin-point their location but give you their business name, contact information as well as a possible website that you can conduct further research inside.
Leasing vs. Buying a space
Some chiropractors may rent a space in a health and wellness or chiropractic clinic. This will alleviate the pressures of having to pay high expenditures in your start up. Many chiropractors establish this through contacts and networking. This will most likely be a good case scenario for you if you already carry high student debt and have limited financing for your start-up. This will allow you to build a customer base and test out an area geographically to see if it works economically for you before you make a huge investment. Even your research for the space will be less time consuming, especially if you rent a space that may cater to the same customer segment but offers a different modality.
Most people decide to lease a space unless they know they will be staying in the area for many years. If you choose the business model where you buy a Victorian house on the main street of a town and can live and work in the same building then this may cost you more at the beginning but will count as an investment. Another option would be if you bought an existing location that was already a chiropractic practice, then this would save on the amount you would spend on lease hold improvements. Always have a lawyer look over your lease as there may be clauses that you are not familiar with.
When you lease a space make sure you look into the terms of the lease. If it is a 5 year lease then it may be hard to get out of the lease but the rent may not increase for a lengthy period of time and this could work to your advantage. If you do lease make sure you check to see if you can rent out to other health practitioners so you can add to your service offering. Find out what is included in your lease, utilities, municipal taxes and if it is properly zoned municipally to house a commercial business.
When negotiating a lease if you decide to go that route, look at the following:
http://blog.clinicsuppliescanada.com/ten-fatal-flaws-in-negotiating-a-lease-for-your-rehab-clinic
When leasing equipment as an option for your location review the following
https://www.canadianchiropractor.ca/finance/leasing-101-4349
Always look into the TMI (taxes, maintenance, and property insurance) associated with any lease. Utilities might be a lower rate in some areas.
Additional leasing information can be found here:
https://www.canadianchiropractor.ca/management/5-things-to-look-out-for-in-professional-office-lease-agreement-4366
https://www.canadianchiropractor.ca/management/lease-renewal-dos-and-donts-for-chiropractors-4462
Parking
One of the biggest draws when customers are looking into service based businesses is free parking. Make sure there is ample parking for staff and for customers. Also check the traffic flow during peak times of the day to ensure that your location is totally assessable for your customers and that nothing is a barrier to going to that location.
Leasehold Improvements
Decide how much space you need and a layout that will make your clinic functional. You may need to alter the location to add or enhance to customize for a chiropractic clinic.
Remember to negotiate if you have any modifications that need to be done when you set up your location. If you have a couple of months of renovations you may be able to negotiate no rent for the months you are conducting leasehold improvements.
Zoning and Shipping
Check to see if there are any restrictions with the zoning. If you have to have any supplies shipped is there a loading dock or can items be delivered easily to the location.
Always remember when you choose your location to have access to your customer segments, review the costs and market access. By accepting every person as your customer you will not be able to customize your offering and be relevant in your marketing efforts to attract business that is sustainable. Even will all of your competition you can create a niche in the industry and be known for something.
Here is a location checklist that covers some of the things we discussed.
http://www.business2community.com/small-business/the-business-location-checklist-picking-the-perfect-place-01271954
You will need to summarize some of your initial assumptions and conclusions in the section, Topic 5 of this module in Assignment 5. You may need to take more time at a later date to research the location thoroughly before you make a decision.
Assignment 4 – Location analysis
Complete the following worksheet for Assignment 4:
CMCC- Module 2 - year 3 - Location Analysis..docx
You will need to summarize some of your initial assumptions and conclusions in the section, Topic 5 of this module in Assignment 5. You may need to take more time at a later date to research the location thoroughly before you make a decision.
You can save the above assignment in your portfolio.
