When starting or expanding a business, one of the most important decisions you’ll make is location. You can’t take this decision too lightly: Undoubtedly, a location can make or break a company’s success, whether it needs office space, a manufacturing and warehouse facility, or a retail storefront.
The cost of leasing or buying a space will affect your decision, but it shouldn’t be your top factor. Here are five key things to keep in mind when choosing the optimal location for your business:
1. Your Business Type
If you run a retail business, services business (such as an accounting firm), or restaurant, you will want to look for an area with a strong demand for your type of products and/or services. If you run a manufacturing operation, you may be less concerned about proximity to your products’ final customers, but more concerned about proximity to your buyers and access to an adequately sized local workforce with the right knowledge and skills to support your industry.
2. Your Target Demographic
Know who your most obvious customers are and look for a place with lots of those people nearby. Does your business cater more to women or men, single people or families, younger or older customers, urbanites or suburbanites? Once you understand that demographic, you can determine the ideal place for your business. If your target demographic is upper-middle-class women in their 30s and 40s, you can then identify neighborhoods with high percentages of them and scout prospective locations there.
3. Other Nearby Businesses
When surveying a particular location, make sure to consider other businesses in the area and do competitive research. Are there potential direct competitors that could make it hard for you to attract customers? (If so, you may want to look for a different location.) Or, are there complementary businesses that could attract more foot traffic to your business? If you have or plan to hire employees, they will likely care about the surroundings as well and might appreciate, for example, being able to walk to a sandwich shop on their lunch break.
4. Laws and Zoning Restrictions
Local governments enact laws and ordinances that can affect businesses’ success and fortunes in their jurisdiction — from setting the local minimum wage and other labor laws — to dictating what type of signage a business can use. It’s essential to research any local laws and ordinances, and the general feeling about them among other local businesses, before basing your business within a particular city, town, or county’s boundaries. Likewise, make sure to check with the city about any zoning restrictions in the specific locations you’re eyeing.
5. Taxes
Businesses may pay and collect a variety of taxes, from property taxes to sales taxes to income taxes. Consider evaluating the tax rates and know how they will affect your bottom line before choosing a location.
If you find choosing the perfect location for your business daunting, you may want to hire a real estate agent or business location consultant who can help you identify your top priorities and scout locations that have those things. Selecting a location for your business may not happen overnight, but it’s worth doing the research to ensure you find the ideal place.
While having a business location has many benefits, more and more business owners these days are choosing to base their business from their homes. Running a business from home might offer more flexibility, and allow for entrepreneurs to test out business ideas without much overhead. Home-based business owners will also spend less time commuting and should evaluate if these home costs are relevant to income taxes. Contact a tax advisor for professional tax advice. Plus, if you have an online-based or eCommerce business, you’ll have the opportunity to connect with customers all over the country, rather than just your local area.
About the Author
Kelly Spors is a freelance writer and editor based in Minneapolis. She previously worked as a staff reporter for The Wall Street Journal, covering small business and entrepreneurship.
Disclaimer: The contents of point 5 above (Taxes) are for informational purposes only. The information should not be relied upon as replacement for professional tax advice.
All content provided herein is for educational purposes only. It is provided “as is,” and neither the author nor Office Depot warrants the accuracy of the information provided, nor do they assume any responsibility for errors, omissions, or contrary interpretation of the subject matter herein.
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