Starting a business is no small feat. It requires significant planning, resources, and time. One of the most important aspects of starting a business is selecting an appropriate business location. The decision of where to locate your business can have a significant impact on your success. Therefore, it is essential to carefully consider the various factors that influence the selection of a business location. This article will discuss the key considerations when choosing a business location, such as demographic factors, style of operation, nearness to market and pedestrian traffic, accessibility and basic infrastructure, competition, proximity to other businesses and services, history of the location, and utilities and other costs.

Demographic factors

Demographic factors are those factors relating to human population change. Population change may be upward or downwards. Thus, demographic factors cover population size, density, age structure, birth rate, mortality rate, and gender ratio. Demographic factors provide information about your potential customers regarding size, age, and sex ratios. 

Knowing the size of the population surrounding your potential business is key to knowing the quantity, type, and size of the products required. Furthermore, you will know the size of the population and the composition in terms of men and women and old age.

Style of operation (psychographics)

This factor is mostly about considering your market niche. It is basically about spending behavior and capacity. If you want to sell high-fashioned handbags and clothes, you need to locate your shop in an area close to the airport, parliamentary buildings, high streets, avenues, and the like. If you locate such a business close to a primary school building, you have failed yourself well in advance. On the other hand, if you plan to sell primary school shoes, bags, and uniforms and place the business near the airports, you have also failed yourself.

Nearness to market and pedestrian traffic

There is a common saying that “Customer is a King or a Queen; thus, you should not plan to cause disturbances to the customers. Locating your business where people can easily walk through is an advantage. Buyers of your products need not get into trouble reaching your business location.

Accessibility and Basic Infrastructure

Basic infrastructure includes parking spaces, restaurants, recreational facilities, health services, fitness centers, etc. The importance of the existing infrastructure depends on the type of business you want to do. Availability of Packing space caters to comfortable loading and offloading of the goods. You may locate a strategic location regarding the number of customers who can access your business. Still, suppose there is nowhere customers can park their vehicles. If loading and offloading become a    big test, then all the other factors become meaningless. Consequently, your customers will find it difficult to drive for the product but required to park far away from the shop.


When choosing a business location, you should remember that you are not alone in doing that business. Prime business location is a source of competitive advantages. Thus, it would be best to consider your competitors when considering customers, market, and accessibility. Some companies require a location where you have your competitors around, while others can not afford such a situation. An excellent example of business that need competitors around you is a small business on construction materials. Customers of construction materials usually require to be saved on a one-stop center approach.  Customers think that all the materials come from the store but other shops.

Proximity to other Businesses & Services

Another essential consideration while considering an appropriate location is Proximity to your business and services. Proximity to other businesses may coincidentally help to boost your business. For example, a 24-hour food vending business may need the existence of nightclubs and pubs to boost your business. In such an environment, you may wish to collaborate with such service providers and allow yourself to get boosted.

History of the Location

Past images and history of the area might haunt you and your business. Thus, the previous tenant can be of help in getting hands-on information. Historical data might work against your business; hence you must make prior strategies to counter the possibility of harm. For example, in starting a lady’s saloon, one should know what happened to the predecessor. If the predecessor failed, it is essential to research the reasons for that failure.  

Utilities and Other Costs

The motive for starting any business is to make a profit. Hence, it is of utmost importance to consider the company’s utilities and other costs. Remember that Profit equals Total Revenue minus Total costs. If Utilities and fixed costs are on the high side, it will impact the level of Profit you will generate. To run profitable businesses, it is essential that owners know and align location issues with doing business. For many companies, utilities are fixed costs that do not go along with the level of sales. Thus if not known from the beginning, it will negatively impact your profitability.


Choosing a business location is an important step that needs to be taken seriously. Owners should consider demographic factors, style of operation, nearness to market, accessibility and basic infrastructure, competition, proximity to other businesses and services, and history of the location, and utilities and other costs. All of these factors are vital for the success of a business. If done correctly, a business can be successful in its chosen location and generate a good profit.

CPA. Dr. Seraphia Mgembe

Powered by TranslatePress