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The Impact Location Can Have on a Business

September 19th, 2016


The physical location of your business can have a multitude of impacts in addition to obvious ones such as customer access and transport. Regardless of the type of business you run, where you ultimately base your organisation will matter, but the level of importance this has will depend on the type of business you’re operating. Before you settle on a location, you need to be thoroughly aware of how and how much your location will impact your organisation. 

Customer access and demographics

If your business is entirely ecommerce based, customer access will probably matter little to you as long as you have access to logistical options for delivery. However, if your business receives customers on site, proximity to your target demographic will be of significant importance. Retail operations, for example, need to have high numbers of foot traffic for a steady supply of customers.

Accessibility and parking

Similarly, if you receive customers on site, your location should be accessible and offer plenty of nearby or on-site parking for your customers. Access to public transport can also be important for customer accessibility, depending on your target demographic. These same factors will also matter for employees. 

Supplier access

If your business relies on heavy materials or other inputs, you need to be close to suppliers or be able to accommodate the delivery of materials from suppliers. Depending on the type of inputs your business uses, you might need to have onsite facilities such as loading docks to receive supplier-delivered goods, or simply be close enough to roads to ensure large volumes of goods can be easily delivered.

Lease and overheads

Your location will impact your lease costs and other overheads such as utilities and maintenance. For example, if you’re located in a remote area, you might end up paying much more for cleaning and ongoing maintenance costs. Centrally located areas and retail spaces with plenty of foot traffic tend to be more expensive to rent than suburban locations. Consider all of these factors and conduct due diligence on value for money before you sign your lease.

Property style and branding

Both your location and property style will have an impact on your branding. How much this matters depends on your industry and product or service. For example, If you’re targeting corporate customers, a centrally located, high-profile office building might be the ideal site. If you’re in the hospitality industry, you might find that a retail shopfront in a popular strip with high visibility to be the best site for your business. The location and property style should be consistent with your brand vision and boost it rather than compromise it.

Expansion potential

One thing to keep in mind as you canvass potential properties for your operations is the expansion potential. Whether you’re a service organisation or in manufacturing, you will need to have more space as you grow. The property that you settle on should be able to accommodate growth in the next year or two at the very least, or for the duration of your lease.

Competitor businesses

Depending on your industry, having competitors nearby can be an advantage as it helps to draw more customers to your location. Too many competitors, however, can compromise sales growth and make it harder for you to gain traction in the local market.

If there are competitors in the area, do sufficient research on the local market and consider whether or not your business will thrive or struggle if you have only a share of the local market. If you need to dominate the local market to succeed, you’ll probably be better off in another location.

Complementary businesses

Having complementary businesses located nearby is usually a positive thing, especially if there’s the prospect of also selling to these companies and their employees. Local businesses can provide much-needed amenities and facilities for your employees, making your workplace more attractive to prospective employees.

Employee and recruitment

You might need to be located close to your target market given your type of business, but this is also applicable when hiring employees. Is your location accessible for potential employees? Will you be able to attract the type and quality of employee that you’re aspiring to?

Factors such as access to public transport can lessen the impact of being located far and away from quality employee populations. Other factors, such as free on-site parking, plenty of restaurants and cafes, and amenities can all make your property more attractive to prospective employees.

Ordinances, zoning, and restrictions

Zoning, ordinances, and restrictions on the building or property can impact your business, as can local developments. Find out as much as you can about these from the local council before you decide on a location. For example, if you operate a wellness retreat, you probably don’t want to open your business near where factories are being planned.

There’s a reason why many businesses choose their locations so carefully, and it’s because your location impacts your bottom line through various factors such as accessibility, visibility, overheads, and employee pool. Choosing the right location is just the start – but choosing well can set the right foundation for a successful business.

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David Hill
David has over 15 years in the insolvency industry – advising clients through restructuring of their business. His clear, “straight up” style provides clients with a strong direction of what they need to do, and how the process will work. As importantly, he brings empathy to the process – which is essential at a “high-stress” time for clients.

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