How to Choose a Suitable Business Location
Finding the perfect business location isn't just about setting up a shop somewhere that looks nice. It's about strategy, customer reach and long-term success.
Whether you're launching a start-up business location or expanding, where you plant your business roots can make or break your venture. So, how do you go about choosing the right location?
Why Location Matters for Your Business Success
Your business location speaks volumes before you even say a word. It's easy for customers to make assumptions about a business based purely on its location. For instance, if your business is in a fancy high-end street, they'll expect premium pricing. But, if your business is in a bustling market hub, they'll anticipate affordability and convenience.
Key ways location affects your business:
Determines your customer base
Influences accessibility to raw materials
Affects hiring the right employees
Overall brand perception
Your location for setting up a business should match your brand image, target market and budget.
How to Find the Best Location to Open a Business
Budget for Your Business Location
Before you go signing a lease in the busiest part of town, you need to crunch the numbers. A lot of businesses are limited by their funds, so budget plays a big role when selecting the business location.
The more basic costs include rent and utilities, but also examine whether or not the location offers all the necessary equipment for running an efficient business. The responsibility of implementing a faster internet connection or adding specialist equipment is in your hands.
Government Incentives and Regulations
Not all places for setting up business are created equal. Some areas provide incentives to boost local commerce, while others have tight regulations that could slow you down.
A lot of cities offer incentives for small businesses in the form of grants or subsidies to help them set up in a particular location. This can be extremely helpful when starting out, and it likely means a lot of other small businesses will be close by, which can be beneficial.
The SumUp Small Business Index gives you a comprehensive overview of the top 100 European cities where you can launch a small business. Discover what cities offer the most government incentives and where competitors are situated, and get closer to finding the right business location.
Incentives, as well as limitations, need to be taken into consideration when choosing a location. Some cities have restrictions on specific business operations, whereas others have regulations in place that make setting up more costly. Research these before picking your start-up business location to avoid costly surprises.
Understand the Customer Demographic
Once the physical location has been considered, it's time to start thinking about other environmental factors. The first consideration is the customer demographics.
Let's face it: your business needs customers. Choosing a business location without considering your target audience is like opening a surf shop in the desert. Before selecting the right location, identify the target market and its whereabouts. Being close to customers could be key to running a successful operation.
The area demographics provide insight into the economy, showing the spending habits of the typical consumer. When you analyse the spending habits and the local economy, you can understand the means, needs and desires of potential future customers.
Business Competition
You might think staying as far away from competitors as possible is a good idea, but hold on. Sometimes, choosing a location for a business near competitors can actually work in your favour.
Having your business close to a competitor means fighting for the same foot traffic, but the foot traffic is also in that area for a reason. The chances of finding a competitor-free area populated with an ideal target market are very slim. Being close to competitors is a reality almost all businesses have to face.
However, it doesn't mean that you'll lose out every time. In fact, there are other ways to attract customers. This is where your pricing strategy can help.
Aside from benefiting from the same amount of foot traffic, locating close to the competition brings various other advantages. Suppliers can be more flexible and offer discounts when they only have to travel to one location instead of several. It also creates a 'bubble', attracting even more like-minded businesses who will support similar ventures, from technology to improving the economy and quality of life of the wider area.
We see this in Silicon Valley, where there are so many innovative start-ups in one location. Tech companies are setting up in the area with the aim of providing these businesses with solutions. For instance, they provide solutions for their employees, such as better learning and training facilities and modern transport options.
The benefit of the 'bubble' is also visible in smaller, more rural towns, where small businesses might share an office space in order to cut costs.
Big businesses also gain from this, but that doesn't make them invincible. In fact, there are a lot of ways that small businesses can compete with their larger competitors.
Does the benefit of locating far away from the competition outweigh the advantage that being near them brings?
Mobile businesses are on the rise, and their diversity is increasing. From the traditional handyman to coffee and food stands, modern businesses don't always have to be stationary.
Employee Considerations
A great business location isn't just about customers — it's about your employees, too. If your team can't commute easily, you'll struggle to hire and retain top talent.
Ask yourself the following questions:
Is public transportation accessible?
Is parking affordable?
Are there gyms, daycare centres and restaurants nearby?
When considering consumer demographics, think about the kind of employees you want to attract. You should also think about the kind of expectations and requirements they might have from an employer, from the average wage to employee benefits.
Final Checklist: Finding the Best Location for Business
Before you settle on a business location, run through this checklist to ensure the location is the right fit:
Fits within your budget
Offers government incentives
Aligns with customer demographics
Analyse the business competition
Matches long-term business goals
Ready to find the best places to set up a business? Start researching, visit potential spots and trust your instincts. Your dream business location is out there waiting for you.
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Business Location FAQs
How do you determine a good business location?
The first consideration is that your business needs to be in close proximity to the target market. You should also consider operational needs and business costs, such as rent and utilities.
How do I find a good place to start a business?
When you are starting a business, you need to conduct research to find the ideal spot for your industry. For instance, if you’re starting a service business, finding a place near the city centre on a busy street is great.
What is a location strategy?
A location strategy is an action plan that will help your business determine the best location for a business. The action plan states the ideal location for business, like where to establish offices or hire workers.
