The location identified for the operation of a business will impact on its success or failure. An unsuitable location can result in high operational costs or low sales volume. Business owners must therefore consider the following factors when choosing a location.
The proximity to customers
It is important that business owners give customers easy access to goods and services. Shopping plazas in very central locations are very popular locations for businesses. Many companies now opt for selling online and therefore do not need to be centrally located.
The proximity to raw materials
It is more cost effective for a business that uses raw materials that are heavy and or bulky to locate close to the source of raw material. For example, bauxite processing plants are located close to mining areas and sugar factories are located close to sugar fields.
Availability to suitable labour supply
A business will need adequate number of workers who posses the skills suitable for the creation of its goods and services.
Firms will locate where there are adequate supplies of water, lighting, airports, seaports, good roads, transportation, and communication facilities.