Finding the Right Location for Your Small Business

March 16, 2014 | By | 1 Reply More

location of your business
Location can make or break your business. Put your retail store in the middle of nowhere and chances are you’ll hear birds chirping more than the ringing of your cash register. It is important to choose the right location to help your business succeed.

What is an ideal location? It all depends on what your business is and what you intend to do in that location. To the retailer, the key to success rests in the selection of a good location that has a significant amount of consumer traffic. By contrast, a manufacturer needs to be located closer to suppliers and modes of transportation.

For a small business owner with a limited budget, the selection of a business location is usually a factor of compromise. Your budget may not be able afford that prime location right smack in the middle of the humongous mall with never-ending foot traffic, but you may be able to afford a location in a strip mall with limited parking. Or you may not be able to afford that office space in the new tower building in downtown, but your budget may afford a space in a 20 year old building near the outskirts of the city.  You need to look at what your business needs, what you can afford, and what you can compromise.

Below are some of the factors that you need to consider when choosing the right location for your business:

Type of Business

The type of your business will dictate your location requirements. The location needs of a retail store will be different from a service or a manufacturing venture.

Location is a key factor in retail site selection success. Retail businesses need to be in high-traffic and high-visibility areas. You need to be in a place with high demand potential where you can significant get foot traffic. You want to be in a place that will give you visual exposure where people can see your store and be enticed to check you. The location also needs to be convenient to shoppers, with ample parking space.

RELATED: The Importance of Accessibility of Location to a Small Business

If you are running a manufacturing business, you can choose a commercial location that is close to the market, close to the skilled labor force, and accessible to raw materials. It should have good communication links, and doesn’t often have to be in the center of the population (especially if your business produces significant noise level). The location should also have good expansion potential.

For a service business, you may want to be in a location close to skilled labor force, and with easy access to transportation for your employees. If your business expects customers, then the availability of parking is critical.


The differences in state laws on taxation makes some states more attractive than others. Take the case of Ruth Ellen Miller, President of NOUVIR, manufacturer of stone-cold and pure-white fiber optic light. She decided to move her business to Delaware to escape the high taxes in California.

While taxes are an important factor to consider in locating your business, there are instances where you may be better off paying higher taxes and selling more goods for a higher price. Choosing a location oftentimes is a compromise between tax relief and potential for profit generation.


Shopping malls are oftentimes the best location for a business, particularly retail and service-oriented businesses. The trade-off, however, is the high rental price of locating in a mall. Entrepreneurs may be forced to go where they can afford the rent or where they can operate more efficiently.


The quality of the neighborhood also greatly affects the decision of where to put your business. Many businesses avoid certain areas of a city because they fear for their safety and property. Make sure that you check the crime rate of the area. If an area is notorious, customers might be leery to drive to these types of locations. Choose a site where you and your customers will feel both comfortable and secure.


Many entrepreneurs locate where there is available space at the time they wish to open. Expediency does have its virtues, but consider the long-term effects of your immediate decision. Don’t be shortsighted. Is this the best location for your business?

RELATED: Choosing the Best Location for Your Business


Sometimes location decisions are based on selecting an area where there are many business professionals to support entrepreneurs and serve their continuing needs. For example, computer businesses often locate in the same area where materials and parts are readily available.

Personal considerations.

The location of a business may depend on how far you want to drive to and from the business each day. Family commitments may prohibit you from locating in a more desirable area that requires considerable driving time. Your personal happiness is an important factor in selecting a location.

Location of Vendors

The location of vendors and various third parties can be important in selecting the location of office space. Companies which have a strategic alliance with vendors or routinely access parts from vendors must consider the location of their vendors when selecting a location. Attorneys who routinely make appearances in civil court or criminal court often select a location close to the courthouse. Property tax consultants often select a location near the appraisal district office. Consider whether you need to be close to either vendors or other third parties when selecting your office space.

Additional Location Factors

Following are addition considerations that may be relevant for you when selecting the general location for office space:

  • Is it near highways (to reduce travel time)?
  • Is it near the airport?
  • Is there abundant parking?
  • Is parking free?
  • Is the area safe?
  • Will female employees feel comfortable walking to their cars and driving through the area after dark?
  • Is traffic light or heavy?

Evaluate Location Factors

Determine which location factors are most important for your business. If possible, assign a weighted average for each of the factor. When visiting possible locations, look at your checklist of factors you have identified to see how the specific location stacks up to your ideal location. You may not get everything you want, but the best location will be the location that addresses most of the location factors you have identified.

Recommended Books on Finding the Right Location for Your Small Business:



Isabel Isidro

Isabel Isidro is the co-founder of A mom of three boys, avid vintage postcard collector, frustrated scrapbooker, she also manages Women Home Business, Starting Up Tips and Learning from Big Boys. Connect with her in Google +.

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Finding the Right Location for Your Small Business
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Finding the Right Location for Your Small Business
Location can make or break your business. It all depends on what your business is and what you intend to do in that location. Learn some of the factors that you need to consider when choosing a location for your business.
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  1. Robbie Homewood says:

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