Business Location Analysis – Factors to Consider when Choosing a Business Location

Business Location Analysis

Business Location (Analysis) one of the major factors to consider when you are starting your first business. Sadly, It is one factor that most entrepreneurs start considering towards the end of their planning. Despite barely being a part of your first business plan, it is one of the most tedious tasks to complete, and very important.

Business Location Analysis

contrary to common expectations, a few entrepreneurs can attest to the fact that their location choice consists 80% of their business success. It indicates that a location can be as good as a casino with a jackpot; if you have the right perception, you can spin and win real money.

Factors to Consider When Choosing a Business Location

Here are ten points to make location finding easy for your first business.

First Business Operations – Business Location Analysis

Although the business world is taking a digital turn, having a physical location is of great importance. Considering the style of operations helps you find the needs of your first business from a location point of view.

It is important because different types of locations are differently priced. For example, a roadside space on the ground floor in a prime location will cost way more than an office space on the fifth floor. You may want to calculate the transport cost if your location is far away from the market.

Writing out the various needs of your business can play a very vital role in choosing your business location. When choosing between metropolises and small towns, make a checklist to see which option will ease operations for your first business.

Foot Traffic Requirement for your first Business

Foot traffic is not required for every single business, for example, if your first business solutions are digital services. But if you are planning to have a retail store, then the scenario changes completely. In such a case, you will have to pay attention to how many new clients and customers you can get from passing pedestrians.

Irrespective of your business kind, being present in a metropolis is also good for an image if you are planning to build a brand. However, your business can also succeed in a small town.

User Demographics for your First Business 

User demographics are one of the most important factors to consider when starting your first business. Their age, likes, dislikes, and location are crucial because not every place will get you your first business deal.

You need to ensure that you are surrounded by people who represent your target audience. You cannot choose a location just because it’s cheap; the community around you should be capable of affording your product; otherwise, irrespective of your idea, your first business will fail.

When choosing between a metropolis and a small town, see which can benefit you and have more people for your demographics.

First Business Loans

Loans can be an important factor for consideration because even if you have the best first business to start, getting a loan could be difficult. While the location of the business plays no role in loan approval, your base could impact the loan differently.

Metropolises are known for being the hub of start-ups and small businesses. Hence, it is common for banks to get a lot of applications, increasing competition. It leads to stricter scrutiny and conditions. However, since the competition is low in small towns, it is far easier to apply and get a loan for your first business. You may even see financial institutions helping you with the process.


Competition can sometimes be good and sometimes bad, depending on the first business you are planning. Sometimes it could mean that you can profit from the overflowing clients of your competition, and sometimes no competition could result in no business at all.

So, studying your competitors with the benefits and drawbacks of operating in the same market should be your first business meeting agenda. And since competition and opportunities go hand in hand, you should include the comparison of small-towns vs. metropolises in terms of competition in the discussion.

Proximity to other Business

The proximity to competitors and proximity to the businesses that could benefit you is another thing to consider. For example, if you plan a cheap coffee and food joint, you could benefit by attracting office workers by offering cheap meals.

Alternatively, an area busy with retail stores could bring business to an advertising agency. So, since a busy place could be beneficial for a profit-first business model, list out which businesses could serve as opportunities to prioritize them in your location search.

Image and History of the Location

Several factors like water logging, restrictions, curse, or even an old story could be a reason behind your unexpected failure. In addition, the perception of the local community on your product or services, and the space you are willing to buy or rent should be an important factor of consideration.

For example, you unknowingly purchase a space for day-care next to a space that will soon be an alcohol store. Many times, the sentiments of the local people may not match yours or the image of your first business. But irrespectively, you will have to consider the emotions because customers are everything, and going against the local community will only land you in trouble.

Cost Estimation

Similar to breaking up your first business trip budget, write down the possible costs of leasing the space. Ask for the things that the lease would cover, for example, building maintenance, utility bills, etc. Compare security deposits and energy units when comparing a small town with a metropolis.

A cost breakup helps you estimate monthly maintenance besides the one-time expenses. And since you can compare the expenses with your first business budget, the analysis can become a very important decision-maker for your first business.

Business Grants

Several companies and government aid programs provide grants for entrepreneurs. Since most of these events are organized in metropolises, being situated nearby could help you with participation and networking.

Comparatively, if your first business is based in a small town, traveling every time for an event may not be possible due to budget restrictions and other circumstances.

Infrastructure Requirements – Business Location Analysis

Infrastructure could be a requirement for your first business. For example, if you are planning to use several appliances, strong wiring would be a need. Alternatively, if you think your office space may not need modern facilities, then you could save money by choosing an older building.

When you make a comparison between a small town and a metropolis for your first business, considering the availability of certain kinds of infrastructure can be crucial.

To get a very good location for your first business, you need to consider the following factors: goals, demand for your services, competition, operational requirements, and customer base. While there are other points to consider before location hunting, you should take the most time to make a checklist.

The factors listed above will help you make a checklist, but your business idea, type, and goal play major roles in deciding the outcomes.


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