Developing a business location strategy

Modern businesses, especially small businesses, tend to be much more agile than businesses in the past. Their location strategy has to reflect this agility.

This means that modern businesses should generally start by looking at the lowest-commitment location options. Only if these are unsuitable should you move on to options at the next level of commitment.

Using your own home

If you’re a new entrepreneur, could you feasibly run your business from your own home? This can really slash your start-up costs.

Using your home as a company office

If all you need is office space, using your own home is usually a totally viable option. What’s more, it’s practically guaranteed to be more economical than paying rent for a dedicated office building.

However, still undertake a proper cost-benefit analysis before making a final decision. Here are the key points to consider:

• Is there any way your business could potentially impact your neighbours?

• Are you really going to get enough peace to focus on work?

• Can you set up an ergonomic workspace?

• Would you be able to separate your work time from your private time?

• What additional costs would you incur e.g. extra electricity usage?

• Could using your home as an office compromise your privacy or security?

• If so, could you take steps to mitigate this? How much would they cost?

In general, the less often you need to hold real-world meetings, the more feasible it is to run a company from home. By contrast, the more often you have to meet with people in real life, the more it makes sense to rent office space in a separate building.

Using your home for other types of business

The viability of using your home for other types of business typically depends largely on the property.

In addition to all the considerations previously mentioned, think about the practicalities of doing your work in the space you have available. Also think very carefully about the potential impact on your neighbours.

However, many entrepreneurs do run other types of businesses from their homes. It’s not even particularly unusual, especially outside of cities where properties tend to be larger.

Using pop-up locations

Using pop-up locations can be an excellent strategic move for some new businesses. It allows you to interact with your customers in the real world without the commitment of long-term rental contracts. There are four main ways the pop-up option can work:

• Signing short-term rental contracts for space in a standard commercial building

• Setting up your own van so you can trade from various locations

• Going to public events such as markets

• Going to your customers where they are e.g. to their workspace or home.

All of these approaches tend to work best as part of a holistic strategy for customer attraction and retention. Typically, have a website and a presence on at least one social media platform.

Then use your real-world interaction with customers to guide them to your online presence. Once they have connected with you there, use this connection to build a stronger relationship with your customer.

If you then decide you want to have a permanent bricks-and-mortar workspace, the data from your pop-up workspaces can inform your location strategy. For example, if you see your sales are particularly strong in a certain geographical area, you could base yourself there.

Using a fixed, permanent commercial building

Some companies require a fixed, permanent commercial building right from the start. Others may wish to expand into one. In this situation, there are two points you need to consider:

• What do you need and want from the building itself?

• What do you need and want from the local area?

You should already know the answer to the first question, so focus on answering the second.

In particular, think very carefully about whether or not you need a location that generally attracts a lot of passing traffic. On the one hand, this can help to kickstart a new business. On the other hand, buildings in high-traffic locations tend to reflect this benefit in the rent they charge.

It’s also worth noting that it can be risky to rely on the presence of passing traffic. There are many reasons why this could lessen or even disappear. This means that all businesses should have a solid marketing strategy to attract customers to their premises, no matter where they are.