9: Locating the business

Question 1

Factors influencing location decisions:

Answer 1

• Technology. The most significant is the impact of the internet on the ability for entrepreneurs being able to work from home. (Teleworking)
• Cost.
  + Fixed costs, which will differ with location. E.g. cost of purchasing or renting the building. - A location that is cheap to buy may save money in the short term, but will the location maximise revenue? Costs associated with transforming the location into suitable premises. If the business needs staff who will be paid a fixed salary, then that fixed cost will need to be taken into account.
  + Variable costs, which may differ with location. Transport costs may differ because of distances travelled, and the quality of the transport links. If labour is needed as a variable cost, this may also differ between locations. Some skilled labour costs can vary significantly in different parts of the country.
• Infrastructure. Transport links, in terms of distance from the raw materials or the customer.
• The market. For start-ups, being close to the customer is essential. The number of competitors in a given market may differ with changing locations.
• Qualitative factos. Quality of life in a location. Quantity of local schools and hospitals, the weather, the local sports facilities or the nightlife all might play a part in location.
  The quantity of labour, and the ease in with which workers can travel to work could be relevant.