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How to Choose a Business Location

What are the factors to consider when choosing a business location? How do you conduct a business location analysis? What’s the importance of location to a business’ success? Well, i advice you read on to find the answers you seek.

Choosing a small business location is an issue most entrepreneurs approach with a pinch of salt. Many small business startups, in order to reduce expenditure usually settle for a cheap location. Others believe that location doesn’t matter provided the product is right.

However, getting a good location is very critical to the success of your business but this can prove quite difficult because one of the challenges of starting a business successfully is getting a good business site.

Just recently, i established a technology company in Owerri, the capital of Imo state, Nigeria and in the process of putting up the necessary things; i had to deal with the headache of getting a good location at a good price. After much effort and resources spent, i got an office space.

Now my office location is very accessible, the power supply in the area is favorable, the environment is a little bit quiet because it is not located close to a major road or market and i have easy access to labour because of the high number of tertiary institutions in Owerri.

Another plus to this location is that it is just a stone throw from a complex where computer wares and other technology related services are sited. All this factors were what i considered before paying for the office space.

Now why am i taking my time to tell you this? The point i am is trying to stress here is that the location of your small business is a strong factor that shouldn’t be taken lightly because it can either make or break your business.

If you are also in the process of starting a business and getting a good location is proving quite a challenge for you, then below are 10 factors you must consider before choosing a small business location.

Choosing a Business Location: 10 Factors You Must Consider

1. Availability of raw materials

If you intend running a manufacturing or production business, then the nearness or availability of raw materials is a factor you must not joke with when choosing your business location. If your business is not sited close to these raw materials, then sourcing and transportation will reduce your profit margin.

2. Nearness to market

The next important factor to consider is the nearness of your business to its customers. Are your customers resellers or end users? Answering this question will help you determine the best area to locate your business. Remember that for your business to succeed, you must make it easy for customers to find your product.

3. Availability of basic infrastructure

Availability of basic infrastructure can affect your choice of small business location. Amenities and infrastructure such as water supply, power supply, good road network and security are things to consider when locating your business.

4. Economic policy

The economic policy or system of a particular region may also affect your decision and choice of location. Some economy favor capitalists and others are driven by socialism; where the government controls all businesses. Other sub-factors to consider are government’s policy, fiscal and monetary policy, exchange rates, taxes, levies and duties.

5. Demographics

Demographics as a factor can have a big influence on your choice of business location. The type of product or service your business offers and the status of the customers will play a vital in your choice of small business location. I will share an example:

Suppose you are into the business of selling stationeries. That means your demographics should be made up of students, so your best bet of location should be within school vicinity.

6. Psychographics

The mindset of your customers or the aura of a particular region is also a factor to consider when choosing a location for your small business. For example; if you site your business in a region where tribalism thrives, then you are doomed if you are not a member of the tribe.

Another example is this; if you are in the pornographic industry, you will be making a grievous mistake to site your business within a region where the inhabitants are highly religious.

7. Industrial Clusters / areas

Some entrepreneurs may decide to site their business in industrial areas or clusters due to the infrastructure and amenities already on ground. Industrial areas are areas mapped out specifically for commercial purposes especially manufacturing firms.

These areas are sometimes given special attention such as good road network, constant power supply, etc. In some certain regions, heavy duty manufacturers are forced by the government to site their companies in these industrial areas.

8. Export processing zones

Locating your business in an export processing zone may be a smart choice for you especially if are an exporter. Locating your business in such regions means a reduction in transportation cost, faster inspection and clearance of your products by custom officials and so on

9. Free trade zones

International free trade zones and trade fair centers are also good places to site your business because it is accessible and normally receives wide publicity.

10. Distributive channel

If your business don’t deal directly with end users or final consumers, then it’s wise to put your distributive channel into consideration when choosing a location for your small business. The more you make it easier for your distributors to access your products, the better for your business.

As a final note, i want to stress that product accessibility is directly hinged on the location of your business. So when choosing a location for your small business, the following factors listed above can give a hand in decision making.


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