Choosing a location for your small business can have a significant impact on your business growth. The wrong location may distance you from your target audience or make employees’ commutes more difficult than they need to be. If your business relies on pedestrian traffic, you’ll need to be sure that you choose a space that makes it easy for people to find you.
Select Funding provides small business financing to help companies grow. Many of our clients use their financing to secure a business location or relocate or expand their businesses. Here are 11 factors to consider as you choose a location for your business.
Why Is It Important to Choose the Right Business Location?
The location you choose for your business is more important than it might seem. Even if you provide remote services and rarely have clients come to your office space, your location can still have a significant impact on your business success and growth.
The location of your business can impact your employees’ commuting time, logistics and deliveries, customer service, and even your personal safety. It can also affect how much you pay in overhead expenses. It’s not overstating things to say that choosing the right location can mean the difference between business success and failure.
11 Factors to Consider When Choosing a Business Location
Before you choose a business location, you should keep these 11 key factors of site selection in mind.
#1: Accessibility
Accessibility is arguably the most important factor to consider when choosing a location because it impacts every aspect of your operations. Here are some examples of why accessibility is crucial:
- Proximity to major roads and public transportation will impact employees’ commutes plus logistical things such as deliveries and pickups.
- Available parking will affect your employees as well as your clients or potential customers.
- If your business relies on foot traffic, you’ll want to make sure that your location is visible from roads and sidewalks.
Keep in mind that relocating to a high traffic area may also come with a high cost, so you’ll need to keep that in mind when evaluating which aspects of accessibility are most important to you.
#2: Cost
The cost of buying or renting a business location is likely to be top of mind for businesses at every level, since overhead costs can have a significant impact on your profits and business growth.
It’s always helpful to have a budget in place that will help you decide whether you can afford a location. With commercial leases, you’ll want to make sure to read the fine print to determine whether you’ll be responsible for expenses beyond rent, such as property taxes or maintenance, and factor those into your decision. On a related note, you’ll also want to consider the cost of living in the area, including utility rates.
#3: Competition
Proximity to your competitors may be a benefit or a risk of any business location. If an area can support multiple businesses offering similar products or services, then moving to a spot that’s close to a competitor may be beneficial. However, overcrowding the market represents a risk.
It’s for this reason that we suggest conducting a competitor analysis prior to choosing a location close to a competitor. When you’re armed with the facts, you can avoid choosing a location that’s not going to allow you to achieve your business objectives.
#4: Safety
Safety is a concern for every business owner. If you choose a location in a high-crime area, the obvious risks are that your business may experience a break-in or your employees may not feel safe. There are additional risks that may not be as apparent.
For example, choosing a location in an unsafe area may impact your business insurance premiums and your foot traffic. Clients and customers may be unwilling to risk their own safety by venturing to a questionable area, so make sure you take safety into consideration.
#5: Hiring Opportunities
Depending on what your business is, you may need to be in a location where you have access to a sizable pool of talent to attract skilled employees to your business. The size of the pool you need will depend upon the size of your company and your business goals.
For example, if you offer accounting services, you’re likely to be better off in an area that’s close to a city where there are many potential employees nearby. You’ll need to think about where your ideal employees would come from and what skills they would need as you evaluate each potential location.
#6: Your Brand
Your brand should be factored in as you decide on the best location for your business. After all, your brand is what tells prospective customers or clients who you are and what matters most to you, so choosing a location that aligns with your brand is necessary.
For example, if you have an apparel store with target customers that are tweens and teenagers, you wouldn’t want to choose a retail location surrounded by service providers or high-end jewelry stores. Customers are most likely to visit your store when it’s near other things that they enjoy.
#7: Functionality
Every business has unique needs in terms of how they use their commercial space. You’ll need to think about the specific functions that you and your employees will perform in the space to decide if it’s right for you.
Some examples of business needs include the following:
- A shipping or receiving dock
- Warehouse space
- Cubicles
- Conference rooms
- Private offices
- Manufacturing space
- Dressing rooms
You may be able to employ a commercial interior designer to help you build out the space to meet your needs.
#9: Vendors and Suppliers
Proximity to your most important vendors and suppliers is something you’ll need to consider if your business operations rely on seamless deliveries. While location plays a role, so do other factors.
You might need to consider delivery costs if your business is an out-of-the-way location. If delivery of raw materials or pickup of shipped products is delayed, you may end up with customer service issues that impede your business growth.
#10: State and Local Regulations
If you’re moving to a new state, you should be sure to read up on local business regulations, including taxes and licensing requirements. Some states are more friendly to businesses than others and you’ll need to be prepared for any responsibilities that may be added to your plate when you relocate.
If you can, get a head start on things like zoning, licensing, and permitting before you move. Failure to do so may impact your ability to resume normal business operations after you move, so make this step a priority.
#11: Growth Potential
There are many reasons that businesses choose their locations, but one thing to keep in mind is whether the location you select will support your business growth. Whether you’re opening your doors for the first time or simply relocating, your growth should still be a priority.
It doesn’t make sense to rent a larger space than you need. That said, if you think you may be hiring additional employees in the near future or you have plans to ramp up your production, you’ll need to be sure that your space will allow you to accomplish these goals.
How to Compare Locations and Choose the Right One for Your Business
Ideally, you’ll be able to find a location that ticks every box and offers exactly what you need. In the event that doesn’t happen, here are some pointers to help you compare locations and select the best option for your company:
- What are the total costs? Here, you’ll need to factor in rent or mortgage payments, taxes, maintenance, and other overhead costs such as insurance, janitorial services, and utilities. A location that seems more expensive on the surface may actually be more affordable than you think.
- Can the space be adapted to suit your needs? It’s rare to find a space that will meet every functional need, but in many cases, a space can be redesigned or adapted to accommodate your requirements. (Note: if you decide to go this route, make sure to factor in the cost of an interior designer.)
- Is one location more convenient than others? While convenience is only one factor, it can be a hugely important one to your employees as well as to your target market. A less expensive location can hurt your business if there’s no parking or it makes your employees’ commutes too long.
- Will the location meet your needs in the long term? You can’t predict everything that will happen with your business, but if you have accurate projections you should be able to analyze each location based on the likelihood that it will accommodate your growth goals.
In addition to the comparisons we’ve listed above, we strongly recommend reading the fine print on any lease agreement and having an attorney review your contracts.
Find the Right Business Location with Help from Select Funding
Finding the best business location for your company requires planning and evaluation, with special attention to the things that will help you achieve your business goals. The 11 factors we’ve listed here can help you consider your options and choose the location that’s perfect for you.
Do you need affordable small business financing to help you secure the right location for your business? Select Funding can help! Learn more about our business financing and start the application process now.
