What is the Importance of the Business Location?


So you are setting up a bus...

  • What is the Importance of the Business Location?
    Nitish Khanna Image Nitish Khanna

    What is the Importance of the Business Location?

    • Wednesday 12th of November 2014
    • Selling

    So you are setting up a business, or expanding, and you are pondering what location to choose - it’s an important question to ponder. Location is important and there are several factors you need to take into account.

    Target Market

    The first thing you have to consider when it comes to location is the target market. If you are targeting the upper market, setting up shop in London’s Finsbury Park or Los Angeles’ Inglewood simply doesn’t make sense. It doesn’t make sense because most of the people you are targeting do not live and/or spend a lot of time in these areas.

    If you are a consultancy, as opposed to someone selling a product on the high street, you don’t have to be exactly where your target market is (unless you want to market your business by having offices in the high street), but you have to be close enough for them to be willing to travel there. So you have to ask yourself how far they are willing to travel to see you. How valuable are your services to them? How easy will it be to convince them to travel five or fifteen minutes extra to come see you, rather than someone in their own neighborhood (if you choose to be in another neighborhood, or are targeting more than one neighborhoods)? Of course, it still has to be a neighborhood they’d be comfortable to visit, with easy access, parking, bus routes, etc.


    The second thing you need to bear in mind is competition. How saturated is the market? Does the area need more shops (or restaurants, offices - whatever it is) like yours to be able to satisfy the demand for the product/service, or would you have to convert clients from other similar shops? Is your product ready to compete with those shops? What will you do to stand out from the competition? And how is your business model different from theirs - can you somehow outsmart them?

    Pricing and Size

    This is obviously a vital element as you need to make as much profit as possible. This means you have to have a location that is in the right area for your clientele and large enough to satisfy the demand for the products you are selling (or enough seating if you are doing office rentals or a bar for example), but no larger. You have to work out in the business model the exact scenario you are expecting. It’s often better to be too small, rather than too big. Sometime there are other creative solutions to lowering the pricing, such as using a basement, or the second floor of a building - you just have to make it enticing enough for clients still to come in the door.

    If you are a consultancy the same principle applies - you have to satisfy client needs (i.e. don’t rent a cheap office in a building ready to fall down if you are targeting the upper market segment), but not more.

    The Future

    When looking at location you also have to bear in mind the future. Are they looking to develop the area further? Is it likely the demographics will change? If you are buying real estate this is especially important.

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    • Monday 19th of January 2015
    • Selling

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    Nitish Khanna Image Nitish Khanna