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Are you choosing the right location for your business?

The location of your business is a crucial decision that you will have to make before you set up your venture. A lot of mistakes that you commit while setting up your business can be corrected but a faulty or unsuitable location is an error which may prove to be fatal and impossible to rectify. Selecting the location of your business is not just about generating an address for your venture. It is necessary that you have absolute clarity on what kind of a workplace you would want to have, what all you are not ready to tolerate and what is your budget for a work space. 

Location Is not Just The Building

What do we actually mean when we talk about selecting the location of a business? The answer to this crucial question is not just the building where your business would function from, but also the bigger picture to its location. Let’s have a look at what all goes on to constitute the ‘location’ of your business:

  • State: The taxes, mainly comprising of Income and sales taxes differ from state to state. This makes it crucial to understand the regulations in the selected state. Certain states have a friendly policy for certain kinds of businesses and they encourage certain kinds of industries. It is a wise decision to select a state which is friendly to your kind of business venture.
  • City: Rentals, real estate costs, availability of labor, local taxes etc., differ from city to city even within a single state. 
  • Part of city: Feasibility and expenses for commute, power supply, rent and such factors are highly variable and can change from area to area within the same town as well.

Factors To Consider Before Selecting a Business Location

To make sure that you do not go wrong with this, let’s take you through some key factors which you need to consider before finalizing your business location. 

  • Impact of location on the business: Location can have varied impact on different kinds of businesses. A retail store needs to be located differently from a warehouse or the central office headquarters. Thus, the location should impact your business in the desired way.
  • Structural amenities required by the business: A business that receives ongoing shipments needs a dock. Another business that receives a lot of supplies needs a warehouse. For every business, the structural amenities required are unique and need to be considered while deciding the location.
Decision making assessments for startups
  • Client Interaction: If your customers will visit your business location frequently, you will need an accessible location as well as reception, waiting area, conference room etc. for it.
  • Parking options required: If the size of your company is huge or there will be a large number of employees or if a lot of customers will be visiting you, you would need a business space with a big parking area.  

How To Select The Correct Location For Your Business

Zeroing down on the ideal location is an exciting and important task. It is natural that a question arises in your mind regarding the aptness of your choice for its location. 

Brand Image

Location can affect the image of your business. Your business is formal or elegant or you deal in a niche product, location will have a huge effect on the brand image and style of operation of your business.

Proximity to customer base

Service providers and retailers need to be located closer to the target customer base than warehouses. If your business relies on customer foot traffic, you need a clustered customer base. 

Availability of workforce

Does the chosen community for your business provide you with the required talent and skill? Will it cater to your staffing needs efficiently? Also, does the location provide you with the necessary resources for your business? You need to ask yourself these questions while selecting your business location.


For certain businesses, comparison shopping is a popular trend. If that’s the case with your business and you may benefit from the extra influx of customers in your business area due to competition, it is advisable to be in close proximity of your competitors. However, if you are selling an exclusive product or service, it is wise to be distant from competition.

Distribution network

If you are a manufacturer, you would need a good transportation network for your raw material as well as to deliver your finished products. Going wrong with your location here may take you far away from your suppliers and customers. This will unnecessarily add to your logistics cost and affect your profitability negatively.

Remote business location

Remote location can be a handy location solution for you. If you establish your business on a B2B platform, you can get the benefit of working with variable locations worldwide. In this case, location will not be a hindrance to your business and collaboration with different services from different locations will be easier for you. 

Closeness to complimenting businesses

It is a smart move to place yourself in a business location where there are complementary services to your business available. A food joint or a gaming zone will get good customer foot traffic if it is placed close to a multiplex. Since you are just establishing your business, you will gain from the foot traffic of your complimentary services and they will provide you with a willing customer base. 

Quality enrichment

Does your business location enrich the quality of your business operations? Having good restaurants where your employees can go out for lunch or having good daycare facilities close to your business and other such useful services enhance and enrich the quality of your business and add to its value.

Location history

Know the history of your business location. It is a good move to understand how the earlier occupants of a particular business location performed in their business. If businesses similar to your business failed at a particular location, it will affect the image your business has on prospective customers. If earlier businesses prospered on the location, analyze if it was due to the location and will the same benefit be available for your kind of business. 

Zoning restrictions

Do ample research on the ordinances and zoning restrictions on a given business location. Not only do research for your specific location, but also understand the kind of business that operates in the neighborhood. A liquor store or a club won’t be placed intelligently next to a school or a hospital and there might be legal restrictions on doing the same. Make sure your business will be allowed to operate at a particular location legally.


The safety in and around your business may affect the quality of customers and employees available for your business and also affect the image your business carries. 

Scope of expansion

Since you are just starting up, you may not require much space for your business. But as you prosper, the need to expand may arise. If you plan to expand your business horizons in the future, you need to select a location that will allow you to do so.


Quality comes with costs. You need to plan and decide on your location budget before you hunt for a business space. The real estate costs, rentals, taxes, etc. are some one-time and concurring costs you may have to incur for your business. 

Technology has taken up important space in business and there is a rise in digital platforms for almost all kinds of business ventures. However, the need for an actual brick and mortar workspace where you can cater to all your staffing, warehouse, maintenance, and customer physical interaction needs can never be downplayed. Consider the above-mentioned factors and try to answer the questions for your business to go right with your business location.

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FAQ – Selecting the Right Location for Your Business

1. What does it mean to select the location of a business? Selecting the location of a business involves choosing not just the building where your business will operate from, but also considering the broader aspects of its location, such as the state, city, and specific area within a city.

2. How does the state selection impact the business? States have different tax regulations and policies that can affect your business. It’s important to choose a state that is friendly to your type of business venture and offers favorable conditions for your industry.

3. Why is the city selection important? Cities have varying rental costs, real estate prices, availability of labor, and local taxes. These factors can significantly impact your business’s expenses and overall viability, even within the same state.

4. What factors should be considered before finalizing a business location? Some key factors to consider before finalizing a business location include the impact of the location on your business, the specific structural amenities required by your business, the need for client interaction and parking options, among others.

5. How does location impact a business’s brand image? The location of your business can affect its brand image and style of operation. Depending on whether your business is formal, elegant, or niche-focused, the location can contribute to shaping the overall perception of your brand.

6. Why is proximity to the customer base important? Service providers and retailers often need to be located close to their target customer base to facilitate customer foot traffic. Understanding the importance of proximity to your customers can help you choose the right location.

7. How does the availability of workforce affect the location choice? The chosen location should provide access to the necessary talent and skills required for your business. It’s crucial to assess whether the community surrounding your potential business location can efficiently meet your staffing needs.

8. Should a business be close to competitors? Being close to competitors can be beneficial for certain businesses that thrive on comparison shopping and increased customer influx. However, if your business offers exclusive products or services, it may be wise to choose a location distant from competitors.

9. How does the distribution network impact location selection? For manufacturers, having a good transportation network is crucial for the efficient movement of raw materials and finished products. Choosing a location far from suppliers and customers can increase logistics costs and negatively affect profitability.

10. What are the advantages of a remote business location? Establishing a business in a remote location can offer advantages, especially for B2B businesses. Working on a global platform allows for collaboration with various services from different locations, reducing location-related hindrances.

11. Why is closeness to complementary businesses beneficial? Placing your business near complementary services can attract foot traffic from those businesses, providing you with a ready customer base. For example, a food joint near a multiplex can benefit from the moviegoers’ foot traffic.

12. How does location history affect a business? Knowing the history of a business location can provide insights into its potential impact on your business. If similar businesses failed in the past, it may affect the perception of prospective customers. Conversely, if previous businesses thrived, consider if the same benefits apply to your type of business.

13. What role do zoning restrictions play in location selection? Understanding local ordinances and zoning restrictions is crucial to ensure your business can legally operate in a specific location. It’s essential to research both your specific location and the types of businesses operating in the neighborhood.

14. Why is safety an important consideration for business location? The safety of the business premises and its surrounding area can impact the quality of customers and employees attracted to your business. It can also affect the overall reputation and image of your business.

15. How does the location choice affect future expansion? When selecting a business location, it’s important to consider the potential for future expansion. If you plan to grow your business, choose a location that can accommodate your future space requirements.

16. How does affordability factor into location selection? Budgeting for location-related expenses is essential. Consider real estate costs, rentals, taxes, and other ongoing expenses to ensure the chosen location aligns with your business’s financial capabilities.

17. Is a physical workspace necessary despite the rise of digital platforms? While digital platforms play a significant role, having a physical workspace is still crucial for staffing, warehousing, maintenance, and in-person customer interactions. Consider your business’s specific needs and find the right balance between virtual and physical presence.

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