Picking Your Business Location


Location. Location. Location. Some places are business-friendly -some are not. If you are about to start up or expand your business, consider what your choice of location can mean to your success. Whether it’s Main Street or Silicon Valley, your business location can mean the difference between success and failure. But more than that, your business location is the linchpin for your reputation, your brand, and your profits.

In fact, choosing a business location is perhaps the single most important decision a small business owner or startup will make, so it requires precise planning and research. It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding how state laws and taxes might impact you, and so much more.

What are your needs?

Most businesses choose a location that will provide exposure and drive foot traffic or volume to their location. That makes features like parking, pedestrian and vehicular access, the reputation of the neighborhood, and the proximity of other businesses all factors to consider.

However, there are other less obvious factors and needs to consider as well. For example:

  • Brand image – Is the location consistent with the image you want to maintain?

  • Competition – Are the businesses around you complementary or competing? Retail stores benefit from being in a retail hub alongside the competition. Others may be at a disadvantage if located too close to the competition

  • Local labor market – Does the area have what you need in terms of potential employees? Can they make it into work without spending too much time in traffic?

  • Plan for future growth – If you anticipate future growth, preempt the need for multiple moves by looking for a building that has extra space you can expand into should you need it. Your budget should also include cost estimates for furniture, utilities, and IT needs.

  • Proximity to suppliers – They need to be able find you easily, too.

  • Safety – What’s the crime rate? Will employees feel safe alone in the building or walking to their vehicles or the nearest public transportation?

  • Zoning regulations – These determine whether you can actually conduct your type of business in certain properties or locations. You can find out how property is zoned by contacting your local planning agency.

What about the money factor?

Besides working out what you can afford, you’ll need to be aware of some other financial considerations:


  • Hidden Costs – Very few spaces are walk-in ready. Don’t forget to include costs like renovation, decorating, IT system upgrades, and so on in your budget.

  • Taxes – What are the income tax and sales tax rates for your state? These vary greatly. What about property taxes? Could you locate your business across a nearby state line and pay less in taxes? Stack- up the best and worst states for Small Business taxes.

  • Minimum Wage – While the federal minimum wage is $7.25 per hour, many states have a higher minimum. In Washington state the minimum is $9.04 per hour. If you are re-locating your business, this might negatively impact payroll costs. View the Department of Labor’s list of minimum wage rates by state.

  • Government Economic Incentives – Business location can determine whether you qualify for government economic business programs, such as state-specific small business loans and other financial incentives.

State-level

Every state says it wants to be business-friendly, but only some deliver on this promise. Government rules, taxes, and other factors can make it more difficult to open a business, operate and grow. Look for a state that makes it easy to get started and function. Find a link to regulations in every state from Business.gov. Here you'll find answers on how to register your business or incorporate, tax filing requirements, worker's comp and unemployment tax requirements, and more.

Local-level

Like states, some cities and towns also make it easier than others for businesses to get started and operate. New York City's Small Business Services has Small Business Express, a one-stop site to apply online for licenses, permits and certificates that are needed by a business to operate. Some locations, however, have red tape that can tie a business up and keep it from opening for months. In considering a specific location, check:

  • Neighborhoods. Some areas may be prospering while others are declining. The fact that you may be able to obtain an attractive rent should not be the deciding factor if that rent gets you a store in a neighborhood with high crime and low customer traffic.

  • Transportation. If your business depends on customer traffic, check access to transportation. Is there public transportation near your proposed location? Is there adequate parking for customers who drive to your business.

  • Zoning regulations. These restrict where you can operate a business and even the type of business. You may be barred from setting up a commercial concern in an area zoned for residential property. Zoning can even impact home-based businesses.

Bottom line?

Do your research, because getting your business location wrong can be costly. Talk to other business owners and use available resources from SBA.gov, to help in your efforts.



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