How much thought do you give to the local area when running a business?
Most of us have heard the frightening statistics that half of new businesses fail within three years of opening.
For existing businesses, ongoing market concerns can result in financial difficulties that could see stunted growth and insolvency.
Recent statistics showed that 8,000 more businesses were dying than being born in the last year.
Could a heightened awareness of the local area be the key to saving your business?
How important is the local area to a business?
You might think that it all depends on the business itself, but there are many factors that can impact a business that may get overlooked.
Operating costs are at an all-time high, so understanding ways to mitigate these could be the key to keeping your business financially healthy.
Knowing where to set up your business based on the services you provide is a key aspect overlooked by many startups and expanding businesses.
One of the more unique opportunities that is currently emerging relates to new housing developments.
Many of these are being rushed to meet house-building quotas and are lacking shops, schools, and other amenities.
You could be the pioneer to place a shop in one of these areas and find that you have very little competition.
This might be a risk though, as if there are no other shops around, people may just take their money elsewhere for the convenience of having multiple things to do in one space.
If your service caters well to a local community, then it could be a good opportunity to stake a claim before anyone else does and take control of an emerging market.
What other aspects of the local area should businesses care about?
One of the surprising things that impacts property value in an area is the performance of local schools.
If you do not have children, the performance of schools might not seem like it has much relevance to your life.
However, just like how a commuter on a train can look up one week in July and suddenly find more seats than usual, schools are tightly interwoven into the country’s various ecosystems, impacting even the most resilient anti-natalist.
Unless you run an ice cream van or your corner shop is conveniently placed on the walking route of hundreds of school kids, you might not have concerned yourself with your proximity to schools.
Being close to well-performing schools has a surprisingly significant impact on property prices.
When a school is rated ‘Outstanding’, the current highest rating, the price of houses in the local area increases significantly, with some reports suggesting it could increase by as much as £15,000.
The opposite is also true, with downgraded schools seeing a drop in house prices as concerned parents and guardians flee the area in favour of a better school catchment zone.
If your business does not require footfall from local residents to keep it profitable, you should consider avoiding areas with high-performing schools as rent and other amenities may be higher.
Businesses can leverage the information of the local demographics to dynamically adjust prices based on the likelihood of more affluent residents requiring their services.
Targeting an area with lower performing schools could see a reduction in rent or property prices, but at the cost of less ready cash from the local residents, while targeting high performing areas could see the inverse.
Depending on whether your business would benefit from the footfall of local residents could determine where you either set up your business or expand if it is time to grow.
It is worth keeping in mind that the simple way that schools are graded will be replaced by a more complex system by the end of the year.
However, we can be confident that schools that do perform well will still find a way to boast about it, meaning that the changes may not have quite as dramatic an impact on property prices as is speculated right now.
We are on hand to help our business explore even the most bizarre aspects of the economy that could impact your finances.
Our specialist team work to understand your business, your clients, and the economy so that you can always stay one step ahead.
We never fail to spot ways to help your business’s finances. Speak to our team today!
