How do Companies choose a suitable location for their Business

Before an entrepreneur starts shopping for business space, he needs to have a clear picture of what must he'd like to have or work in, he/she should be clear what they won't tolerate and how much are they able to pay. Analyzing the whole scenario feels like it is a time-consuming process that's both exciting and tedious, but essential to give the attention it deserves.

One can say that half the success metrics of the business depends on its location. It is more than important to select the suitable location for the business than any entrepreneur might consider.

One might have the most exceptional and irreplaceable product/service on earth, but if they are located in the middle of nowhere, they won't make any money and get lower attention. This is why it is important to conduct a business location analysis.

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Importance of Location while setting up a Business

Choosing a suitable location for business is all about setting your business up for success. One shouldn’t just choose the trendiest building or the cheapest listing. Entrepreneurs need to put careful thought into where they want to establish their business. After all, a business location isn’t something that can be easily changed.

The business location sets the tone for the business. It also decides what customers think of your business. The business location determines how well you perform in your business.

Easiest Location to do Business(100=easiest)
Easiest Location to do Business(100=easiest)

Factors that should be considered for a location

There are several crucial factors to consider when it comes to choosing an apt business location for the company.

Factors affecting Business Location
Factors affecting Business Location

Analyze the Community

Before planning to set up a business somewhere, study the community by reading some of their local newspapers. Also, visit the library and research on the history of the place. Communicate with other small business owners in the area and inquire whether their business is succeeding.


Create a business budget for the impending expenditure before planning any business idea. Budget is the most important factor while choosing a suitable business location. Think of how much can you afford to spend on your business location and find ways for it.

Monthly rent or lease payment is not the only total cost of the location. There are several other costs to the property. Owners need to pay taxes when they buy a commercial building. Sometimes, there are hidden costs to the building, costs like a renovation or install upgrades. For example, one might need to add insulation or run communications cables. Expenses like to decorate the interior to fit the business style and brand.

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Demographics and Closer to Market

Demographics are one of the most significant factors to consider when choosing a business location. It’s important to be near the target customer group. One cannot sell gaming consoles in an area populated with older generations. The sales will be higher in an area dense with the target market.

The more you know your customers by going near to them, the higher are the chances that they will buy from you regularly. Where are your target consumer group located? Are they other manufacturing companies? or are they an end consumer? Analyze these questions and try to answer them.

Easy Accessibility and Infrastructure

Good infrastructure is key to any kind of successful business. Uninterrupted power and water supply, good roads are a few significant factors to consider when choosing a suitable business location.

Lack of enough parking spaces for the employees, or accessibility for people with disabilities, can be an issue in some locations. Nobody wants their employees to spend hours to get to work. Hence, select a location that won’t cause any problems with daily travels.

Distribution Network

If a particular business is manufacturing, it requires a good location and network for a business to produce. Unnecessary commute to work can be avoided because nobody likes to spend money on transportation than they have to. Analyze before choosing a business location, good proximity to suppliers is key in minimizing logistics costs.

Foot Traffic

More than many businesses look for foot traffic. No business wants to be swayed away in a corner where potential customers will pass them. On the contrary, if some business needs confidentiality, they should opt for a low-traffic area. Try to monitor the traffic outside a certain location at different times of the week.


Business location factor creates both an advantage and a disadvantage. Consider if a location has a huge number of consumers because of the business competitors, your business might attract them as well.

However, it might backfire if both sides sell the same product, one team will end up losing.

The Zoning Rules

Local zoning regulations might limit small business locations. Zoning rules might restrict what plot or buildings can be used for commercial purposes, hours of operation, noise levels, signage types, and chemical usage. It has to be made sure the building’s zoning designation matches the business’s requirements.

Remote Location

Having a business on a B2B platform which will give the benefit to access and work worldwide. One will have no location as a barrier and can easily collaborate with companies from every location and all sectors.


A final factor to pay attention to is the closer the products are to the customers, the higher the market value. From planning future expansions, relocating to newer offices, or opening new shops in the right location can mean many things for any business. Consider and plan the potential growth of the company when choosing a business location.

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