Choosing the location of a business is a crucial step when starting a business. The most important factor when choosing a business location is the type of business and its operations. For example, the needs of an online-only business looking to expand are vastly different from the needs of an accounting business. A business location plan requires research, planning, and intensive vetting of all the possible options. There are several factors to consider when choosing a business location.




The location chosen must fit within the company's budget. Various location-specific costs must be considered in addition to the monthly rent or purchase price. Different sites have different types of hidden costs associated with them that must be accounted for. Such hidden costs include renovations, taxes, minimum wage requirements, economic incentives, and utility upgrades. For instance, the water supply in some areas warrants the installation of a water softener system. This would need to be taken into consideration when working with the budget.


Market and Demographics


Demographics refer to the characteristics of a population. These include income, age, gender, spending power, or occupation. A firm understanding of a location's current demographic profile and market statistics is fundamental in establishing the viability of a business. A company can apply this knowledge to predict the expected level of support from the community, the average income of the community, or their spending habits.


The study of specific community attributes helps to determine the profile of a community. An example of such a feature is the average age of the community. Another characteristic is a community's purchasing power and the extent of disposable income existing within the community. The most popular recreational activities and hobbies within a community can also be a good source of information.


Proximity to other establishments


A business set up close to other complementary companies can turn out to be a very profitable tactic. This involves choosing business locations with neighboring shops that complement the services and products offered by the business. For example, a women's shoe store that is set up near a popular designer clothing shop could benefit from the traffic generated by the shop.


Numerous business opportunities can expose themselves by surveying an area to find out the establishments operating within it. For example, high-density areas with many establishments within them can be profitable locations for setting up a parking lot.


In addition to considering proximity to complementary businesses, don't forget to assess the local environment, including parking lot fencing, which can impact customer convenience and safety. Choosing the right location means considering all the factors that can pave your way to business success.



Businesses function more efficiently when the owners and employees feel protected and safe. The company’s onsite security is also essential if the business deals with valuable inventory that is susceptible to burglary and theft.


It’s essential to research the crime rate of an area before committing to a location. Security cameras and shutters are useful in protecting a business but will not guarantee employees’ safety in areas with high crime rates. Customers will also tend to avoid visiting a company if they are worried about crime. A location's level of security can be found out by checking the local crime statistics.




Customer-facing businesses must have their competition in mind when choosing a business location. Rival companies located close to one another will find it more challenging to attract people to their establishment. A business situated in an area that has been untouched by similar businesses dramatically increases its chances of attracting customers.