1. What are the key factors that influence the choice of location?

2. Technology
Increasingly possible to work from home, or away from the office – teleworking
3.3 million teleworkers in the UK are self-employed
41% of self-employed people in the UK are teleworkers

3. What are the benefits of teleworking?
Flexibility
Location
Time flexibility
Staffing
Reduced costs/lack of overheads

4. Cost of site
Least-cost site is the business location that allows a firm to minimise its costs & hence selling price
Cost particularly important to start-ups and small businesses
Low cost of location may increase competitiveness

5. Costs of location include:
Land costs
Labour costs
Wage variations across regions
BUT need particular skills
Transport costs
Bulk reducing or weight-losing industries, least-cost site is close to raw materials
Bulk increasing or weight-gaining industries locate closer to the market than raw materials
Location of suppliers may be key

6. Infrastructure Transport links, e.g. road network
Employee access to workplace
Access to services
Local infrastructure may be key

7. The market
Most important influence for retailers and other service industries
Customers expect convenience & easy access
Small retailers look at ‘footfall’ in an area (number of potential customers walking past the shop)
Locate near to competitors?
Locate near to complementary companies
Enhance revenue rather than cut costs

8. Convenience
Natural inclination of entrepreneur is to start operating from where he/she lives

9. USP
Unusual premises may be an attractive feature of the business

10. Quality of life
Location may not be ideal from least-cost perspective, but may offer other compensation

11. Industrial inertia
Once established, a firm may be reluctant to locate elsewhere
Personal reasons
Loyalty to existing labour force
Fear of change
Lower morale & productivity due to relocation
Cost of relocation
Transitional difficulties while adjusting to new location

12. Location & Success
Poor location is one of the main causes of small business failure
Least-cost site not ideal – convenience to customer is more important
Revenue generated by a good location will more than offset the additional cost of that location

13. Key factors for small firms
Demographic – does local population match target market?
Economic wealth of the area
Footfall during opening hours
Parking factors
Competitors’ locations
Location history – did site have a good track record of successful business activity?
Council policies (e.g. limiting some business activities)