1-4-2-Business-Location

Factors influencing business location

• Choosing a good location can have significant impacts on a business, such as attracting customers, reducing costs, accessing skilled labor, remaining competitive, and enhancing its reputation

Business location decisions

Proximity

• Proximity to market, labour, materials and competitors influence the location decisions of a business

  • Proximity to the market refers to the distance between the business location and the target market. Locating near the market reduces transportation costs and increases its accessibility to potential customers

  • Proximity to labour refers to the availability of qualified and skilled workers in the area. Businesses often locate in areas with a high concentration of skilled labour to ensure that they have access to the necessary workforce to run their operations efficiently

  • Proximity to materials refers to the availability of raw materials and supplies needed for the business which will help to minimise transportation costs

  • Proximity to competitors may be desired (or not) to take advantage of a shared customer base or to differentiate themselves by offering unique products or services

Nature of the business activity

• Different types of businesses have different requirements in terms of space, infrastructure and accessibility

  • E.g. A manufacturing plant may require a large space for equipment and a loading dock for shipping and receiving goods, while a service business such as a law firm may require less space and more accessible office locations

Impact of the internet

• Businesses can now reach customers from anywhere and physical location may not be as important as it once was

  • E-commerce businesses may choose to operate from a fixed location, but their location may not be as critical as it is for traditional brick-and-mortar businesses that rely on foot traffic

  • Providing customers with the opportunity to book services or purchase products online offers convenience and is likely to reduce business costs, as premises in non-high profile areas are usually cheaper to rent or buy than high street or other busy areas

  • For businesses that offer a combination of online and in-person services (restaurants or retail stores), location remains an important factor in their success