10 Reasons Why Location is Important in Business

When it comes to choosing a location for your business, you might think it’s as simple as putting your finger on a map. However, location is important and there are several factors you need to consider. Choosing the right location can prove to be extremely lucrative, but getting it wrong can do more damage than good.

In this article, we’ll give you our list of ten reasons why location is important in business, as well as a few pointers on how to determine the right business location.

What is a business location?

A business location is the place where you will provide your service or sell your products. For a coffee shop, that might be the physical location where you sell your coffee and welcome customers. For an online business selling a marketing service, it might be the office where you base yourself. 

For the purposes of this article, we will mostly look at why location is important for businesses with physical premises as this is where location can have the most impact.

Does location matter for business?

Choosing a business location is an extremely important factor for organisations to consider when looking to set up shop, open a new location or move premises. Any business owner should think carefully about their ideal location before they make a firm decision.

In the UK, only 2.2% of businesses operate more than one site. This means that the majority only have one opportunity to make the most out of their location, further showing the importance of getting it right. 

Location is particularly important when you are considering growing your business in a new market. You will need to complete plenty of market research to ensure you choose a place where your business can succeed. 

RELATED: How to expand your business through new market development

How does location impact a business?

We’ve mentioned briefly that location is important for business success, but how companies determine their location will depend on several key drivers.

1. Talent attraction and retention

When it comes to ensuring you have the best employees working for your business, location matters. You’ll want to ensure the people that live in that locale have the skills you require to run your business. For example, tech companies might want to look to London for talent, especially as it’s the most popular city in Europe for tech talent.

A business’ location is also important for employees and potential recruits, with a Gartner study revealing that 53.5% of workers cite location as the biggest attraction driver for a new job.

2. Cost

Cost is a big factor when choosing a good location. While city centres might be great for talent and accessibility, they usually come with a hefty price tag. Real estate, utilities and rates in big cities can be expensive if you’re looking to lease a building.

RELATED: How to work out your business rates

It’s worth weighing up the costs of different locations before you decide on one place. You could also research shared office space or virtual office locations if you definitely want a city centre location but don’t necessarily need a huge amount of space – or a physical space at all!

3. Proximity to other local businesses

When making location decisions, you need to look at the other local businesses in the area, for three reasons. First, you’ll want to determine whether you can benefit from the nearby businesses and their foot traffic. Secondly, you’ll need to consider whether these businesses will enhance the quality and culture of your company. And third, you need to consider whether they will be competitive enough to take customers or even staff away from your company.

4. Accessibility

Finding a location that can be easily accessed by both your customers and your staff can make or break a business. For example, you might find the perfect bricks and mortar store in the city centre for a reasonable price, but there is no parking nearby. This location would be difficult for you to attract customers or enable staff to get to work easily, especially where public transport is unreliable or expensive.

5. Demographics

Getting your location right will also be determined by demographics. You need to think about whether your customers are likely to live close by or shop in this area, or whether they would be happy to travel to you. Many customers also rely on convenience, so you’ll need to consider how convenient it is for your customers to get to you and whether going to a competitor is easier.

6. Competition

Depending on the type of business and the industry you operate in, the closeness of your competition can either be a good or bad thing. If you’re a small business, it might be a bad decision to choose a location near a competitor that sells the same products as you, but at a cheaper price point.

On the other hand, if you know your competition’s location is difficult for people to access, this could help you ensure you choose a location that’s easier for customers to get to.

7. Location perception

The reputation of a location is an important business location factor, especially in small cities or towns where people have preconceived perceptions about a place. If you’re looking to move to a new location, it’s a good idea to do plenty of research and find out what the locals think of the area.

8. Tax & regulations

Tax and regulations are particularly important for companies wishing to operate in different countries. However, UK taxes can also differ across counties. For example, premises in a high-end part of town would likely have higher business rates than one just outside the city center.

9. Growth

When it comes to growth, you’ll want to ensure your place of business is going to be beneficial for the direction your company is heading. Some businesses might benefit more from a small central hub in a city with smaller offices located elsewhere, while others would be better suited to one large office and a few remote workers.

10. Foot traffic

If your business needs to have physical premises where customers can view and buy your products, analyzing footfall in your location will be very important. If your location is off a side street with low foot traffic, you’re unlikely to receive as much custom as a shop located on a busy main street with plenty of passers-by.

Choosing your location

Where you base your business should be a strategic decision, taking into consideration your wider business goals and general direction. It is not a decision you should take lightly. Whether you opt for a city centre location with excellent transport links or your business is better suited to a rural locale with plenty of parking, location matters.

If you’re in the early stages of setting up your company, find out the top locations to start a business in the UK.

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Rovva puts everything you need for your business in one place. From an accountancy helpline to a drop-in business lounge - we've got everything covered.

Your complete business toolkit

Rovva puts everything you need for your business in one place. From an accountancy helpline to a drop-in business lounge - we've got everything covered.