Choose a location

Turn a site into figures — people passing, the share who buy, contribution and rent — compare sites on profit after rent rather than foot traffic, find the rent a busy site can bear, and check access, rivals, zoning and the lease.

Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.

1. What you will learn

You will work out a site's profit after rent, compare two storefronts, choose the better site, write the site-profit rule, fill in a bike shop's two-site sheet, and find the most rent a busy site can bear.

2. What you already have

You can read local market evidence, test a second product, and weigh a fixed cost against the contribution it brings. A location is a fixed cost — the rent — bought for the customers it brings within reach. This lesson turns a site into those figures, so a busy, expensive street and a quiet, cheap one can be compared on the one measure that matters: profit after rent.

3. Words for this lesson

4. Profit after rent, not foot traffic

The busier street is the worse site. Foot traffic only matters through the share of it that buys, and a high rent can swallow a busy street's extra customers several times over. A destination business — one people seek out — often does better on a cheaper street near others like it. Every figure here rests on stated assumptions about volume, price and cost. It says what follows if those assumptions hold; it is not a prediction, and it is not advice about what any real business should do.

Term	What it means
Foot traffic	The number of people passing a site, usually counted per day or per hour.
Conversion rate	The share of people passing, or coming in, who buy.
Catchment	The area a business's customers come from.
Destination business	One customers travel to on purpose, rather than find by passing.
Zoning	Local rules on which kinds of business may operate where.
Triple net lease	A commercial lease in which the tenant also pays the property's taxes, insurance and upkeep on top of the rent.

Another way: table

Maya's two storefronts.

Site	Buyers a month	Contribution	Rent	Profit
Main Street	480	2,400	3,000	−600
Side street	540	2,700	1,500	1,200

Another way: steps

Count the people passing on normal days, at the hours the business would open.
Estimate the share who would buy, from similar shops or a trial.
Buyers a month times contribution, less the rent and other site costs.
Compare sites on profit after rent, and find the rent each can bear.
Weigh access, parking, rivals, zoning and the lease's terms.

5. The method, step by step, and how to check it

Count the foot traffic. Stand outside the site at the hours the business would open, on ordinary weekdays and a weekend, and count. Landlords' figures are often taken on the busiest day of the year; the owner's own count is the one to trust.

Estimate the buying share. This is the weakest guess, so take it from evidence: similar shops' experience, the owner's own market stall or pop-up nearby, or a supplier who knows the area. Destination businesses convert a larger share of fewer people; impulse businesses a small share of many.

Work the profit after rent. Buyers a day times the trading days, times the contribution of each purchase, less the rent and other costs the site adds: utilities, property taxes on a triple net lease, parking permits, a higher insurance premium.

Find the rent each site can bear. The most rent a site can charge and still leave the owner as well off as the alternative is its contribution less the alternative's profit.

Check each figure by sense: a site's contribution can be no larger than all the people passing buying every day, and profit falls one dollar for each dollar of rent.

6. Who the location reaches

A location decides the catchment: who can reach the business easily. A neighborhood café's catchment may be a few blocks; a specialist bike shop's may be the whole city, if it has parking and is near the trails cyclists already use. The right site sits where the business's own customers already are, or where they are happy to go.

Access matters as much as distance. Parking, transit stops, a safe place to lock a bike, a storefront visible from the road, step-free entry: each changes how many people in the catchment actually come. For a business that delivers or visits customers — a cleaning company, a mobile groomer — the location matters mainly for travel time to the customers, and a cheap unit near a highway can beat a storefront.

7. Rivals, neighbors and clusters

Being near rivals is not always bad. Shops of the same kind often cluster — antique dealers, restaurants, furniture stores — because customers go where they can compare, and a cluster draws more of them than any one shop could. Being near complementary businesses helps too: a bike shop near a trail, a café near an office block, a florist near a hospital.

The question is whether a site brings more customers than the rivals near it take away. A second coffee shop on a block with one may do well if the block's demand is unmet; the same shop across from three others will struggle.

8. Zoning, permits and the lease

Before signing, check that the business is allowed to operate there. Local zoning rules decide which uses are permitted on each street; a kitchen may need a health permit and ventilation the building lacks; signage often needs its own permit. The city or county planning office can say what is allowed.

Then read the lease. Commercial leases in the United States are often triple net, so the tenant pays property taxes, insurance and upkeep on top of the rent; the true monthly cost can be much higher than the headline rent. Leases often run three to five years, sometimes with a personal guarantee, and include yearly rent increases. A shorter first term, an option to renew, and a clause allowing the business to leave early all limit the damage if the site disappoints.

9. Test the site before signing

A site should be tested before a lease is signed, in the same way a second product or a second location is. The foot traffic can be counted; the buying share cannot be known until someone tries to sell there. A few weeks of real trading tells the owner more than any estimate.

The cheapest tests borrow a nearby space for a short time. A pop-up in an empty storefront, often available for a few weeks at a low rent while the landlord looks for a long-term tenant. A stall at a farmers' market or a street fair on the same block. A shared space inside a complementary business, such as a rack of mugs in a café. A delivery trial to the area, which tests whether the catchment's customers want the product at all.

The test is set up like any trial: fix the measure in advance — buyers a day, or the buying share — and decide what result would justify the lease. The natural measure is the share that makes the site's profit after rent at least as good as the alternative. If the test falls short, the owner has lost a few weeks' rent instead of a three-year commitment.

Even without a test, some of the figures can be checked. Neighboring shop owners will often say how trade is on the street, which days are busy and which are dead. The city may publish traffic counts for main roads. The local Small Business Development Center can provide demographic data for the catchment: how many households, what they earn, how far they travel to shop.

A test also shows things the arithmetic cannot: whether the street feels safe in the evening, whether delivery trucks can stop outside, whether the neighbors are welcoming, whether the owner can bear the commute.

10. In the world: a bookstore that moved off Main Street

An independent bookstore in a small Colorado city had rented a storefront on its busiest street for eight years. When the lease came up, the landlord asked 5,200 dollars a month, up from 4,000. The owner counted foot traffic for two weeks: about 1,500 people passed a day, but only about 1 percent bought, many of them tourists buying a card or a map. At an average contribution of 9 dollars a sale, that was 15 buyers a day, 450 a month and 4,050 of contribution: less than the new rent.

A storefront two blocks away, on a quieter street beside a café and a yoga studio, asked 2,600. Fewer people passed, about 500 a day, but the owner's regular customers, who came on purpose, would follow. From its sales records the owner estimated that regulars made about 12 purchases a day, and that 1 percent of the new street's passers-by would add 5 more: 17 a day, 510 a month, 4,590 of contribution. Profit after rent: about 2,000 a month, against a loss at the old site.

Before signing, the owner checked the zoning allowed retail and events, negotiated a three-year first term with an option to renew, and asked for a month of free rent to cover the move. Sales in the first year at the new site were within a few percent of the estimate.

11. In the world: help choosing a site

Local Small Business Development Centers, funded in part by the US Small Business Administration, help owners find traffic counts, demographic data for a catchment and zoning information, usually at no charge.

12. Where this goes wrong

The busiest street is the best site. Only the share who buy counts, and the rent can swallow the extra customers.

Rivals nearby always hurt. Clusters can draw more customers than any one shop alone.

The headline rent is the cost. Add taxes, insurance and upkeep on a triple net lease.

Location matters equally to every business. A shop that depends on passing trade lives or dies by its site; a business that visits its customers needs mainly a cheap base near good roads.

A site that works today will work for the whole lease. Streets change: a new development, a closed anchor store, years of road works. Ask the planning office what is coming before committing for five years, and prefer a lease that lets the business leave if the street declines.

13. Monica's mall kiosk

14. Maya's two storefronts

15. Neighborhood Kitchen's second site

16. Your turn: Northside Repairs

17. Guided practice

About $1000$ people pass a storefront each day, and Maya expects $5$ percent of them to buy. Each purchase contributes $6$ dollars, and the rent is $3000$ dollars a month. Taking a month as 30 trading days, Complete the sentence.

The site would bring _k dollars of contribution a month, and _g dollars after rent.

18. Guided practice

Complete the worked solution: About $600$ people pass a kiosk site in a mall each day, and Monica expects $2$ percent of them to buy. Each sale contributes $6$ dollars, and the kiosk's rent is $2000$ dollars a month. Taking a month as 30 trading days, find the kiosk's profit a month.

19. Guided practice

Maya is choosing between two storefronts for her studio shop. On Main Street, about $1200$ people pass a day and she expects $2$ percent of them to buy; on a side street, about $200$ pass and $4$ percent would buy, because more of them are coming to the arts district on purpose. Each purchase contributes $3$ dollars. Main Street's rent is $3000$ dollars a month; the side street's is $1500$. Take a month as 30 trading days. Fill in each site's buyers a month, contribution a month and profit after rent, in dollars. Write a loss with a minus sign.

20. Practice

Maya is choosing between two storefronts for her studio shop. On Main Street, about $1200$ people pass a day and she expects $5$ percent of them to buy; on a side street, about $600$ pass and $7$ percent would buy, because more of them are coming to the arts district on purpose. Each purchase contributes $4$ dollars. Main Street's rent is $7000$ dollars a month; the side street's is $1500$. Take a month as 30 trading days. Main Street would make $200$ dollars a month after rent and the side street $3540$. Which site should she choose on these figures?

21. Practice

About $p$ people pass a site each day, $c$ percent of them buy, each purchase contributes $m$ dollars, and the rent is $r$ dollars a month. Taking a month as 30 trading days, write the site's profit a month, $g$.

22. Somewhere new

A bike shop in Minneapolis compares two sites. On a busy avenue, about $300$ people pass a day and $4$ percent would buy; the rent is $4000$ dollars a month. Beside a popular bike trail, about $100$ pass and $9$ percent would buy; the rent is 2,000. Each sale contributes 20 dollars. Take a month as 30 trading days. Fill in the working sheet.

23. Lesson test

Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.

24. Test question

About $600$ people pass a Main Street storefront a day and $4$ percent would buy; about $200$ pass a side-street storefront and $5$ percent would buy. Each purchase contributes $6$ dollars, and the side street's rent is 1,500 dollars a month. Taking a month as 30 trading days, what is the most rent Main Street could charge and still leave Maya as well off as on the side street, in dollars?

25. What you can do now

You can choose a site on its profit, not its bustle. Tell someone why the busiest street can be the worst site. Next: testing a second location.

	Amount
Avenue buyers a month
Avenue profit after rent
Trail buyers a month
Trail profit after rent