Building A Business in a Bad Neighborhood-Pros and Cons
by Leeia Ladipoh on April 30th, 2008
When you think of opening a new business location, where do you start looking for your storefront? For many, the answer is to start at the hottest real estate spot in town and keep moving outward until they find something in their budget.
Have you ever thought about starting at the other end of the spectrum?
Whether it’s for trying to make a difference or trying to get an ‘in’ spot before it’s hot, many people are looking to rundown and overlooked areas to open up shop.
This could be a crime-ridden area of town that has been abandoned by local vendors or a place that has been quiet for a while, but is forecast to have resurgence in the months and years to come.
Whether you think it’s risky or innovative, crazy or brilliant, here’s a look at some of the pros and cons to this type of business venture:
Pros
* Lower Cost Real Estate – The most expensive part of most business ventures is the real estate. In this case, the real estate can be very affordable, as it is in an area where no one is buying.
Many a great deal has been had by purchasing lower-priced areas before they pick up steam. Buyers can then enjoy watching their property values skyrocket later.
* Support – In many cases, trying to open shop in a blighted area will bring support from local officials who would like to see nothing more than that area spring to life again.
Some cities even offer financial support and perks to businesses who are trying to rejuvenate less-desirable areas.
Cons
* Clean Up – Often the structures in these areas are more worse for wear. They are often neglected buildings that have not been maintained.
This means you could end up spending a lot of money just trying to get the building up to a workable level, much less into the attractive storefront you had hoped for.
* Fear – Often, it is hard to get past the stigma of an area when you’re trying to convince customers to come to a business that is in a bad part of town.
Whether it’s crime or just the area’s reputation of being less than impressive, it can take a bit of work to convince people this is a place they want to be.
The decision to open up shop in this type of location is not one you should come to overnight. Before putting up a large amount of money on a business location, do your research to be sure that you are making a responsible and wise decision.
Look at trends in the area (such as renovation of blighted buildings into new apartment and condos), or other changes that may help you get the traffic you need once your business is ready to open to the public.