As well, even if you do decide to run the business from your home, you will still need to make sure that you do not violate zoning ordinances or rental agreements if you do not own your home. If you have space to run a home-based gift company, you should still spend some time researching the cost of office/studio space, which will give you an indication of what rental costs would be incurred if you ran your business in another location. Paying yourself the equivalent rent each month will give you a better indication of your profitability and the feasibility of future expansion.
b. Demographics of the Area
Determine the demographic profile of the potential customers in the community you are considering. Professionals and business executives will differ greatly in their purchasing interests from a working-class clientele, and urban city dwellers will vary in their interests and needs from potential clients in a suburban setting. Income, education, culture, religion, occupation, and upbringing influence the tastes and buying habits of your potential customers.
Consider the following factors when choosing a community to locate your business:
(a) Purchasing power or degree of disposable income
(b) Building activity and the range of housing
(c) Diversity of business establishments and industry
(d) Number of colleges or universities
(e) Cultural and leisure activities
(f) The age range of the population
A gift basket business is versatile and appealing to a wide range of clients. A gift basket service usually attracts customers who work long hours, have a steady income, and do not have the time to shop or create their own gifts. Generally, your potential clients will be well-educated, make average to high salaries, and be inclined to buy gifts that are creative as well as useful.
When you are satisfied that the community you have chosen can support your new business, it is time to choose a site for your new venture.
c. Leasing Office or Studio Space
If your dwelling is not appropriate for a home-based business, and you have enough capital to rent, you can consider leasing office or studio space. I have always leased space for my own company since my condominium is inappropriate for a home-based business. The advantage to leasing outside space is that you can set up a showroom and invite potential customers to visit and view your products.
Another option is to find another business to share space with, where you have a designated area to store inventory, assemble your baskets, and display your products.
Following are a few types of businesses that have good potential for space sharing:
(a) Gourmet food wholesaler
(b) Florist
(c) Artists and craftspeople
(d) Photographers
When leasing office or studio space, you must consider the issues of —
(a) proximity to customers,
(b) parking facilities,
(c) accessibility to loading dock or freight elevator, and
(d) storage and work space.
1. Proximity to your potential customers
My own office and showroom is located in the downtown business district of a major metropolitan area. I live within walking distance of the majority of my local corporate clients, and advertise that our showroom is open during the week for walk-in business. We also actively promote our business to the other companies in our building and have made many loyal customers who do not even have to leave their office building to receive our services.
Consider how close any potential office space is to your clientele. If you are hidden away in a back street, you won’t attract walk-by traffic, and it will be more difficult to show off your product. You might find the monthly rental or lease rate lower in a less populated area, but those savings won’t go very far if you can’t attract customers because no one knows where you are. Make it easy for your customers to find you.
2. Customer parking facilities
Make sure you locate your office where there is plenty of free or inexpensive parking for the convenience of your clients.
3. Accessibility to a loading dock or freight elevator
When those big orders start to come in, you will be grateful for easy access to a loading bay or freight elevator.
4. Storage and work space
Make sure your office has sufficient space for storing supplies and inventory and plenty of space to produce your products. You can lease your own space in an office building, small business park, warehouse, or loft/studio space. These options are considerably cheaper than renting retail space, and you will still be able to receive customers. Choosing this option has the advantage of the professional image it lends to your company. Many large corporate accounts will feel more comfortable doing business with a company in an office building.
Another option is the “packaged office.” This type of facility usually takes up the entire floor of an office building. Each company has one office space. There is one central reception area and a receptionist who can accept deliveries, take messages, and for a separate fee perform secretarial services. These offices generally have a photocopy machine and fax machine available, which all the tenants share. You could run your business out of this type of space, but you would still have to make your gift packages elsewhere.
d. Signing a Lease
If you rent or lease space, you will need to decide what kind of lease agreement you are willing to sign. The longer the lease term, the lower the monthly rent, but you are responsible for the full term of the lease whether you are still operating the business or not. Some lease agreements will not allow you to sublet the space.
For a brand-new business it is probably best to take a one-year lease or month-to-month rent at a higher rate until you have ascertained how well your business is going to do. It also gives you the option of moving to larger premises if your first year of business is very successful. Always seek competent legal advice before signing any kind of lease agreement.
Before renting or leasing space ask yourself the following questions:
(a) Is the space accessible for receiving and shipping?
(b) Is there a loading bay and elevators?
(c) Is there sufficient parking for delivery trucks and customers?
(d) Are there enough electrical power outlets for your equipment?
(e) Is the lighting, heating, and air conditioning sufficient?
(f) Will your lease allow you to make necessary alterations, such as installing track lights and shelving?
(g) What type of advertising sign is allowable in your lease agreement?
(h) How safe is the area and the building?
(i) Will you be able to buy reasonable insurance against burglary and fire?
e. Shared Retail Space
I have said previously that I believe a retail gift basket operation is too high a risk. Retail overhead is very high, and it is unlikely that you could sustain a profitable business without introducing other aspects to your business.
However, sharing retail space with another business may be a viable option. Shared space can