Published April 4, 2011

How To Choose the Right Location for Your Small Business

New small business owners have tremendous considerations when starting their new venture, and one of the biggest is where to find the right location. While the business location may not seem like a looming decision, especially for startups working from home, it should still be a priority to plan for the (hopeful) future growth.

When considering a location, there are several factors you want to keep in mind. Here are some of the elements we feel are most important:

The Type of Business

Your company's operations will quickly narrow the list of commercial locations and spaces that are applicable. Regardless of your industry, however, it is critical to keep in mind your current needs, as well as your future growth. Ideally, any location that you initially choose should have options that allow you to scale easily as you grow.

Are you starting a consulting firm that consists of just you and perhaps another associate? Working from home out of a spare bedroom may be sufficient for day-to-day operations, while you take advantage of the services of a virtual office for a prestigious mailing address and conference room privileges when the need arises.

If you sell products strictly online, you want to choose a commercial warehouse that can be easily scalable as you grow and need to house more inventory.

Are you selling retail products via a brick-and-mortar location? Then clearly the real estate adage of "location, location, location" is critical for directing customers to your shop.

In the early startup stages, one must find the right balance between budget constraints and the ideal location. By catering to your current needs, while simultaneously keeping open easy options for future growth, you can find the right location that works today and tomorrow.

The Location

What about a location makes it right for your small business? Once you have established a budget and possible suitable locations, you must also consider these important factors:

Zoning - Legal zoning is important because it sets the permissions for what types of business may operate in a neighborhood. Be sure that the area is zoned for commercial use. Beyond that, there may be restrictions such as only retail or office business. If you want to operate a light manufacturing business in a retail-only zone, you may need to look elsewhere.

Competition - What other businesses are in the location? Scope out whether competition of similar businesses may be too high. For instance, in "hip" parts of town, you may have trouble succeeding with a new restaurant where dozens already exist.

Neighborhood - Check the neighborhood. Is it well kept? If you are on the "other side of the tracks" in a particular town, your customers may avoid that area. Also check with the US Census. You can get valuable demographic data about specific neighborhoods, including population, education status, and even average annual income.

Public Services - Also be sure that your location gets the right and adequate public services, such as sewer, water, trash collection, drainage, and police and fire protection.

Transportation and Logistics

This is an important consideration for many reasons. First, will your customers be able to find you using public transportation and main roads? Will you be in a high foot traffic area?

Also, will your employees have easy commuting access either by car or public transportation?

Distribution logistics is another factor. If you need products transported in, or if you manufacture products to be transported elsewhere, will your location accommodate supply transportation?

Considerations of a Particular Facility

After all the above considerations, you may have found a good location. But is the facility itself right? Will you need to do considerable improvements or perform heavy maintenance on the building? What about storage space? Does the facility have adequate utilities? Is there room for expansion?

Taxes

Taxes may be least of your concerns - until you file your tax forms. Look up your tax laws in your state, county and city. Particularly if you live on the border between two states, you may want to compare and consider establishing your business in the other state to save money on your taxes.

Your business location can make or break your business. Be sure you give particular attention to the above considerations before you open your doors for business.