60% of businesses that make incorrect location choices experience a decline in revenue within the first year. Choosing the right location for your business is one of the most critical decisions you will make. The success or failure of your business can hinge on where it is situated.

A good site can lead to high foot traffic, strong customer engagement, and high-profit margins. But, a poor location can result in low visibility, poor sales, and ultimately, business failure. In today’s world, generative AI and location data can be used in strategic site assessment.

In this comprehensive article, we’ll explain what makes a site a bad decision for your business to enable you to mitigate risk.

3 Key Factors in Site Assessment

When assessing a potential site for your business, these critical factors must be considered. Ignoring any of these can lead to unfavorable outcomes.

Demographics

Getting demographic data of a potential site is fundamental. Demographic data is information about a given population's attributes such as age, sex, and place of residence. It could also be socioeconomic factors.

This type of data will significantly impact your business's success. It answers business questions like:

• Population density of a given site area.
• Number of people that live between 1km of a given property.
• The median age of the population in a site area.
• The gender ratio.
• The population growth rate in a given site area.

Polygon AI’s site assessment tool, allows users to analyze demographic data comprehensively, ensuring businesses choose locations that align with their target audience.

Traffic Patterns

Traffic patterns of vehicles and pedestrians are crucial in determining the suitability of a site. High traffic can mean more potential customers, but it also depends on whether the traffic is composed of your target market.

Traffic data provide answers to business questions like:

• What are the peak traffic hours in this area?
• What are the major traffic congestion points in the area?
• What is the traffic pattern on weekdays versus weekends?
• How does traffic density change within 1 km of this area?

Detailed traffic pattern analyses can help businesses understand the flow of potential customers around a site, ensuring optimal visibility and accessibility.

Competition

While having competitors nearby can indicate a healthy market demand, it can also mean a stiff battle for customers within the area. Assessing the level of competition in an area is essential to determine if the market can sustain another player and to identify unique selling points that can differentiate your business.

You can chat with Polygon AI to map out competitors and analyze their strengths and weaknesses, helping you make informed business and strategic decisions.

Common Mistakes in Site Assessment

Despite thorough assessments, businesses often act with the wrong strategies when selecting a site. Let’s take a look at some of these mistakes:

Ignoring The Closure Rate of Establishments & Local Laws

Local zoning laws and regulations can significantly impact your business operations. Ignoring these can lead to legal troubles, increased costs, or even forced closure. It is crucial to understand the local regulations and ensure that the site is compliant.

Discover establishments that are closed within your site of interest by chatting with Polygon AI. This can help you further look into the reasons behind closure to help you make informed decisions and implement sustainable strategies for long-term business growth.

Overestimating Foot Traffic

Foot traffic is a vital indicator of potential customer flow. However, not all foot traffic translates into sales. Overestimating the impact of foot traffic without considering the relevance of the traffic to your business can lead to poor site selection.

For instance, as a gas station business, it’s more efficient to search for foot traffic of other gas station businesses in an area rather than analyzing foot traffic of all the establishments in an area (restaurants, supermarkets, hospitals, etc).

Precision is the key to effective data analysis, where focusing on a specific targeted area provides more actionable insights than generalized searches.

Misjudging Market Demand

Accurate market demand assessment is essential. A location might seem ideal based on foot traffic and demographics, but if the market is already saturated or if there is insufficient demand for your product or service, your business may struggle.

Case Study For Site Assessment

Case studies are crucial for understanding the real-world implications of site selection decisions. They illustrate the successes and failures of businesses in various scenarios, offering valuable insights into what factors can lead to a successful location choice or contribute to a costly mistake.

Retail Store in a High-Traffic Area

A well-known retail chain with products for women over 40 decided to open a new store in a popular urban area, attracted by the high foot traffic and population density. However, after establishing the store in this area the retail chain struggled with sales and growth because the initial high foot traffic consisted mainly of the male population which did not match the store's target demographic of women over 40.

What the Retail Store Can Do Differently to Avoid Bad Site Decisions

• Leverage Demographic Targeting: Use detailed demographic data to find areas with a high concentration of your target audience—women over 40. All data gathered should be centered on your target audience and generalization should be avoided.
• Evaluate Foot Traffic Relevance: Assess both the volume and composition of foot traffic. Verify that a significant portion of the traffic matches your target demographic.
• Benchmark Against Competitors: Analyze competitor data to understand successful site selection strategies and customer demographics, and use this information to refine your site selection.

This problem is not unique to just retail chains for women over 40. It applies to several businesses in different industries like healthcare, real estate, gas stations, energy, etc. The context and target audience might be different but the challenges are the same.

Conclusion

Choosing the right site for your business is a complex but crucial process. By leveraging advanced tools like Polygon AI, businesses can make data-driven decisions that significantly enhance their chances of success.

Polygon AI transforms fragmented data into real-time insights using Large Language Models (LLMs) and generative AI, allowing users to draw polygons on maps and ask natural language questions to receive detailed answers.

Don’t let a bad site decision hinder your business growth. Sign up for our platform here and see generative AI in action for streamlined decision-making. To enquire about Polygon AI or our dataset, send us an email at sales@xmap.ai.