Business Location and Business Success

Despite all the emphasis on “location, location, location,” not all businesses are affected in the same way by their location. And in these days of online yellow pages, switchboard.com’s and business directories, even businesses located in non-business areas can attract customers. Location, however, can be a critical factor for some businesses and should be consciously considered during the feasibility analysis stage.

How Do Location Selection Affect Business Success?

A number of major and minor location-related factors can affect the success potential of specific businesses.

  • Accessibility: Retail establishments, e.g. a retail store or restaurant, need to be conveniently accessible to customers, meaning not only geographic proximity but also such things as ease of entry and exit. Ease of commuting to the location is another important consideration if your business employs many people.
  • Local Business Conditions: Some states and countries impose high taxes while others offer special incentives for businesses. Businesses might have to face stiff competition in certain locations while others might be presently underserved. Regulatory issues such as zoning regulations and pollution control laws might affect your freedom to locate the business. It is important to review the impact of such factors.
  • Availability of Inputs: Businesses need raw materials and labor, and might also require special transportation facilities. Consider both the availability and costs of these (and any other inputs) at the proposed location.
  • Availability and Costs of Premises: Some locations might be ideal on the grounds of accessibility, business conditions and availability of inputs; however, no suitable premises might be available or affordable for your proposed business. On the other hand, selecting a bad location simply because of low costs can result in low business volumes and consequent failure.
  • Your own Preferences: Many entrepreneurs would like to operate from their homes, or at least in their own communities. And the emergence of the Web as a business location has also made this an increasingly feasible option. During the feasibility study, you can examine the possibility of running a successful business from your preferred location; you might even come up with an unusual, yet practicable, solution.
  • Lifecycle Stage: Locations have growth, maturity and decline stages. Many formerly prosperous industrial suburbs have become tourist spots now, with museums exhibiting technologies of a bygone era. Review the lifecycle stage of the location as it affects your business; probably, you can set up in a declining area catering to tourists!
  • Safety & Reputation: How secure will the business and its employees be at the location? Will an address in that location create a negative image for your business?

Location Issue in the Internet Context

The Web is considered a location of its own. Several issues related to a physical location disappear if a business achieves its visibility through the Web and sells on-line.

  • Visibility: By putting its product catalog on a website, a business can allow customers to see what is on sale, and good product photographs can even replace a physical examination. By promoting its website, the on-line business can achieve visibility among prospective customers over a much wider area compared to a physical location. On-line yellow pages and business listings in business directories can also help prospective customers locate businesses in their area.
  • Doing Business: Many products can be sold on-line, with the order being placed and paid for through a secure page on the merchant’s website. Compact products such as books, many electronic products and trinkets can be couriered to the customer for next day delivery. Customers might also place on-line orders locally for groceries and food items like pizza that are then delivered at the customer’s home within acceptable time limits.

You can use virtual addresses, virtual assistants, virtual phones and executive suites to create a great impression without having to spend on expensive physical equivalents of these business necessities. Some of these are even available on demand, as in the case of getting an executive suite to meet customers when you travel to another town.

When Does Location Become Really Critical?

There are certain situations that do make right location a critical success factor. Examples include:

  • Service providers who need to interact with customers face-to-face have to locate their businesses at places where their customers are.
  • Industries that use bulky raw materials and make comparatively light products can save on transportation costs by locating near sources of raw material supply.
  • Cost considerations might dictate locating businesses near markets or in low-cost countries, and also in economic development zones that offer special incentives.


The question of where to locate a business is usually an important one to answer during a feasibility study. For certain types of businesses, location is not a critical success factor. For others, selecting the right location can provide major cost or marketing advantages. The location question thus has two dimensions: Is location important for the business? If so, where should the business be located?