Location, Location, Location

What are the three most important factors when starting a business? Some will tell you it’s location, location, and location. In many ways, it is true.

The spot you choose has a significant impact on the success of your business. That is especially true if you are a service business like a restaurant or a store, but also true for factories and business-to-business firms.

Factors To Consider

There are many factors to consider in terms of choosing a business location, each of which will impact your success and decision-making.

  • Accessibility. Every brick and mortar business needs customers, inventory to bring in, and products to deliver out. That means customers, salespeople, employees, and suppliers need to be able to find you. They need easy access, which may require nearby parking or closeness to public transit.

    Do you get regular truck traffic for delivering or transporting your products? They often need ample turnaround space and an area for loading and unloading.

    Do you rely on walk-in trade? This is important if you are a restaurant or service business. Look for a spot that has close-by traffic generators. Look for large businesses, office parks, colleges, schools, hospitals, shopping malls, strip malls. Locations that are in central downtown cores close to office buildings and other retails shops can provide generous foot traffic as well.


  • Safety. Your location needs to be safe and attractive if you want people to feel comfortable patronizing your business. If your site or the building is unsafe, prospective workers might be inclined to choose other employers .

  • Future growth. If your shop or factory takes off, you may need room to add space for offices, services, and manufacturing, all without losing your parking and loading areas. Are there empty lots next to the property or ample rental space to expand?

  • Zoning regulations. You need to stay legal. That means your product or service fits the municipal building codes and legal zoning requirements for the area. Your building must meet the standards for the neighborhood. The amount of traffic you generate must not overwhelm local roads and available parking.

    If you do not make sure you fit the zoning regulations, you’ll end up unnecessarily spending money either on bringing your premises up to the standard or on moving.


  • Taxes. Setting up a business at a new location or moving there involves tax implications. Make sure you can afford the taxes imposed with owning a business. Seek the advice of a lawyer and an accountant to figure out what to expect from local, state, and federal taxes.

Points That Impact Your Business

When deciding on a location, some things can have a significant impact on the success of your business.

  • Demographics. Who is your target audience? You want to select a location that makes it easy for them to find you. For instance, if you operate an upscale salon, it makes no sense to choose a building in a low-income area.

  • Business friendly local government. Do the local and state governments offer incentives for setting up shop in a particular area? Do local laws, taxes and zoning regulations favor small businesses? You can nurture growth much more easily in an environment that is friendly to your company. Ask the local chamber of commerce for advice. Find a small business specialist to guide you through any confusing laws and regulations.

  • Labor market. Unless you are a one-man band, you need to consider how easy and affordable it is to attract the right type of employees. If your business requires particular kinds of skills, be sure the local area can supply your needs at the pay you can afford. Further, what is the minimum wage in the area? Make sure workers can get to your business easily via public transportation.

Where you set up your business can be the make-or-break decision for future success. Put the time into considering all the factors. Research more than one spot. Confer with your accountant, lawyer, the local chamber of commerce, and other local business resources. Talk to business people in the same area. The more research you conduct, the better chance you have of finding a profitable location.

Additional Resources

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