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How to Choose the Right Location for Your Business

Anuja Marathe Kanhere
Are you wondering how to choose a good location for your business? A location that will make you a successful businessman? Here are some points that will help you find the right business location.
Choosing a business location is a vital and long term decision. An ideal business location is essential to the success of a business. It is one of the foremost business planning decisions. Some of the most essential factors that go into consideration while making this choice are listed below for your reference.

Choosing Perfect Business Location

Business Budget

Business budget refers to the capital investment that the business can afford to make while buying or leasing a new business premise. A business man has to give a lot of thought before he actually decides the location. It is commonly seen, that business premises located in the heart of the city are very costly while prices or rents for premises located in suburbs, smaller towns and rural areas are cheaper. In these cases, a central location is very costly and vice versa. So if the budget is high, then the business can afford premises at better locations.

Proximity to Customers

It is essential to consider the type of customers that the business will be dealing with. The foremost distinction is of retail and industrial customers. If the business has industrial customers, then the business might be located in industrial towns or within industrial zones.
For retail customers, the businessman has to consider if he and his employees are going to come in direct or indirect contact with his customers. In case, there is going to be a direct and regular contact with the retail customers.
Then the business should ideally be centrally located or within a residential area. At such times, facilities such as car parking spaces for customers are given a top priority. e.g. Bank and restaurants location.
If the business deals with indirect retail customers viz. BPOs, there is a lot of freedom in choice of business location as business contacts are expected to be maintained through Internet and telecommunication devices only.

Nature of Business

It is often seen that similar types of business entities are located in a common business area. e.g. Businesses dealing in jewelry manufacturing or women's wear manufacturing are usually located in places similar to their business competitors. Similarly, you may observe that wholesale businesses are usually located in particular town or a particular suburb of an urban area only.

Availability of Facilities

A business cannot work smoothly without steady availability of facilities such as water, electricity and air-conditioning and communication systems such as Internet and telecommunication. All these or few other special facilities need to be available so as to make a business location ideal.

Location of Suppliers

A manufacturing or processing business cannot run without a steady supply of raw materials from the suppliers. To ensure a smooth and unhindered supply of materials, businessmen opt for locations very close to their suppliers. e.g. A dairy business is ideally located near the pastures, a food preservation and packing business is located near the place of cultivation while fisheries business is usually located in coastal towns only.

Business Zones

There are, at times, some business zones restricted for a particular type of business by the government. These businesses are issued licenses provided they operate from these specific locations only. e.g. a particular business or manufacturing unit may be encouraged to operate from a particular state only. At such times, a businessman has no choice but to opt for a location within the business zone. If a businessman fails to abide by these zoning restrictions, his business licenses may get confiscated.


It is important that the business location is well connected by a good infrastructure. What is the use of a high investment on purchasing a business premise, if the business clients, suppliers and employees face a problem in approaching the business premises?

Government Restrictions

At times, there are some restriction on location of business units depending upon the nature of business or government policies. At times, a business is engaged in manufacturing processes that emit harmful gases and cause air pollution. At times, the business activities may tend to cause intense noise pollution and water pollution. At such times, there are some government restrictions that clearly state that the business should not be located in proximity tom residential areas.

Tax and Miscellaneous Benefits

The government is often seen to offer tax benefits for locating a business in a particular urban or rural area. At other times, it is worth doing a research on government issues grants, subsidies, incentives and cheaper loans for purchasing and renting of business premises within specific demarcated areas.

Climatic Conditions

Climate plays a crucial role in success of certain businesses. e.g. Cotton textile manufacturing business needs to be ideally located in an area which has humid climate. If however, the business budget is on a higher side, then the business premises may be technically conditioned to create an artificial climate environment. Harnessing of innovative technology does mean more capital investment.

Proximity to Employees

A business location may ideally be located where there is a pool of talented employees for your business. e.g. Silicon Valley is known as an IT hub with software giants like Google, Oracle, Yahoo located in this area. Similarly, there are huge number of software engineers based in this area.

Expansion Opportunities

It is quite likely that your business might grow in due course. If you foresee an expansion and diversification of your business in the near future, then it is well worth to choose the most feasible location.
So, you can see all the many factors that need to be considered before zeroing on the perfect location. There is no point in being hasty and choosing a location at random, lest you regret your decision later.