Finding a suitable place for your business start-up can be a tricky question. Most products are region specific. What I mean is that some products sell well in some areas while the same product does not sell that much in another area. It is simply the demographics of the area which decided which goes where.
13 Factors for choosing a perfect business location
#1 Does the area you select have activities relating to your business core?
Would you be selling anything if you open a rock music shop near a temple? No. However if you have a pub or a night club near your sock music store chances are that your sales will go sky-high.
#2 Buy a location for your business or lease them?
Most start-ups prefer to rent spaces for their offices and not having land and building on their own. One such example is technopark in Trivandrum. Software companies buy space in this huge commercial area. Ready-to-use infrastructure and developed plots, enabling lower operational set-up time and cost.
#3 Virtual office space for start-up business
This is something like you own a business address anywhere in the world, you have your own private telephones, conference halls, mail forwarding and related. The only catch is that you are not physically in that office. This is the new era of virtual office. Normally this is for people seeking a cost-effective alternative to renting a conventional office. Read more about virtual offices in this Wikipedia article.
#4 How long do you plan to run in the present site?
#5 Transportation to the site
A very important aspect while choosing your business is transportation. It is really a no brainer. You need to have good access to the site. If you can’t get the raw materials or finished products for your business into your store/ factory then what use does it serve? You will need to employ people to carry the materials over to your site.
#6 Availability of workers
This is one that is mostly overlooked. You have to make sure that human resources are at your disposal. If not then you will have the extra cost of having to lodge your workers. It is also necessary to look into the average wage rate of the people in that location, the retention rate of the workers there. You also want to research about the level of education in the area, the number of educational institutes around and related to get an idea of the education background of the area.
#7 Economic condition of the place you selected
You can’t sell costly perfumes near slums, can you? So you must strategically place your business where it SELLS!!! It would be a good choice to place a medical shop near a hospital and so on.
#8 Is this a new growth area or target market for future business?
You must always target the future audience while planning a business start-up. Do you plan to start a business that is just a trend and will soon die off? Then think again. Normally a business takes time to flourish and hence you must target a business that could run for a long time. The location you choose for this is very important. If you don’t see a growth in the business in your present location, then you may consider moving to another location.
#9 Near your competitors?
You may find this absurd, but it is true. Sometimes placing your business close to your competitors can be your best free source of traffic, especially if you are near an established competitor. You will have a large amount of traffic to your business just because of your location and this is true in the case of businesses like shopping malls.
#10 Operating costs
- What are your country tax structures?
- What about business taxes?
- How much should you pay as compensation to your workers?
- How long does it take to get a permit and what is the process involved?
- Is sufficient amount of land and cheap fuel available?
- What about the building modification rates if required and electricity charges?
- Do you need extra utilities to work efficiently
#11 Factors relating to your environment
- Does your business involve chemicals or hazardous materials? If so choose a location that is strategically away from the townships. Each country may have specific laws that state that such industries must be located outside the city within a specific radius.
- What about the natural resources available? Do you need to import resources from other places which would incur added costs or are they freely or cheaply available locally?
- Ensure supply of clean water. If not then you have to set up water filtering plants.
- Do a research about the quality of the air around the region and noise rate. If you do not run an industry or your industry demands cleanliness such as in pharmaceutical industry, then this point is a must see.
- Make sure you analyze the environmental reports thoroughly.
#12 Business considerations
Most countries offer small business start-up incentives. These may range from cutting on taxes, allocation of area for development and so on. You must have heard about SEZ (Special Economic Zones) in India. Know more about SEZ here
#13 Other factors
- How much does it cost you to buy or rent a house nearby?
- What necessary facilities like hospitals, fire stations etc are available immediately?
- What is the geographical situation of the current location? Is it a zone where earthquakes or other natural calamities like floods etc occur?