Business Location: Meaning, Examples & Strategies

“In business, wrong location leads to suffocation.” – Mokokoma Mokhonoana

For businesses, whether big or small, location is crucially important. Business location not only affects a company’s costs and revenue as well as its ability to serve the customer. Getting the wrong location can have serious consequences for the business. In this article, you will learn what makes a good business location and how to set up a location strategy to ensure success.

Definition of business location

First, let’s find out what a business location is and why it is important for a business.

Business location is defined as a place or structure occupied by a firm to run its operations. This includes any structure or establishment used in conducting a business.

Starbucks places its coffee houses in high-street, high-visibility locations in various settings, including downtown and suburban areas. You can also find Starbucks in office buildings, university campuses, and off-street highway locations.1

A good business location aims to provide an advantage to your business by creating a balance among:

• Operational costs (the daily costs incurred to run your business),

• Potential revenue

• Target customers.

Some examples of good business locations include the M4 corridor for tech companies, tourist attractions for hotel businesses, and the city centre for coffee shops.

Business location factors

Factors influencing the choice of a business location can be split into:

• Supply factors

• Demand factors

Figure 1. Factors that influence business location choices, StudySmarter

1. Supply factors

Supply factors examine the cost of running your business operations in a location. Some of these supply factors include: