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.
Many experts agree,
What is the Right Location? though, that the answer
Manyto experts
where you agree,
should
In any given area, there are many possible locations the small though,
business owner can consider as his business location. Plotting the locate is moreanswer
that the
to where you shouldthan
straightforward
different locations in a spectrum, one will be situated on the extreme locate is more
many entrepreneurs
side of the “right location.” Another will be on the extreme side of the straightforward
make it. "Quite than simply,
“wrong location.” Those in-between the extremes may be classified as manytheentrepreneurs
best place to be is as
“nearly right” or “nearly wrong.” make it. "Quite
close to yoursimply,
biggest
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best place to as be
youiscan
as
The right location refers to that one which will bring the highest close to your biggest
be," says Greg Kahn,
possible benefits to the firm. The wrong location is one which will competitor
founder as andyou
CEO canof Kahn
bring the most disadvantages to the small business. be,"Research
says Greg Kahn,in
Group
founder and CEONorth
Huntersville, of Kahn
Research Group
Carolina, and a in
General Criteria for Selecting a Business Location Huntersville,
Different types of small business need to use different sets of behavioralNorth research
Carolina, and a
veteran who's done
criteria in determining the right business location. The criteria for behavioral
locationresearch
research for
locating the retail business will be different form that of the veteran who's doneInc.,
Arby's, Buffets
manufacturing firm and the service business. Some of the factors in the location research for
Home Depot, Subway
criteria set, however, are generally applicable to all types of small Arby's, Buffets Inc.,
and other major and
business. HomeminorDepot, Subway
players. "Foot
andtraffic
other is major and
obviously
Selecting the Region minor players. but
important, "Footlanding
A mere look at the statistical reports on the growth traffic is obviously
the 'perfect' customer is
patterns and economic performance of the nation’s different important,
far morebut landing
crucial. By
regions will reveal information that some regions are more the being
'perfect' customer is
in close proximity
far more
to your crucial. By
competitors, you
desirable areas of investment than others. Some regions like
being in close proximity
can benefit from their
National Capital Region have higher rates of population growth to your competitors, you
and average family income. Most prospective investors marketing efforts."
can benefit from their
consider such information as plus factors. marketing efforts."

Many manufacturing companies are situated in Region

IV-A or CALABARZON.

Selecting the Province

In a given region, a province may be identified as more
promising for a small business than other provinces. For
instance, due to the growth of surfing enthusiasts coming up
north, La Union is becoming a good market for various SMEs.
Now, even businessmen from as far as Metro Manila do
business in La Union 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 located:
1. Proximity to markets
2. Proximity to supply of raw materials
3. Labor supply
4. Business climate

Selecting the City or Town

 After 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 considered:
1. Population trends (population size
and density, growth trends, family
The estimated population of the
Philippines as of July 2011 is
size, age breakdowns, education,
101,833,938! income levels, gender, religion, and
ethnic groups)
The estimated population of Baguio
City based on census conducted in
2. Local laws and regulations
2007 is 301,926! 3. Competition
4. Compatibility with the community
Batanes, the country's northernmost
province, reportedly has a zero crime
5. Transportation
rate. 6. Public services
7. Police and fire protection
8. The reputation of the location

Steps in Selecting a Business Location for Retailers

1. Choosing a viable community (economics, population, competition)
2. Selecting the trading area (including the composition of the trading area – primary,
secondary, fringe trading area)
3. Evaluating the specific site (central business district, shopping center, free-standing)
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 room for all the retail, office, storage or workroom
space you need?

3. Does it meet your layout requirements?

4. Does the building need any repairs?

5. Do the existing utilities-lighting, heating and cooling-meet your needs or will you have to do any rewiring or
plumbing work? Is ventilation adequate?

6. Are the lease terms and rent favorable?

7. Is the location convenient to where you live?

8. Can you find a number of qualified employees in the area in which the facility is located?

9. Do people you want for customers live nearby? Is the population density of the area sufficient for your sales
needs?

10. Is the trade area heavily dependent on seasonal business?

11. If you choose a location that's relatively remote from your customer base, will you be able to afford the
higher advertising expenses?

12. Is the facility consistent with the image you'd like to maintain?

13. Is the facility located in a safe neighborhood with a low crime rate?

Locating the Small Manufacturing Firm

The small manufacturing firm is saddled with certain
limitations in choosing a location. Big cities are desirable
locations because of proximity to a bigger percentage of the
population. However, zoning 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.
 Even 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:
1. Determine if the proposed area allows the type of manufacturing under consideration.
2. Determine the following: (adequacy of shipping facilities, types of buildings available
for lease or rent, distance from factory to market and resulting shipping costs)
3. Determine the availability of: (cheap fuel, power and water, skilled labor, and
financing facilities)

Locating the Service Firm

Service firms are those specifically sought by customers. If the customers are satisfied
with the services they provide, they will be continuously patronized even if a competitor is more
accessible. Even if this is so, however, there is a point where the customer will be indifferent to
the quality 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.