Factors to consider when choosing a business location – Every business has its own approach. The factors that are good for business Type A may not be favourable to business Type B. Selecting a good location for a business is a great way to start. One of the things that you intend to achieve when you start a business is to make as much profit as you can and a good business location will help you in achieving that. As a small business owner, some of the factors that large scale business owners should consider in choosing a location may equally be the same with your own. What I want to let you know is that most times, all the favourable factors that you need may not be found in one location.
The best way to choose a location is to make a selection of multiple locations, analyze the factors and see the one that will maximize your profit and minimize your expenses. For instance, you may see a location where there is an adequate power supply, labour supply and good accessibility. You now come across another one where there is a good accessibility, labour supply and efficient security. All you need to do is to check what the missing factor(s) will cost you in the course of running your business inorder to guide you in making your choice.
Factors to consider when choosing a small business location
Here are some of the factors that you should consider before choosing the location for your business;
1. Population of your target group living in that area
Every business has a target group. Whether you are retailing, wholesaling or selling to the the final consumers, it’s necessary to have a good background check of the population of your intending buyers of your goods or consumers of your services. Starting a business in an area where the number of people that will patronize you is low will lead to a great loss.Take for instance, if you starting a stationary business where the locations of schools and other institutions is very far, the level of your turnover will be low. Consider also the fact that you will have bills like rent, cost of power and other bills to pay whether you are selling or not.
2. Accessibility of the location
Your business should be located in an areas where it will be easy to reach. It also should be located in a visible area. This is very important because people tend to patronize businesses located in strategic positions. The availability of transport facilities and good road linkages will be a big boost to your business. This will equally reduce the cost of transporting your goods to your location and making other deliveries. It will not be a good scenario whereby you will finish advertising your business and your intending buyers will spend more or find it difficult to locate your business. Most of them will not come back again after the first try.
3. Power Supply
If you are into a business that have a high demand of power supply, then, you need to take this factor very important. If this is not available, then, know that you will spend a lot buying fuel, diesel or any other means of getting your own power supply. Therefore, check for the areas with acceptable level of power supply (electricity).
4. Presence of security
It is not a new news to hear that there are some areas that business owners there are suffering from damages and losses caused by hoodlums. You need to check very well whether the area you are intending to locate your business have adequate and effective security.
5. Presence/Absence of competitors
If you want to enjoy the power of monopoly, then, consider locating your business in an area where you are the only one selling such a product or rendering such a service. When you want to consider such a factor, carry out a proper research to know whether the people living in such an area needs such a product or services. You can equally observe from how much they patronize the nearest businesses doing such a business or rendering such a service. At times, it may not be a bad idea to choose a location where there a few competitors. One of the advantages of this is that it will make you to be “ontop of your game” knowing fully well that any slightest mistake can knock you out.
6. The Cost of labour in such an area
Some businesses requires you to hire labourers. The cost of labour maybe higher in some areas due to a number of factors. You need to check whether the cost in the location you are considering is affordable. It will not be a good idea whereby you will spend most of your “supposed” profits in paying for services that you would have obtained at a cheaper rate elsewhere.
7. Business policies
This can be classified into government business policies and the business policies of the host communities in such an area. There are some areas where business owners are made to pay taxes which will depend on the type of goods and services they are selling and also the scale of such a business. Some area equally requires you don’t a sell a particular product or even open or close your business in given hours. In some areas, these policies are strictly implemented. In another instance, some host communities may require you to pay a given levy either monthly or yearly. You need to check whether you can be able to pay such tax or levy as failure to comply may lead to the closure of your business in some areas.
8. The cost of renting a business location
I can tell you that this factor is very important. In some areas, not every small business owner can afford the cost of renting an area. Do not be deceived. Remember that after paying for the first rent, you will equally pay for renewal. Go for a business location where you will be left with reasonable profit after paying for rent.
9. Proximity to Market
If your business is the type that requires you buy your needed products or goods from the Market, you need to consider this factor. Don’t locate your business in an area that you will spend a lot on transportation on a daily basis purchasing what you need.
10. Nearness to raw material
If you are in a production business, nearness to raw materials is an important factor. Where your raw materials are heavy or bulky, know that it will be expensive to transport your raw materials to your location. Also know that if your selling or producing perishable goods, the raw material may have a significant amount of damage before getting to your location.
Starting a business whether small or big requires careful considerations. The profit motive of establishing your business will be achieved if you avoid some pitfalls. I believed you have gained from the Factors to be considered before choosing a business location. Always visit for more interesting business updates.
Also Read; 10 Best Small Businesses to Start in Nigeria