For Your Business
So you’ve got your business. That’s great! Coming up with an idea and getting started is often the hardest part of entrepreneurship. Whether you’re just planting your roots or moving from another location, how to determine the right location for your business is often a challenging task. It’s a big decision that affects many factors, and in many cases you have to choose what is most important to you and compromise on things you want but don’t need.
These are the top points to consider when picking a location for your business:
TAXES
If you’re able to choose any state you want, that’s awesome. You can pick a location that has low property and business taxes, and depending on your industry, sales and transportation taxes. While keeping the low taxes of certain states in mind, it’s important to factor in whether or not you’ll need a highly populated area to stay afloat. States like California, New York and New Jersey are known for their high taxes but have excellent environments to start companies.
Hiring Pool
The next step is to evaluate the hiring pool in the area. A rural area may have better skills for manufacturing and manual labor, while a city setting would have a better selection of tech, marketing and communications. Your location will set the work environment regardless of who you hire. If you don’t have parking, a variety of lunch options or an outdoor seating area, some potential hires may be discouraged.
Nearby Partnerships
No matter what industry you’re in, you’re going to need other businesses to do business. Some companies operate digitally and even have all remote employees, but the majority of businesses will need to buy and sell good from other vendors and will want to be in an area that has those connections. Being isolated may be cheaper but will cost more doing business in the long run. Retailers especially want to be near highly trafficked spots, however that being said…
Nearby Competitors
While you want partnerships nearby, you don’t want an area oversaturated with competitors. It is extremely important to research an area and see if you would be filling a market gap, creating your own market, or competing with multiple businesses offering the same product or service. This is especially true for a small business competing with a major chain or long-standing name. It wouldn’t be that your business is bad, just that the area wasn’t a fit.
Size and growth options
As a business owner, you know to always look ahead at the future, and that’s no different when wondering how to choose the right location for your business. If you see expansion on the horizon, are their ordinances or zoning restrictions prohibiting you from growing? Is the area robust with opportunities for multiple locations? Don’t get overleveraged, but don’t box yourself in either.
Buy or Lease Options
Do you already know if you’d want to buy or lease? Are you open to either? If you lease do you see yourself someday buying? It may seem small now, but when it’s time to seek growth funding and bank loans, having property will make it easier to get that working capital. Additionally if you decide to expand or make property changes, you could end up butting heads with the landlord. Contrarily, if all there are are options to buy, you might strain cash flow too soon.
Each factor is unique to each business and the size, industry and cash flow of it. You’re building your business from the ground up, quite literally, and get to decide every big decision and small detail on the way. Research research research when it comes to picking out a location for your business, and you’ll put yourself ahead of the curve from the onset!
Category: Management Advice
