Choosing a Business Location

Choosing the perfect business location is more than finding a place that looks like you envisioned.

It’s about being in a competitive location that helps grow your business, staying within budget, and meeting local and state regulations.

In this guide, we’ll work through key questions to narrow your location search and provide additional resources to help you find the right spot.

1. What location type fits your business?

To start your search, you should understand the different types of business locations:

• Retail: Storefronts, malls, or commercial streets suitable for businesses that rely on foot traffic and visibility.
• Office space: Suitable for businesses that do not rely on walk-in customers, such as shared or dedicated office spaces.
• Industrial: Locations suitable for manufacturing or warehousing businesses, usually outside the city center.
• Home-based: Suitable for businesses that do not require a physical storefront or office, such as online businesses.
• Pop-up: Temporary spaces that businesses can rent for a short period, often used for testing new markets or seasonal businesses.
• Mobile business: For businesses operating from vehicles, such as food trucks or mobile services.

Identifying the physical setup that best fits your business will make your search more focused and efficient. If you’re unsure which location type fits your needs, the remaining questions should provide additional clarity.

2. What’s your budget?

The next step in narrowing your location search is to consider your budget.

Your budget will determine the locations you can afford and the areas feasible for your business.

Understanding your budget involves more than knowing how much you can pay for rent. It includes startup and operational costs, as well as additional charges to make the location viable for your business.

Tip: Create a financial forecast to fully understand your financial position.

Here are some additional budget-related questions to consider:

• Will extensive renovations be necessary before you can move in?
• What are the state and local property taxes? What about income and sales taxes?
• Could you pay less by starting up in another state?
• Can you afford to pay your employees at least the minimum wage?
• Do you qualify for any government economic programs or incentives? Might you qualify in another location?

A comprehensive understanding of your budget and associated costs will enable you to make an informed decision about your business location and avoid unexpected expenses.

Dig deeper:

Budget-friendly alternatives for your business location

Consider lower-cost options like coworking spaces and non-traditional rental properties.

Why you should consider a coworking space

Coworking spaces provide benefits beyond cheaper rent, including networking opportunities and improved facilities.

Understand your startup costs

Know the cost of renting or purchasing a space for your business and handling necessary renovations.

Create a financial plan

Forecast how the cost of your location will impact your finances, including potential sales, expenses, personnel costs, and cash flow.

3. Does it meet customer expectations?

Your business location plays a significant role in shaping customer perception based on the physical place and how it aligns with your brand image.

Your location should resonate with your target audience and meet their expectations regarding convenience, accessibility, and overall vibe.

Conduct market research to understand your target market’s preferences and expectations. Consider factors such as demographics, presence of competitors, and the atmosphere of the neighborhood.

Remember, your location is an extension of your brand. Choosing a location that aligns with your customers’ expectations will help you attract and retain them.

4. How safe is the location?

Safety is an important consideration when choosing a location. A perceived lack of safety can deter potential customers, make it challenging to attract and retain staff, and increase the risk of theft or vandalism.

Questions to help gauge safety include:

• What is the crime rate in the area?
• Is the area well-lit, especially at night?
• Is the location easily visible from the road or other businesses?
• Is there a high level of foot traffic in the area?
• What is the overall reputation of the neighborhood?

Choosing a location that is both actually safe and perceived as safe by your target audience is essential.

5. Is there increasing demand?

Choosing an area with growing demand is crucial for the long-term success of your business. Growing demand indicates a healthy economy, increased foot traffic, higher sales, and networking opportunities.

Consider the following questions:

• Is the population in the area growing?
• Are new businesses opening in the area?
• Are property values increasing?
• Are there planned infrastructure developments or investments in the area?
• Are there opportunities to network or partner with other businesses?

A real-world example of this is the tech boom in Silicon Valley, where increased demand for technology services and housing resulted in a thriving business environment.

6. Is the location accessible?

For a location to be accessible, it should be easy for you, your employees, vendors and suppliers, and your customers to reach your business.

Consider the following accessibility factors:

• Is convenient parking available?
• Is the location easily accessible by public transportation?
• Is the location near other businesses or attractions that your target market frequents?
• Are there any physical barriers that could make it difficult to access your location?

You don’t need to answer "yes" to every question, but ensure that a lack of accessibility won’t negatively impact your sales, recruiting, or brand perception.

7. Can you legally do business at this location?

Ensuring that you can legally operate in a given location is crucial.

To determine your legal ability to conduct business, start with zoning regulations and ordinances that affect property purchase, changes, and business operation. Research business licenses, building codes, landlord approval, restrictive covenants, and necessary insurance coverage.

Thoroughly research and understand all legal requirements and restrictions before finalizing your business location.

Additional resources for choosing the right location

13 tips to identify a great business location

Explore business location factors recommended by the experts from the Young Entrepreneur Council.

How to establish a business in a new location

If you’re changing the location of an existing business, focus on what it will take to successfully reestablish your business.

Start your location search

To find a physical business location, consider resources like your local SBDC, the local Chamber of Commerce, Craigslist, walking around neighborhoods, and commercial real estate agencies.

If you’re planning to run an online business, check out our guides on starting a home-based business and setting up your online presence.

Finding the right location is one of the final steps to start a business. Now it’s time to solidify your team, get your marketing strategy in place, and ensure that opening day at your new location is well-staffed and well-attended.

Andrew Brooks

Hello!

I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.

My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.

Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!