Determining the Right Location

One of the most important decisions the small business operator

has to makes is choosing the right location for his business. The
location decision must be made before actual operations begin. The
wrong location will make it very difficult for the business to achieve its
objectives.
What is the Right Location?
In any given area, there are many possible locations the small
business owner can consider as his business location. Plotting the
different locations in a spectrum, one will be situated on the extreme
side of the right location.! "nother will be on the extreme side of the
wrong location.! Those in#between the extremes may be classified as
nearly right! or nearly wrong.!
The right location refers to that one which will bring the highest
possible benefits to the firm. The wrong location is one which will
bring the most disadvantages to the small business.
General Criteria for Selecting a Business Location
$ifferent types of small business need to use different sets of
criteria in determining the right business location. The criteria for
locating the retail business will be different form that of the
manufacturing firm and the service business. %ome of the factors in the
criteria set, however, are generally applicable to all types of small
business.
Selecting the Region
" mere look at the statistical reports on the growth
patterns and economic performance of the nation&s different
regions will reveal information that some regions are more
desirable areas of investment than others. %ome regions like
'ational (apital )egion have higher rates of population growth
and average family income. *ost prospective investors
consider such information as plus factors.
*any manufacturing companies are situated in )egion
I+#" or (","-").O'.
Selecting the Province
In a given region, a province may be identified as more
promising for a small business than other provinces. /or
instance, due to the growth of surfing enthusiasts coming up
north, ,a 0nion is becoming a good market for various %*1s.
'ow, even businessmen from as far as *etro *anila do
business in ,a 0nion to cater to the needs of surfing enthusiasts
and those that attend to their regular events.
The following factors must be considered when
identifying which province the small business will be located2
3. Proximity to markets
4. Proximity to supply of raw materials
5. ,abor supply
6. -usiness climate
Selecting the City or Town
Many experts agree,
though, that the answer
to where you should
locate is more
straightforward than
many entrepreneurs
make it. "Quite simply,
the best place to be is as
close to your biggest
competitor as you can
be," says Greg Kahn,
founder and C! of Kahn
"esearch Group in
#unters$ille, %orth
Carolina, and a
beha$ioral research
$eteran who&s done
location research for
'rby&s, (u)ets *nc.,
#ome +epot, ,ubway
and other ma-or and
minor players. ".oot
tra/c is ob$iously
important, but landing
the &perfect& customer is
far more crucial. (y
being in close proximity
to your competitors, you
can bene0t from their
marketing e)orts."
Many experts agree,
though, that the answer
to where you should
locate is more
straightforward than
many entrepreneurs
make it. "Quite simply,
the best place to be is as
close to your biggest
competitor as you can
be," says Greg Kahn,
founder and C! of Kahn
"esearch Group in
#unters$ille, %orth
Carolina, and a
beha$ioral research
$eteran who&s done
location research for
'rby&s, (u)ets *nc.,
#ome +epot, ,ubway
and other ma-or and
minor players. ".oot
tra/c is ob$iously
important, but landing
the &perfect& customer is
far more crucial. (y
being in close proximity
to your competitors, you
can bene0t from their
marketing e)orts."
"fter identifying the province where the small
business will be located, the specific city or town within the province must be selected.
In choosing a specific city or town, the following must
be considered2
1. Population trends 7population si8e
and density, growth trends, family
si8e, age breakdowns, education,
income levels, gender, religion, and
ethnic groups9
4. ,ocal laws and regulations
3. (ompetition
6. (ompatibility with the community
:. Transportation
;. Public services
<. Police and fire protection
=. The reputation of the location
Steps in Selecting a Business Location for Retailers
3. (hoosing a viable community 7economics, population, competition9
4. %electing the trading area 7including the composition of the trading area > primary,
secondary, fringe trading area9
5. 1valuating the specific site 7central business district, shopping center, free#standing9
Locating the Small anufacturing !irm
The small manufacturing firm is saddled with certain
limitations in choosing a location. -ig cities are desirable
locations because of proximity to a bigger percentage of the
population. ?owever, 8oning laws implemented in big cities are
more restrictive than those imposed by small towns. To avoid the
said difficulty, some manufacturing firms locate in a small town
just outside the boundary of the city. This makes the
manufacturing firms very near the market but out of reach of the restrictive ordinance of the city.
Answering these 22 questions for each of the sites you're considering can help you decide on the best retail location
for your business:
1. Is the facility located in an area zoned for your type of business?
2. Is the facility large enough for your business? Does it offer roo for all the retail! office! storage or wor"roo
space you need?
#. Does it eet your layout requireents?
$. Does the building need any repairs?
%. Do the e&isting utilities'lighting! heating and cooling'eet your needs or will you ha(e to do any rewiring or
plubing wor"? Is (entilation adequate?
). Are the lease ters and rent fa(orable?
*. Is the location con(enient to where you li(e?
+. ,an you find a nuber of qualified eployees in the area in which the facility is located?
-. Do people you want for custoers li(e nearby? Is the population density of the area sufficient for your sales
needs?
1.. Is the trade area hea(ily dependent on seasonal business?
11. If you choose a location that's relati(ely reote fro your custoer base! will you be able to afford the
higher ad(ertising e&penses?
12. Is the facility consistent with the iage you'd li"e to aintain?
1#. Is the facility located in a safe neighborhood with a low crie rate?
/he estiated population of the
0hilippines as of 1uly 2.11 is
101,833,938!
/he estiated population of 2aguio
,ity based on census conducted in
2..* is 301,926!
Batanes! the country's northernost
pro(ince! reportedly has a zero crime
rate.
1ven if some manufacturing firms wanted to be near their market, they cannot afford to
be situated away from the source of their raw materials.
Procedure:
3. $etermine if the proposed area allows the type of manufacturing under consideration.
4. $etermine the following2 7ade@uacy of shipping facilities, types of buildings available
for lease or rent, distance from factory to market and resulting shipping costs9
5. $etermine the availability of2 7cheap fuel, power and water, skilled labor, and
financing facilities9
Locating the Service !irm
%ervice firms are those specifically sought by customers. If the customers are satisfied
with the services they provide, they will be continuously patroni8ed even if a competitor is more
accessible. 1ven if this is so, however, there is a point where the customer will be indifferent to
the @uality of service if the firm providing is too far enough.
The choice of a location for service firms will depend on the traits of the target customer.
Information on where the target customers want to be served may be determined through market
research.