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How big of an Influence Does Location Have on Business’ Success?

How big of an Influence Does Location Have on Your Business’ Success

You’ve done it. You have established your business and are planning to expand. But while you may offer your customers the best services in the world, it won’t help the business’ success if you are in a location lacking resources.

Location and success compliment each other

Deciding the location has always been of primary importance to any business. Advanced tools and software such as the retail site selection software, have simplified things for business owners. 

When deciding the location of your business, it is much more than just a pin on a map. Several factors must be considered before you set up a business. Location plays a vital role in attracting and retaining the best employees, especially those who look for places where they can optimize their work—life balance. This is just one of the many aspects where location impacts a business’s success. 

What is a business location?


A business location is where a company provides services or sells its products. For a coffee shop, it is their cafe where people come that qualifies as their business location. The location of a business that is entirely online would be the office or place from where they operate. The location is one of the most important variables for determining the success of a business. 

Does location matter for business?

If a boutique with the latest trends is located in a quiet street or a highly—functional grocery store is located on the second floor of a building unapproachable for a walk—in crowd, in both cases, we know that the location of choice is poor. Therefore, businesses need to establish themselves in places where they can generate maximum customer traffic. 

The geographical location is one of the first things to consider when setting—up a shop, moving premises, or opening a branch at a new location. All business owners should think twice about the site before making their decision. Furthermore, extensive market research should determine the best location to start a new venture if you are entirely new to the industry.

What are those factors where location impacts a business?

  1. Talent attraction and retention

Location surely matters when it comes to ensuring that you have the best employees working with you. It is wise to have people from the local area who are skilled enough to know how to run your business. Even when people apply for jobs, the location is the first thing they observe. So, location indirectly impacts a business’s success through its employees. 

  1. Cost and expenditure

Cost is undoubtedly a driving factor in choosing the location of a business. While cities may be suitable for talent acquisition and accessibility, they also come with a hefty price tag. In addition, the real estate rates are high in the big cities and can make you bankrupt if you are looking to lease an entire building. 

Before finalizing the location, you can calculate the overall cost of locating your business in a particular place. You could also rent a shared working space or work virtually until your business is financially strong enough to have an offline presence. Some companies can save costs by not having a physical location at all. 

  1. Proximity to other local businesses

When choosing the location, you need to look out for the other local businesses in the area, specifically for the following reasons:

  • Firstly, determine if you can benefit from other local businesses and their foot traffic. 
  • Second, consider the impact of the other businesses on the quality and culture of your company. 
  • Finally, ascertain how capable they are of taking away your customers and employees. 
  1. Accessibility of location

The accessibility of a business by its employees and customers can make or break a business. For example, if you are located somewhere where parking isn’t available, it will be a problem for customers and employees. Additionally, if the location doesn’t have public transport, then it is very likely that a handful of customers will visit the store during the week. 

  1. Demographics

The demographic can determine whether the location you have selected is suitable or not. You need to understand the behaviors and the willingness of the people nearby to visit your store. The location should be convenient enough for the customers and better than the competitors. 

  1. Competition

The competition of businesses with each other can have both positive and negative outcomes. Being near a competitor will not be helpful for small businesses as they may sell products of the same quality at a lower price. On the other hand, if you know that your competitors’ location is tough to crack, your business will surely do better than them.

  1. Location perception

The reputation of a location is a crucial business location factor. Get locals around the area to share what they think of the site. This perception of a location works in small cities and towns where people are exposed to preconceived notions about a particular place. 

  1. Tax and regulations

Tax and regulation protocols must be strictly followed depending on the location of your business, especially those in different countries. The tax rate will indeed differ depending upon the location. Companies in the city will definitely have more taxes to pay than those living on the outskirts. 

  1. Foot traffic

For businesses where customers can view and buy products, having proper physical premises becomes all the more important. Therefore, you need to analyze the foot traffic to your shop at a location before establishing a base there. For example, shops on the street corner will not receive as much foot traffic as the shop on a busy street with plenty of passers—by.

What aspects of a business’s success are related to its location?

  1. Size

Businesses usually study the size of the market and the competition level in the area before establishing themself there. A market that is small or highly competitive will impede sales and profits and not be successful enough. 

  1. Significance

The business must be located in an appealing area where different forms of transport can be accessed. A business will not be successful if it’s located in another area where the crowd is less. The location will be considered fit as long as the business owner can make profits. 

  1. Benefits

A business located in a desirable area where exposure and foot traffic is higher compared to other neighborhoods will surely be successful. Also, placing a company’s headquarters at a prime location indicates that the company welcomes more potential customers. 

  1. Effects

Businesses that provide add—on services essential to customers will see more crowd at their place. People prefer to meet at locations that offer basic amenities, if not more. 

  1. Extra considerations

Businesses opt for those locations where they can enjoy additional tax benefits. The extra saving on the tax money can create a better cash flow for the company. 

Location planning for the future

Location planning enables you to future—proof your company’s operations and existence. Wherever your business is placed, you should be able to get maximum return on investments and fulfill business objectives. If you are in the initial stages of setting up, take time to decide but don’t take the decision lightly. 

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