Where Should I Establish Myself?

Starting A Business 

Volume VII

Where Should I Establish Myself?

A business should be strategically located where it would be easier for it to conduct business. That being said, there are a few things to seriously consider to determine that location.  A business in general, needs to be able to produce a good or a service  and deliver such to its customer base, in the speediest and most cost efficient way, therefore the choice of the business location is critical. There are several factors that influence the choice of a location over another, and those are not the same for all businesses. For the sake of this argument, I will speak of the most common factors that will influence an executive's choice for a new business location. Generally, the nature of the business plays an important role, so does the market segment being targeted. The local skilled labor pool must also be considered as well as the suppliers, professionals and subcontractors presence in that geographical area. Finally, for logistical reasons, the area's infrastructure in terms of highway, rail, airport, sea/river access for transportation must not be forgotten.

The Nature of the Business: 

• Service sector:  For professionals, consultants and all businesses that offer a service to consumers or businesses, being able to reach that consumer is the most important aspect, since a service can not be shipped. In this case, the main consideration is to be as centrally located as possible, within the very market you are targeting. This way,  you and your staff can go to your customer to perform that service, or your customer can conveniently come to you to receive that service.  
• Wholesale and Retail sector: Retailers, whether we are speaking of big box stores, discount outlets or neighborhood family owned stores, must be close to their customers workplace or residential area, depending of which segment of the population they target and if their goods are affected by the time of the day (i.e: Department stores get more affluence in the evening after 5 PM when people finish their work day and go shopping before going home. Other business cater to business people and workmen and therefore will close around 5 or 6 pm as the work day ends for everyone as well) So Department stores will be located close to residential areas, in outskirts of Large cities, to remain close to their customers as these go home. Space is more available in the suburbs as well, and property cost are usually lower than in city centers.
• Manufacturing sector: Sales territories of Manufacturers are customarily very large, often regional, national or even international. Therefore being close to your customer base geographically is not as important as other factors because if you have to cover the entire globe, you can do it from basically anywhere since it will involve a complex system of logistics. However, local legislation may become an important factor in most cases of large Industrial groups, particularly when it comes to regulation and especially with regards to taxation.

Targeted Market Segment:
Not every business caters to everyone. If you are an agricultural machine or tool manufacturer, you are most likely to make a better choice in a rural area close to the large agricultural states of the Midwest rather than in the middle of Manhattan or Malibu. On the other hand if your business is a high end Designer Salon & Spa, you'd be better located in a larger metropolitan area where you are more likely to get a steady amount of business to fuel you growth.
If you cater mostly to the Elderly, you might choose to open your business in Florida, Southern Texas, New Mexico or Southern California where a rather large portion of the Retired Population elect to reside once they retire. However if your product or service is more geared toward young adults and youth in general, you may wish to set up shop in a State that has a lot of Universities, like Florida, California or New York.

 Skilled Labor Pool:
Manufacturers and Craftsmen must consider the local pool of skilled labor, and do so very carefully. They should ensure after all, that there are people living in the area they are about to choose, with the skills that are required to open such business. You should not want to build a plant or a workshop, only to realize, after the fact, that the skills required to work in your business are sorely lacking from the local population's talent. In that scenario, you would either have to relocate your company or dislocate your employees from wherever it is that you are bringing them.

Suppliers, subcontractors and professional availability:
For the same reason, it is always an advantage to have all the services and goods, your business requires, as close to you as possible. It cuts down on logistical costs and facilitates communication with your suppliers and professional service providers.  The added flexibility that proximity provides can sometimes make a difference in opening an important customer account, or loosing one. 

Infrastructure: 
Last but not least, where you establish yourself must be a area easily accessible in all aspects. Not just from a freight and logistics issue, but also from a human resources point of view. Skilled labor will be more willing to come to work for you, if you are established in a town or city with a superior choice of schools, entertainment, proximity to administrative centers, highway, airports, train station...etc.

Depending on the nature of your business, the city in which you establish your enterprise, may not have any large throughways for freight forwarding. It could be to far from the closest Airport or simply have no hotel accommodation adequate to receive your clients if you need to receive them regularly. Regional Infrastructure can be a very determining factor in your final election of the location.