Choosing a location is a crucial step in starting a business. There is more to identifying the right location than just finding an available structure to occupy. How you go about choosing your business's location will define your organization.
A business location strategy takes planning and research and a willingness to thoroughly vet all your options. Finding the right location involves both identifying the desired qualities of a potential space and considering your needs as a business owner.
Here are some key factors to consider when selecting a location for your small business:
- Location Type and Zoning Restrictions
The location you choose will depend on the type of business you operate. Consider the location type that makes the most sense for your business and customers, whether it’s home-based, retail, mobile, commercial, or industrial.
In almost every case, where you can locate will be dictated by local zoning ordinances. Contact your city and/or county clerk’s office for information about ordinances or zoning restrictions could affect your business, as well as any special considerations such as required structures and taxes.
- Costs and Budget
When weighing business locations, it’s important to the overall cost, not just the rent or mortgage. Costs that can vary significantly by location include standard salaries, minimum wage laws, property values, rental rates, business insurance rates, utilities, and government licenses and fees.
In addition, income, sales, property, and corporate taxes may vary significantly from place to place. Some state and local governments offer special tax credits for small businesses; you might also find state-specific small business loans or other financial incentives.
- Customer Demand and Competition
Consider who your customers are and the importance of their proximity to your location. If your customer base is local, does a sufficient percentage of that population match your customer profile to support your business? Does the community have a stable economic base that will provide a healthy environment for your business?
Research different demographic aspects about your local area, particularly around your desired location, for example, purchasing power and disposable income, means of transportation, average age and population, recreational activities and hobbies, and family status. This information will help you determine the potential demand for your product or service.
In addition, knowing where your competitors are located will allow you to better gauge demand for your product or service compared to other companies. Ideally, you want to secure a location that’s not saturated by your competition. Look for areas where your product or service is in high demand and/or where your competition is low. If possible, you’ll want to find a location where the other businesses on the block are complementary, to ensure that your business fits into the local market.
Library resources such as Gale Business: DemographicsNow and Reference Solutions are helpful for finding information about individuals and businesses in a particular geographic area.
- Employees and Recruitment
Finding high-quality employees is crucial to your business success. What skills do you need, and are people with those talents available? Consider what is most important to your current or future employees. Does the community have the resources to serve their needs, such as restaurants and grocery stores, childcare, banks, or schools?
- Accessibility and Parking
Consider how accessible the facility will be for everyone who'll be using it, including customers, employees, and suppliers. Find out about the days and hours of service and access to locations you're considering. No matter how attractive your business is, sufficient parking should be a key consideration.
When considering your options, ask yourself which location site makes it easier and cheaper for you to get the raw goods you need to operate. What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to your business?
For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.