Starting a business takes a lot of work. You will likely spend your time working on a business plan, raising funds, and getting your legal documents in order. However, if your business location isn’t well-chosen, all of that work could be for nothing.
Where you start your business affects your earning potential, market impact, operating expenses, and much more. Similarly, your location can restrict how you trade and even jeopardize your business altogether if it prevents you from generating enough revenue.
Let’s look at what to consider when choosing a location for your business and how to find the best place to set up your business.
Benefits of Choosing the Right Location for Your Business
1. Increased earning potential
A good business location can directly impact your business by increasing foot traffic, making it easier to attract customers, and improving your visibility.
2. Reduced operating expenses
It can also help you reduce your operating expenses, such as by being in a cheaper rent district or having access to more affordable labor.
3. Improved market impact
The right business location can help you make a bigger impact in your target market. For example, if you’re trying to reach a local market, it’s important to stay in a location that’s convenient for your target demographic.
4. Greater efficiency
A business location can also make your business operations more efficient. For example, if you’re located near suppliers or customers, you’ll be able to cut down on transportation costs and time.
10 Steps to Finding the Right Location for Your Business
1. Define your priorities
Before you even begin scouting locations, outline your priorities. What factors are essential for your business’s operations? Consider aspects like target audience proximity, transportation access, and local regulations.
2. Know your target audience
Understand your target audience’s preferences and habits. Choose a location that aligns with their demographics and behaviors. This ensures a higher likelihood of foot traffic and engagement.
3. Competitor analysis
Conduct a thorough competitor analysis in your desired areas. Identify both direct and indirect competitors, and evaluate their strengths and weaknesses. This helps you position your business strategically.
4. Budget consideration
Balance your aspirations with your budget limitations. A prime location might be tempting, but it should be financially sustainable. Factor in rent, utilities, and potential fluctuations in foot traffic.
5. Accessibility and convenience
Easy accessibility is paramount. Opt for a location with good connectivity to major roads and public transport. Convenience for both customers and employees is a big plus.
6. Local regulations and laws
Before finalizing any location, understand local regulations and zoning laws. Certain areas might have restrictions that affect your type of business. Avoid potential legal headaches by being well-informed.
7. Infrastructure and facilities
Examine the existing infrastructure and facilities in the area. Adequate power supply, internet connectivity, and amenities are crucial for smooth business operations.
8. Future growth prospects
Think long-term. Consider the area’s potential for growth and development. An up-and-coming neighborhood might offer more opportunities for expansion.
9. Security and safety
Prioritize the safety and security of your staff and customers. Research crime rates in the area and invest in a location that ensures a secure environment.
10. Negotiation and flexibility
When finalizing the deal, be prepared to negotiate. Favorable rent terms and flexible arrangements can significantly benefit your business in the long run.
8 Factors to Consider When Choosing a Location for Your Business
1. Geographic location
Firstly, your business location needs to be in an area that positions you in close proximity to your target market. This trend remains true for urban and rural consumers, although rural customers will travel longer distances for specific goods. The right location for your business will be inside this 20-minute commuter window for as much of your market as possible.
Related Post: How to Choose the Right Legal Structure For Your Business
2. Operational needs
Look for an office or building that matches your business model. If that will be expensive, find an old building, and renovate it to suit your operational needs. And if you plan to host clients or customers in your business location, first impressions matter. Consider the state of the building and whether it reflects well on your business.
3. Rent cost
Narrow down your selection of business locations to compare costs. And if the buildings are located near one another, your lease will likely be near the same price.
Depending on the location, rent will likely be your largest bill each month, so getting a good deal on rent will be a decisive factor in your business’s success. And if your business can be run from any location, then consider turning your home to an office, it will help save cost.
4. Taxes
When looking at business locations, don’t forget to factor in taxes. Depending on the area, some taxes can have a significant impact on your bottom line.
5. Security
Some businesses need more protection than others. A boutique might need a high-tech alarm system, while a small restaurant may simply need a sturdy lock. As you compare options for your business location, see what existing security features are in place. Furthermore, you can install security cameras or upgrade the property in any other way to make it suitably safe.
6. Competition
Should you open your store near a competitor? You may likely say no, but you can benefit from selling near similar businesses. As a business owner, you understand that consumers like having choices. They also like convenience when they shop. This is why malls and shopping centers are so popular among retailers. So having nearby businesses could actually bring more foot traffic to your store.
7. Growth potential
Choose a business location that allows you to expand your service when the need arises. Growth can be helped or hindered by all kinds of factors besides the building itself. The size of the town or city may influence the potential to open more branches that expand your customer base, while the ability to open and market online services can make your base city irrelevant to growth.
8. Accessibility
The more accessible your business is, the more appealing it can be to shoppers. Customers hate to struggle to find a location/building of a business, which can make the experience stressful. Knowing there’s a nearby car park or bus stop puts potential customers at ease as they don’t have to figure out how they will reach the business.
Examine the above factors to analyze your compatibility with your desired location and identify potential fits to check if it’s viable. Make sure to take your time to avoid making the wrong investment. You can even consider hiring an advisor to choose the right business location.
References:
- https://www.nationwide.com/business/solutions-center/management/how-to-choose-location-for-business
- https://upmetrics.co/blog/business-location-strategy
- https://www.forbes.com/sites/rhettpower/2022/04/17/how-to-strategically-select-your-businesss-location/
- https://articles.bplans.com/how-to-choose-a-business-location/
- https://fastercapital.com/content/Choose-the-Right-Location-for-Your-Start-Up-Business.html
