Q: How do I decide where to base my business?
May 13 2010
Answered by: Marc Barber Ask a question
Start by asking yourself what the ideal location for the type of business you have in mind is. Then think about the constraints placed on location, such as home and family. You should know the ideal location so you can estimate the effects of concessions you are making to these outside non-business constraints. There may be further constraints, such as the lack of finance, which may cause you to compromise.
Communications
How dependent is the success of our business on communications: road, rail, air, bus? This could be important if:
- You deliver your product
- Your business is service-based to particular areas of the population
- You sell your product direct, using salespeople
- Your business is dependent on import and export
In these and other categories of business, an ideal location would allow easy access to the relevant parts of the country. For example, if import/export is your trade, a location within reach of a major airport could be an advantage. Or, if you sell direct to the whole country, you need access to motorways.
Labour
If your business is dependent on the use of certain skills, you may find that one part of the country is more abundantly endowed with potential employees who have already acquired those skills than other parts. On the other hand, skills may be irrelevant; what you may need is a ready pool of unskilled labour, in which case some areas have higher unemployment than others.
Centres of population
Your business may need to be located near particular centres of the population. If you are trying to sell your product in large volume, being in a large centre of population may be an advantage. Or you may want to choose an area with a specific structure of population if your product or service is sold only to particular sectors. For example, if you plan to open a bookshop, you need a town or population area of a certain size. You also need a population well endowed with the particular characteristics of those who buy books. Your market research will help you identify what those characteristics are.
Suppliers
Your business may depend on supplies of a particular raw material or some other product. Costs would be lessened if your business was located near the source of supply. This could be either the main distributor of he item or where the item is grown or produced.
Government and local authority assistance
Your business may be location-independent. Thus, you can look at some of the deals that the government ad local authorities produce to stimulate the founding of new businesses in specific regions.
The government has designated some poorer regions of the UK as assisted areas (see the Business Link website for more information). A Business Premises Renovation Allowance was introduced from 11 April 2007. Under this scheme, you can get tax relief in the year you incur the expenditure for the full cost of renovating or converting business premises in an assisted area to bring them back into commercial use where they have been vacant for a year or more.
The government has also created 2,000 enterprise areas. If you locate your business in one of these, you may be eligible for grants or loans from, for example, a community development finance institution.
The final choice of location
It would be unrealistic to assume that the domestic constraints are not important in locating a business. The extra benefits gained from moving to another area may simply not outweigh the domestic upheaval and cost of moving house when you want to start your business.
If you decide not to move your home, it makes sense for your offices to be close to where you live, as long as other business considerations do not apply. If it would not adversely affect your business to be near your home, it can be an advantage as it cuts down travelling time from home to office, giving you more time to devote to your business.
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