Trade area

Definition

The area a business actually draws its customers from, not the map around it.

Why It Matters

Two businesses with the same revenue and different trade areas are different assets. A dense one is defensible and hard to grow without cannibalizing itself; a wide one is fragile, because the customers at its edge are somebody else's next week. It also decides what a second location does: open inside the existing area and the two split one book, open outside it and you start again with none of the referral flow that made the first one work. Ask for the customer addresses instead of the seller's opinion, then look at where the last hundred jobs actually came from, because an owner's sense of their own reach is almost always wider than the map says.

In numbers: A shop drawing 80% of its jobs from inside four miles is a different asset from one drawing 30% from inside four miles, at identical revenue.