Location, Location, Location Factors that influence new businesses

Research by the World Bank shows that it takes just 13 days to set up a business in the UK compared to the European average of 32 days. It ranks the UK first in Europe and sixth in the world as a location for running a business.

New entrepreneurs…. Where do most new business start up? In their local area At home Local market stall On line…

Most start-ups begin life at home, but then need to find extra/different space as the business grows

Quick task  You will be given a set of ‘cards’‘cards’  Sort them into TWO groups…  Qualitative factors  Quantitative factors Can you remember what these mean?

Possible answers…. Quantitative Costs of property / rent Technology Availability of workers Transport costs Transport links Suppliers Competitors Laws Govt support Qualitative Proximity to market Image Quality of life Personal knowledge of the area The weather Local amenities Convenience Inertia

Main factors affecting choice of location Communications Labour Customers Suppliers Government assistance

What do these mean?

Communication This includes transport facilities (road, rail, air) as well as information infrastructure Transport links are particularly important if the business delivers products, sells direct using a sales force or is dependent on import and export Information technology is less of an issue these days – most start-ups can quickly establish reliable broadband Internet connections

Labour When a start-up needs to hire employees, then access to a reliable pool of staff with relevant skills is important Businesses that are labour-intensive often look to locate in areas of traditionally low wages

Market – Customers & Population A start-up may need to be located near particular centres of population For example, if the product is a service targeted at affluent older-aged people, then it is important to be located where there is a sufficient population of such people Franchise businesses often analyse the population characteristics of a potential new territory before setting up in a new location

Suppliers The business may be dependent on supplies of a particular raw material, so costs will be lower if the business is located near the source of supply (e.g. where the raw material is grown or where a distributor is based) This factor tends to be more important for manufacturing businesses rather than service businesses

Government help Aims to encourage start-ups & business growth in poorer locations Assisted areas – benefit from grants & low-cost loans Regional Development Agencies – focus government investment in target regions and industries Government support can be the difference between one location and another – particularly if it affects the location costs

Technology and home-based start-ups 60% of new businesses are started from home 2.1 million home-based businesses in the UK Popular sectors –Business & professional services –Online trading –Food products

Location, Location, Location factors…. We know where you live!

Prioritise the factors

Using the mini case studies! Working in different groups….. You will be given a business to work with…. Using the factors that influence location cards…. Create a priority order for that entrepreneur that influenced them when locating their business…. Far Left = most important Far Right = least important You will have to justify your decisions…

Feedback From each group

Next task Individual work….

Location, Location Location??? Be ready to justify your choices

Homework…. Using your ‘map’ – Identify three places where a hotel could be sited. Mark with a H on your map. Write an explanation for your choice – to include some of the KEY factors that influence location