Location Evaluator
publication date: Sep 3, 2009
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author/source: John Graden
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Download–Location Evaluator
How important is location? If you're in real estate, it's everything. If you're running a martial arts school it's something, but not everything. Some of the most successful schools in the nation are hidden away in the corner of some shopping plaza in what is known as non-prime retail space. The question becomes; How much extra rent are you willing to be locked into in order to attract the passerby? A better question is; How many introductory courses can I sell due solely to the visibility of this location?
For example, if your goal is to keep your cost per information inquiry down to the $20 - $30 range (a nice goal), then how many inquiries do I need to justify an extra $1,000 a month in rent? The answer is too many in most cases. Very rarely have I seen a school that, due to location, was able to trade rent dollars for advertising dollars. In other words, would it be a better idea to have a less visible (not less attractive) location and have the option of investing that $1,000 a month in advertising at your will instead of being locked into high rent? Rarely is the answer in higher rent. Your location should be in a demographically strong area with many elementary schools nearby, decent traffic, and a residential income level that would allow a family of four to spend roughly 10 percent - 15 percent of its median income for tuition to black belt, (i.e. $20,000 median income = $2000 - $3000 in tuition for three - four years). Realize that you will draw primarily from a three - four mile radius. Can that area support you? The mistake too many of us make is to pursue cheap rent without regard to the location. As I said earlier, location is not everything but a definite something. You would do well to be located in a non-prime retail location in an area that matches your demographic needs and with a rent that will not exceed 15 percent of your projected gross. For example, if your gross is estimated to be $15,000 a month your rent should not exceed $1800.
How important is location? If you're in real estate, it's everything. If you're running a martial arts school it's something, but not everything. Some of the most successful schools in the nation are hidden away in the corner of some shopping plaza in what is known as non-prime retail space. The question becomes; How much extra rent are you willing to be locked into in order to attract the passerby? A better question is; How many introductory courses can I sell due solely to the visibility of this location?
For example, if your goal is to keep your cost per information inquiry down to the $20 - $30 range (a nice goal), then how many inquiries do I need to justify an extra $1,000 a month in rent? The answer is too many in most cases. Very rarely have I seen a school that, due to location, was able to trade rent dollars for advertising dollars. In other words, would it be a better idea to have a less visible (not less attractive) location and have the option of investing that $1,000 a month in advertising at your will instead of being locked into high rent? Rarely is the answer in higher rent. Your location should be in a demographically strong area with many elementary schools nearby, decent traffic, and a residential income level that would allow a family of four to spend roughly 10 percent - 15 percent of its median income for tuition to black belt, (i.e. $20,000 median income = $2000 - $3000 in tuition for three - four years). Realize that you will draw primarily from a three - four mile radius. Can that area support you? The mistake too many of us make is to pursue cheap rent without regard to the location. As I said earlier, location is not everything but a definite something. You would do well to be located in a non-prime retail location in an area that matches your demographic needs and with a rent that will not exceed 15 percent of your projected gross. For example, if your gross is estimated to be $15,000 a month your rent should not exceed $1800.
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