The Effect of Business Location to the Business’ Success

The first course of action to finding a location for your business is to determine your business’ needs. Will you rely on foot traffic? Does your business require natural or local resources? What kinds of zoning restrictions might you encounter? The best location is one that minimizes costs while maximizing income. Some businesses are “footloose” in that they could set up pretty much anywhere.

Push And Pull Factors

Factors that draw a business away from a certain location are “push” factors. These include increasing costs, more competition, a reduction in demand or poor communication and transportation systems. Conversely, those that “pull” a business toward a location are lower labor costs, a growing consumer base, government incentives, improved transportation and communication systems.

Customers And Community

When you rely on customers to visit your business, consider the demographics of your potential location. A business appealing to young families would not do well in a location where the average householder is older than 50. A day care facility would need to be located near where young dual-income families live, or where young parents work, so that dropping off and picking up are not out of the way. Check the United State Census information for your proposed locations.

Competition

When your business relies on the local community for support, you’ll need to check out the competition. In some cases, being near several similar businesses is an advantage because it draws a consumer group to that area. So, if you are retailing teen fashions, being near to other similar stores could be helpful. The same is true of fast food or quick restaurants, and gas stations. However, if you need the bulk of the market share, such as a grocery or after school program, you’ll want to choose a location where you are the primary servicer of that market segment.

Area And Success

Choosing the actual business area contributes to the bottom line. Consider traffic patterns and accessibility for both customers and employees. Consider too that even if a location does not have specific zoning, there may be covenants and deed restrictions on the location you choose. “Bloomberg Businessweek” writer, Peter Coy, points out that while Houston, Texas, for instance, has no formal zoning code “the separation of land uses is impelled by economic forces rather than mandatory zoning … Developers employ widespread private covenants and deed restrictions, which serve a comparable role as zoning.”

Choosing Space

Once you’ve chosen the general area, you’ll need to determine what kind of space you’ll need for your business. A retail business needs street access and a storefront. A coffee shop or cafe needs kitchen facilities. If you’re warehousing and shipping, access to shipping facilities might be the priority, and a labor-intensive assembly business might need to locate nearest to the source of inexpensive labor, such as a college campus. Because businesses generally rent locations to begin with, check out the costs for renting in your area as well.