Richard Du, AgorafyThe wheels of U.S. innovation are turning. Entrepreneurship and ingenuity are helping boost the economy and create jobs. While this process has been gradual, a recent uptick in new business starts has brought with it opportunity for more real estate professionals to work with young, creative and fast growing companies. Understandably, the real estate search process can be daunting for business owners. How does a founder begin to match her firm’s business requirements to the right real estate? Well, with the right real estate professional, a little effort, and the help of real estate technology, a founder can chart the appropriate path and find the perfect location for their launching company!
U.S. start-up activity and business starts have been trending up in 2015. According to the Kaufman Foundation, the majority of U.S. states have seen a resurgence in startup activity in 2015 when compared with the last five years. New business creation rose in nearly half of the nation’s 40 largest metro areas, according to The Kauffman Index: Startup Activity. In fact, the report indicates that “the Rate of New Entrepreneurs in the United States increased about 10 percent, from 280 out of 100,000 adults in the 2014 Startup Activity Index to 310 out of 100,000 adults in the 2015 Index. The Rate of New Entrepreneurs of 0.31% translates into approximately 530,000 new business owners each month during the year.” In New York, the rate of new entrepreneurs is 0.33% - 330 entrepreneurs (or roughly 177.7 new businesses created) for every 100,000 adults in a given month. In fact, you or someone you know may be one of these individuals, or serve as a real estate professional working on behalf of a new start-up looking for that very first business space!
Starting a new business takes guts - a lot of guts. Entrepreneurs put their time, careers, and finances on the line to pursue their dream. Moreover, from the get go, entrepreneurs are faced with many challenges, such as identifying and refining a business idea, generating a business plan, deciding on a business structure, getting appropriate business financing, as well as many others. Notably, CEOs and founders must also decide where to locate their business. Should they start a home-based business, find co-working space or enter into an office or retail lease? Rash decisions or leaving the real estate process to chance can hamstring a new or growing company. Yet, trying to find the right space can be confusing, time consuming, and stressful. That is why it is critical for small businesses to engage real estate professionals early on in the location search and decision process.
Location can drastically affect a business’s success. Location can dictate customer traffic, shipping and receiving capabilities, or even access to top quality talent. Thus, your real estate decisions need to be front-of-mind when starting your company. Similarly, because of the potential affects on your business, your real estate decisions deserve the attention of the owner and management team in consultation with trusted tax, legal, accounting and real estate advisors.
As a starting point, the U.S. Small Business Administration (SBA) offers some useful questions for small business owners to ask themselves when initially thinking about their firm’s real estate needs. These questions can serve as a baseline for questions to go over with your real estate advisor, but may just be scratching the surface. First, the SBA indicates that most businesses choose a location that provides exposure to customers.
In our digital word, that may or may not be applicable, but some less obvious factors to consider include:
Brand Image – Is the location consistent with the image you want to maintain?
Competition – Are the businesses around you complementary or competing?
Local Labor Market – Does the area have potential employees? What will their commute be like?
Plan for Future Growth – If you anticipate further growth, look for a building that has extra space should you need it.
Proximity to Suppliers – They need to be able to find you easily as well.
Safety – Consider the crime rate. Will employees feel safe alone in the building or walking to their vehicles?
Zoning Regulations – These determine whether you can conduct your type of business in certain properties or locations. You can also find out how property is zoned by contacting your local planning agency. (TIP: Don’t forget to check if considering a home-based business!)
In addition, many of today’s start-ups will want to consider building connectivity and infrastructure at their next location, so that they can conduct business at the pace of today’s modern economy.
Again, enlisting or assembling a group of qualified professionals helps focus a company’s real estate requirements, saving time, frustration and often leading to more economical real estate decisions and better structured deals. Consulting with lawyers, accountants, and real estate professionals early on is essential to developing a suitable and flexible real estate plan. For instance, new entrepreneurs may meet with advisors to review demographics, assess their supply chain, survey the competitive landscape, calculate or discuss a budget, cover state laws, zoning restrictions and taxes, and much more. These discussions can help develop a firm’s short, medium and long-term goals, which may factor into any early real estate decisions.
Notably, business owners and real estate professionals are increasing looking to online resources and real estate technology for real estate information. Practitioners and founders are using online tools to identify available real estate, review property information, and to learn about the real estate market and real estate process itself. Mobile technology is accelerating this trend. In fact, research shows that 6 in 10 investors and tenants now search for commercial properties using their mobile devices. Landlords and real estate professionals are, therefore, well-served to supplement their traditional marketing techniques with a robust digital marketing strategy, particularly incorporating mobile solutions. Doing so will help better inform tenants and investors, while enabling real estate owners and professionals to access a growing market of digital searchers.
At Agorafy, our team is building a digital home for the real estate community, professionals and the public alike. Agorafy’s open online platform is an easy-to-use, mobile-friendly resources for businesses, buyers, sellers, renters, and practitioners. We have simplified the commercial and residential real estate search process by providing open access to information and robust marketing capabilities, unique search and market data, and detailed property information for every building in New York City. That way parties can display their property, property seekers can quickly find the right location, and stakeholders can connect to move to close without all the hassle. And now, the Agorafy New York Real Estate App for iOS and Android is free for download at the App Store and Google Play!
Getting your business up, running and growing is paramount! And still, a business’s real estate decisions can have a significant economic affect on their bottom line. Do not be fooled, engage a knowledgeable local real estate professional to help vet your real estate ideas, guide you through the real estate process, and provide market insight and advice. Because as a start-up or growing small business, it is important to get your real estate requirements right!
Richard Du is the founder and CEO of Agorafy, New York, N.Y.
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