6 Factors to Consider when Choosing a Business Location

Infrastructure and accessibility

Businesses should be located in an accessible area. Accessibility allows potential customers to identify and visit an establishment with ease. Infrastructure, including road connections, parking spaces, and water and power supply, determines business location. For example, an individual cannot set a business in an area without roads or parking spaces because it discourages customers from visiting the business. In addition, electricity and water are essential in any business; hence water and power supply are priorities when selecting a business location.


It is vital to evaluate competitiveness before settling on a location. Competition can offer both an advantage and a disadvantage. For example, setting up a business in a competitive place allows a firm to exploit the already existing consumer base. Therefore, such a business needs to improve its offerings to lure customers from competing firms. On the other hand, it is challenging to attract customers in a competitive location, especially when people are loyal to existing establishments. Therefore, it is crucial to establish whether one wants a competitive or non-competitive environment when deciding on a location.


Traffic denotes the size of people passing next to a business. A good business location offers foot or car traffic whereby individuals can view and buy products or services when passing. High traffic broadens the potential customer base. For example, a restaurant in a busy street attracts passers to dine in the facility. Although traffic equals more customers and sales, some businesses require less traffic. For example, businesses such as medical facilities and VIP lounges require a location with less traffic to offer clients the privacy they need.


The fourth factor influencing business location is demographics. Demographic elements, including age, gender, and education levels, largely determine the nature of the product or service a business offers. For example, a gaming or tech company stands to sell more to a young population than the older generation. The suitable locations for such firms include areas close to colleges or towns with a high youth population. The demographic composition also determines labor availability. Therefore, demographics are a vital aspect to consider when selecting the site of a business. 


It is essential to evaluate the security status when deciding on a location. Insecurity poses a serious threat to a business by increasing susceptibility to theft, burglary, and subsequent financial losses. For example, in San Francisco, drug stores are ceasing operations due to increasing robberies (shoplifting). https://edition.cnn.com/2021/06/16/us/san-francisco-shoplifting-walgreens/index.html.It would be imprudent for an investor to build a drug store in the same streets or areas where shoplifting is getting out of hand. In addition, a business can go bankrupt due to theft hence security status should be a priority when choosing a business location.

Business regulations 

The other factor influencing business location is regulations. Business regulations and taxes vary across countries, states, counties, or municipalities. Setting a business requires licenses and permits such as federal permits for tax and Food and Drug Administration (FDA) permits. The protocols to start a business are restrictive in certain areas, undermining business growth. In addition, high tax requirements, charges, and fees to the council government minimize profit share. A prospective business owner must evaluate business regulations and taxes when choosing a location. Such research might be the difference between success and failure. Locations with less bureaucracy and low tax obligations are favorable for businesses, especially small and medium-sized enterprises.

To support our work