How to choose a business location

Many businesses start off in small spaces: home offices, co-working spaces, living rooms. Steve Jobs famously started Apple in his garage. The day will come when you will leave the infancy stage and enter the growth stage of business – and you will need to find a newer, bigger business location. 

What is the best location for a business? It depends on your business type, size, customer base and more. In fact, you may not need a business location at all. Ultimately, the most important consideration when choosing a location for a business is maximizing your profitability.

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Why is business location important?

Your business location is the face that you present to your customers and clients. It’s a part of your business identity and reflects your company culture. If your business is a retail store or restaurant, business location can directly affect your ability to bring in sales and revenue. Even if you don’t rely on foot traffic, it can affect the talent you attract to your company and the impression you make on your clients.

Your business location also affects your costs. State and local taxes vary widely, and some cities offer incentives for you to locate your business there. Zoning laws and real estate prices also affect the overall costs of running your business. Don’t take choosing a location for a business lightly – it can directly affect your success.

Do you need a business location?

Choosing a location for a business

Before you even think about the best location for a business, consider this: Do you even need one? The business world is trending toward remote work and owners are discovering that productivity is just as high when employees work from home. Offering at least part-time remote work can help you attract and retain the best employees.

If you rely on foot traffic, then you definitely need a business location. But if your business provides a service, such as technology or professional services, you may not need one. Even if your business creates a physical product, you can have a business location only for operations, not sales. Keep recent trends in mind when considering how to find a good location for your business.

Choosing a location for a business

The best location for a business depends on many different factors, from your industry to your growth plans. Here’s what to consider.

1. Zoning laws

Every city has zoning laws that will play a big part in your business location. Do you need commercial, industrial or agricultural zoning? Mixed-use zoning, which allows for both residential and commercial properties, can be the best location for a business that relies on foot traffic. Don’t forget to check the zoning of neighboring properties as well, or you could end up with an undesirable business next door.

2. Taxes and incentives

Sales tax and other business taxes vary by state, county, city and even within cities. You’ll also want to consider income taxes. Always do your research on your desired business location as well as the surrounding areas. It’s possible to save by moving just a few miles away. On the other hand, some cities and states provide incentives for businesses to move there, such as tax breaks or compensation. 

3. Your customers and employees

You want to create both raving fan customers and equally enthusiastic employees, and your business location has a big impact on that. Will your customers be able to find your business? Is it convenient for them to enter the building and find your office? Some customers will need special considerations, such as closer parking. Dedicated parking is a big perk for employees and accessibility, but it is a lower priority for customers in walkable areas. And both customers and employees need to feel safe in the area.

4. Business size

If you own a very large business, that’s one of the biggest factors in choosing your location. You may not be able to operate in the middle of a crowded city, but you could choose a lower-density area that is an easy commute. No matter your business size, calculate how much money you’ll need to make per square foot in order to be profitable – can you afford it? Also think about how quickly your business is growing. Do you need to plan ahead for future growth?

Choosing a location for your business

Consider how your business location

5. Operational needs

Your operational needs will affect your business location as well as the type of building you can use. Shipping and delivery businesses may need warehouse space, loading docks or factories. Restaurants will need to receive deliveries easily, while commercial businesses may need meeting space, reception areas or waiting rooms. Industrial businesses often have special wiring or power requirements. Make a list of the attributes you need to run your business successfully.

6. Competition

A retail or restaurant operation will want a business location without a lot of similar businesses nearby. However they can benefit from other businesses that bring in customers without creating direct competition – like a lunch restaurant near an office park. For businesses that want to attract top talent, nearby competition can be an asset and help to create a culture of innovation. There’s a reason Silicon Valley became a hub for the tech sector.

7. Identity and culture

Want to hire superstars? Consider how your business location reflects your identity and culture. Do you want a location that will add prestige, like a downtown address or a top-floor office in a high rise? Or is your business identity more casual and informal? Once you’ve chosen your area, ensure the building and office space reflects your company values – innovative, creative, caring or trustworthy – so you can attract the right customers and employees.

8. Infrastructure and utilities

Remember: A building that looks perfect doesn’t mean it’s the best location for a business. Go beyond a cosmetic assessment and determine if it has the infrastructure you need, such as capacity for high-speed internet, phone service, heating/air conditioning and electrical. Then determine how much those utilities cost – you can request a previous bill from the utility company for the site you have in mind. Also look at the costs of cleaning services, parking, insurance and any other services you need.

Choosing a location for your business is a big step, so take the time to do it right and consider all your options before you sign on the dotted line. You’ll be glad you did.

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