by Jonte Rhodes

Created on: July 31, 2010   Last Updated: August 01, 2010

The location of a small business can affect nearly every aspect of how it operates, from the logistics of the production process for businesses that manufacture goods, right through to the level of passing trade that will be attracted for service based businesses. Choosing the right location for a business is therefore essential in ensuring that it operates efficiently.

Depending on the type of business, passing trade can often make a big difference to how much income small businesses can easily make. Businesses located in high traffic or heavily populated areas are more likely to attract business from people passing through the area. And even those who do not typically directly sell to the public are better served if they are as visible as possible. Local people and companies who may need to use the services a particular business provides will tend to remember a business they see regularly instead of looking up a competitor.

Smaller retail businesses in particular will benefit from passing trade if in a prime location purely because they are often more convenient, and yet will tend to be less busy than much larger chain stores which require a larger site separate to already built up areas. General stores that are closer to areas of housing than large supermarkets are good examples of this.

Logistically the location of a small business can also be crucial, particularly if the business either manufactures or ships goods. Access for deliveries and shipments can be a potential issue for small businesses with limited space, particularly if they are in a high traffic area rather than an industrial estate. Also businesses should always strive to locate themselves between the point of sale and their suppliers if they are producing goods. This ensures that transportation costs are lower and that deliveries either way can be made more quickly.

Similarly the location of a business in some respects dictates how large the premises will be. The higher the rent is in any given area, the smaller the building that a small business will be able to afford. This affects things such as how much stock they will be able to hold, and by extension how often they will have to order raw materials. Also if the business ever expands the size of the premises dictates to some degree whether or not they will have to relocate, which can either be beneficial or expensive.

One of the most important factors small businesses must consider in regards to location, particularly when starting up is how

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