Q&A - How important is location in determining business success?

For businesses in some sectors, location really is important. For others, it is a relatively minor decision. The key is to consider the main issues faced by a business choosing a business location and to address the most appropriate way of making a choice.

Location decisions are often important – to both large and small businesses. The location decision has a direct effect on an operation’s costs as well as its ability to serve customers (and therefore its revenues).
Also, location decisions, once made, are difficult and costly to undo. The costs of moving an operation are often significant and run the risk of inconveniencing customers and staff. It is always best to get the location decision right first time.

There is no such thing as the perfect business location. Every choice made involves having to balance the supply (cost) and demand (revenue) factors.

However, a good location is one which delivers the following benefits:

Competitive unit costs – through a combination of a productive and efficiency labour supply, acceptable location overheads and cost-effective access to inputs (raw materials, components etc)

Optimal revenue opportunities – customer service is not inconvenienced through the choice of location

An acceptable rate of return on investment – all business projects compete for scare cash resources; a business location decision is no different

Sufficient production capacity to meet demand and future flexibility in capacity management decisions

Access to a labour force which enables the business to achieve the objectives of its workforce planning