Business Location
A shop on a busy high street outsells the same shop down a quiet lane. Learn the factors that decide the best location for a business, and why the internet is changing how much location matters.
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Location, location
Where a business sets up can make or break it. A shop in a busy high street sells more than the same shop down a quiet lane, and a factory near its suppliers saves on delivery. This module explores the factors that decide the best location for a business.
Location words
Four ideas run through this topic:
Why place matters?
Why does location matter to many businesses?
- It affects costs, customers and how easy it is to run
- It sets the colour of the products
- It chooses the name of the business
- It never makes any difference
Shop or online?
How much location matters depends on how the business sells.
Match the factor
- Proximity to the market
- Proximity to labour
- Proximity to materials
- Proximity to competitors
- Being close to the customers who buy
- Being close to workers with the right skills
- Being close to suppliers of raw materials
- Being near to, or away from, rival businesses
The internet effect
The internet has changed where businesses need to be. With e-commerce, a business can sell to the whole country from a single warehouse, so being on a busy high street matters less. Many businesses now mix online selling with a few fixed premises.
What influences it?
Which THREE factors influence where a business locates?
- How close it is to its customers
- How close it is to its raw materials
- Whether skilled workers are available nearby
- The age of the owner
- The name of the business
Compare the rent
A shop unit in the city costs 2000 pounds a month in rent. A similar unit in a town costs 800 pounds a month. How much cheaper is the town unit per month, in pounds? Subtract the smaller rent from the larger.
Choosing a site
Put the steps of choosing a business location in a sensible order.
- Work out what the business needs from a location
- List some possible sites
- Weigh up the factors and the costs of each
- Choose the site that fits best
- Set up and open there
Complete the idea
A business chooses its _____ by weighing several factors. Being close to the _____ means customers can reach it easily. A factory often locates near its _____ to cut delivery costs. Thanks to _____, an online business can sell from anywhere, so its location matters less. A high-street shop needs _____ premises where people pass by.
True or not?
Tap the TWO statements that are TRUE about business location.
- A shop usually needs to be where customers pass by.
- E-commerce lets a business sell without a fixed shop.
- Location never affects a business at all.
- An online business must be on a busy high street.
- A factory is always best placed far from its suppliers.
Best fit
- A factory making heavy goods
- A high-street clothes shop
- An online-only retailer
- A software company
- Near raw materials, with space to build
- Where lots of customers pass by
- Almost anywhere, as it sells over the internet
- Near a supply of skilled workers
Pick the spot
Choose the best location for each business.
- A bakery wants to sell fresh bread directly to shoppers. Where should it be?
- A company builds heavy machinery from steel. What matters most for its site?
- A small online craft seller works from home. Why does location matter less for them?
Where should it go?
A new coffee shop is deciding where to open. Evaluate what makes a good location for it.
- Name two factors that matter for a coffee shop
- Explain why being near customers helps
- Explain one cost the owner must think about
- Reach a judgement about the best kind of location