Business Tips

Business Location Factors: 10 Mandatory Things To Consider

In this article, i will be sharing with you the 10 mandatory business location factors

…those unique power factors you need to know and give to strict considerations when choosing a business location.

But before we get into that…

I think you’ll agree with me when i say:

It’s REALLY hard to start and run a successful business for a long period of time.

Or is it?

According to statistics published in 2019,

20% of small businesses hit the rocks in their first year of operation, 30% drop dead in their second year… about half (50%) the start-ups crash after five years in business. And finally, 70% of small business owners fail in their 10th year in business.


Further research also proved one of the top causes of this failure can be traced to having a bad business location.

In essence, getting your small business location Right can dramatically increase your business chances of surviving long term.

So without any further ado, let’s dive into the business of day.

Business Location Factors For Small Business Owners You Need To Know.

factors to consider when choosing a business location

1. Proximity to target audience (potential clients)

business location factors: proximity to target audience

Needless to say, your target audience are the end users of your product or service.

These are the people whose needs and wants you intend to build your business around by satisfying them.


I want to believe you have already decided on the segment of people you want to target.

Now, the big question is…

Are you certain your target audience are in the area you’re looking at?…or at least very close.

It’s of no use going in search of a location without considering the people you want to satisfy with your product or service.

Aside that…

…you also want to look at the total number of people (target audience) before choosing a business location.

Therefore before siting your business at a particular place, make sure your target audience are of high population there or close.

This is to ensure you enjoy a reasonable amount of patronization which equals more sales and of course income.


They may not necessarily reside in the neighborhood, but it should be a place graced or patronized by them in mass.

For example, where do you think sportswear will sell best?

Near a church? A bank? Or a sport center (stadium)?

Of course it’s a stadium.


…because a stadium it’s a place usually PATRONISED or graced by sport lovers / fans.

Keyword: Patronized! (it’s very important you have that in mind)

Bottom line?

One of the major factors to consider before choosing a business location is to make ensure your target audience can be identified there in reasonable numbers.

2. Accessibility.

Business location factors accessibility

In relation to business, accessibility simply refer to the degree at which your business location is available to as many people as possible.

Personally, i don’t like stress and there are many others just like me.

Being at a place that’s difficult to navigate is never good for any business. Your clients shouldn’t have to go through hell to find you.

Under this chapter, you should also consider looking at

  • Lighting
  • Convenience
  • Parking space

If you are on a busy street:

Would it be easy for cars to get in and out of your parking lot?

Have you considered some of your customers who might be physically challenged?

Which sort of deliveries are you likely to receive, and will your suppliers be able to access the facility easily?

If you’re looking at the possibility of renting a space in an office building, consider the fact you’ll need access (keys) to the main doors.

Furthermore, if the access to the business location is restricted on weekends and you still fancy working, consider looking elsewhere for a good business location.

Bottom line?

Work on a location that’s always and easily within reached during working hours .

In essence, you want to site your business at a place with enough parking space for your employees, your suppliers and most importantly your target audience…

3. Security

factors to consider when choosing a business location- security

How secure or safe is the area?

Clients safety is paramount to the success of a business.

We are all consumers in one way or the other so of course our safety is paramount.

Here’s the deal:

If your place is known to have high theft rate, sexual harassment, abuse and the likes… no body will patronize you on a long term. Because those who was will stop.

Imagine a scenario whereby a client parked his car outside your store and it was stolen.

Or a scenario whereby clients are bullied off valuables by gang members always sniffing around that geographical area.

First impression last longer…

…and personally if I hear from 1 or 2 persons such activities occur at a particular area your business is sited, I won’t go there.

But unfortunately, if it happens that I experience it myself, then trust me you just lost 10% of your potential customers. Because I will tell all who cares to listen the place is a no go area and why they should warn their loved ones too.

Don’t give me that face, you’ll probably do the same.

Therefore, before choosing a location for your business , conduct proper research to know how safe the place is to operate.

4. Profile of customers

things to consider when choosing a business location

Having considered all the above points, the next step is to conduct research on the profile of people living or working in the area.

For example:

if you’re into boutique business , you should know that boutiques are known for premium prices.  In essence, your business will be best sited at a place with medium – high income earners.


if you run a cyber or internet cafe business , then a place with low `- medium income earners will be just fine.

Why? you make ask.

well, you don’t want rich people… who are not JUST financially capable of buying their own personal computer…

…but in most cases, are also educated and experienced enough to know how to use it.

Your ideal clients are those who are not so rich – so as to afford their own personal computers, internet connections etc…

…and who are not so poor – not to be able to afford your services.

hope you got the idea? Good.

Bottom line:

Extra seconds on your idea and market research will be will worth it. Because your discoveries based on your research will help you know if the people in that locality can afford your product or not.

5. Competitors.

factor to consider when choosing a business location

Needless to say, your competitors are those you are in a healthy rivalry with.

Mind you, Not all competitions are healthy.

I say this because i remember the story of a startup who are enjoying and recording high sales  but with zero market share.

In essence, target audience doesn’t know of product but they are making sales…

I’m guessing you may wondering how this is even possible…

WELL, one of their competitors were actually the buying all their goods from the market… after which they’ll burn them up.

Sometimes, they’ll wait until the product is expired and then release the goods to market.

All of this is to create customer dissatisfaction and tarnish the image of the new startup.

That’s insane rivalry.

But Generally:

Your competitors are those guys who have gone beyond coming up with a similar product… to targeting those set of people you are targeting.

In essence, these guys literally want what you want.

Now, don’t you think these set of people are worth checking out when choosing your business location?

if you’d ask me, i think they are…

…therefore I’ll advise you settle for a place with no more than two Major competitors .

And by major competitors, i mean those who are directly and specifically into what you intend to do or sell.

For example,

let’s say you intend start a soft drink franchise business for i.e COKE… and you noticed – perhaps 3 soft drink franchise businesses into coke at that same area. Then that Location is a NO – NO.

Or let’s say you’re looking for a shop to open a pizza business… and you find the what you think is the perfect place.

But there are pizza businesses at the area… doing things just the way you intend to do it . It’s advisable you LOOK ELSEWHERE.

But the kicker here is this:

To have a reasonable chance of success for your business, you want to make sure your major competition in that neighborhood or within are at least 3 km.

…and most importantly, they are not more than 3.

The fewer the better.

This is to ensure you have the opportunity to scale through and make money too. Before you start shouting village people that don’t exist.

However, you can break this rule in situations whereby it’s evident or obvious (based on your research) your competitors are weak…

…or you have a unique strategy of having them walk home FACE DOWN and with their tail between legs.

In essence, the patronage there are enjoying is due the fact that the consumers have got no better alternative.

Example include; lackluster customers service, bad product quality etc.

Here’s is where you come in and work on their weakness and have their clients patronize you instead.

6. Nearness to raw materials

Customer 1 1

Having quick access to materials needed to produce your own product is part of the key business location factors you need to put into consideration…

…especially when you dealing with fast selling products.

It automatically ensures goods are made on time and delivered to customers when needed.

I am not saying you should locate your business in the exact area you raw materials are.

The idea is that you ensure the needed raw materials are available and accessible by you when necessary.

The main point here is this:

Always be time conscious, it’s key while running a business. Remember a delay and or lack of raw materials will lead to delay in product availability to your end users.

In today’s world of instant gratification and high competition, you want to make sure your target audience get what they want at the right time and in the right place…

…because if you don’t deliver, someone else will.

7. Restrictions.

Customer 2

If there’s any business location factors you want to overlook, it shouldn’t be this. No matter where you are.

As you may already know, RESTRICTIONS can seen as laws and regulations guiding a particular geographical area…

…and these rules should never be underestimated in any way.

You should also know that these rules differs based on country, state and even city.

In essence, what is applicable to Americans may no not be the same for Australians or those in the United kingdom.


Even in the united states, criteria to follow in West Virginia may differ from that of Chicago as well as Kentucky.

Bottom line?

When choosing your business location, ensure you have all the papers needed to run a law abiding business.

The essence of this is to avoid future sanctions. Which is very likely if you’re not law abiding

8. The building’s infrastructure

Customer 3

Firstly, your business type will require some sought of basic infrastructure the location building should have. More like some basic amenities.

Needless to say, this is to ensure smooth running of operations.

For example, Many older buildings don’t have the necessary infrastructure to support the high-tech needs of contemporary operations.

But it’s possible you find them in newer constructions.

The kicker here is:

Make sure the building has adequate electrical, air conditioning, and telecommunications service to meet your present and future needs.

You can always get an expert (engineer) to help you run a check up.

9. Proximity to other businesses and services

Customer 4

There are some favours that comes with being around the right individuals.

At a point in your life, i believe you must have gotten something because of your family members or neighbour…

An advantage you wouldn’t have gotten on a norm.

…this is called favour connections . And same idea is applicable in business.

So in this chapter, consider the following business location factors:

Firstly , you want to know if there’s something you stand to gain from nearby businesses… i.e the customer traffic they generate. Moreover, those companies and their employees could become your customers too.

Secondly , look at how they’ll enrich the quality of your company as a workplace.


  • Does the vicinity have an adequate selection of restaurants so your employees have places to go for lunch?
  • Is there a nearby day-care center for employees with children?
  • Are other shops and services you and your employees might want conveniently located there?

These are things you should look at.

10. Demographics

Customer 5

The idea here is that you also consider the primary gender your product or service is directed towards…

Needless to say, although some product or services are patronized by both sexes, some are primarily built or mainly patronized by just one (male or female).

For example, let’s say you’re looking at the possibility of opening a wine bar…


Men drink, women drink. In essence, both sexes do.

However, we both know that men do more of the drinking. No offense!

That automatically tells you a place populated or graced more by men will be best for your business

Another example:

If you are into the business of sanitary pad. That means your business will be best sited at a place graced more by women.

Hope you got the idea? Good.

Bottom line:

one of those factors to consider when choosing a business location is the primary Category of people your business is targeting. This is essential in other to boost demand for your product .


frequently asked questions - entlifeonline

What is a business location?

Firstly, a business is viewed as an entity set up with the sole aim of making profit.

Having said that…

A business location can be viewed as the physical space, geographical area or region where a firm decide to carry out her operations.

In other words, anywhere you decide to site your operations; or the physical space your business exist is your business location.

What are business location factors?

Business location factors can be viewed as those variables to be considered that helps in coming to a reasonable conclusion on where is best to site/locate a particular type of business.

After due consideration of the factors , the analysis can also be used to help a struggling business determine if the location was the right choice in the first place. And then possible adjustments can be made.

What are business environmental factors?

Business environmental factors refers to the controllable and uncontrollable elements that affects the operations of a business at a given location

By controllable elements:

This simply refers to those element that are within the control or management of the business owner…

…which can be easily manipulated to ensure business growth.

Examples of these controllable elements include employees, product, price, promotion and place also known as distribution.

The uncontrollable element are the opposite of the former. They can’t be easily manipulated but can be anticipated.

In most cases,  organization tends to adjust their policies or program to fit uncontrollable elements in other to survive in the market.

Examples include: Government policies, competition, technology, culture, economy etc.

What factors influence the location of a business?

factors that influence the location of a business can be likened to those things that will motivate or propel a business owner to settling for a geographical area as the ideal business location for their business.

In other words, the question is:

What are those factors or things that will make an entrepreneur choose a particular PLACE to site their business?

To avoid repetition, the answer to that – i have already MENTIONED above.

However, below are extra or alternative business location factors you can also check out .

  • Foot traffic
  • Economic policy.
  • Distribution channel       and
  • Industrial zones/area


One thing you must know is this:

While all of the aforementioned points are key success factors you need to consider while choosing your business location… NOT ALL  FACTORS MUST BE IN PLACE.

Perfection is unattainable… so you want to consider the pros and cons of an area in relation to your business and then make a decision.

but remember: Patronage is only possible where and when there is access.

Over To You

What business location factors will you be taking more seriously WHEN choosing the ideal geographical area for your business? and Why?

Is it proximity to target audience, security or profile of consumers?

Drop a comment and let me know.

Your questions and contributions on this topic will be highly appreciated. All you have to do is drop a comment.

Thanks for stopping by entlifeonline

Agabi Godwin

Authored by Agabi Godwin. A marketing student with a passion for writing and business. Life motto: Plant trees under whose shade you do not plant to sit. Don't let criticism get to your heart ♥ and don't let compliments get to your head.

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