Starting a Business 3 - Location

Question 1

What factors can influence the importance of location?

Answer 1

1. The type of business - shop location is far more important than a website design company
2. Availability of locations -often the best locations will have gone so new businesses will have to make do with second best
3. Competitors - often a business will want to avoid being too close to a competitor (petrol station) but sometimes this can be an advantage where the competition is an established business (eg restaurant or hotel)
4. Availability of raw material - important for some businesses
5. Availability and cost of labour - some businesses may want t set up in areas of high unemployment (for low skilled work) but in other cases it may be better to set up in major cities to get higher skilled workers
6. Transport links - export businesses my want to be near airport or port - if cannot afford London rent business may want to be in place accessible to public transport to London
7. Technology - good internet or mobile coverage
8. Costs - limited funds limits choice of location

Question 2

Why is location so important?

Answer 2

Location is important because it can effect:

1. COST of premises can impact upon profit and this will vary significantly depending upon location
2. Sales - sales may be affected by location - hotel in wrong location will struggle to get visitors
3. Image - some products will benefit from where they are located - perfumes produced in Paris or London will do better than perfumes produced in Northampton.