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3 Important Factors to Consider When Choosing an Area for Your Business


Opinions expressed by Entrepreneur contributors are their own.

The geographical area of your business can affect operating costs and, ultimately, how much you make. Here are three important factors to consider when establishing a location for your business.


Obviously, it would be best if you were close to the customer. Think about being within walking distance or a short drive away from your target audience. A small town can work within an hour of a large city, but most want access to shopping and entertainment.

Your business also needs to be in a location that is easily accessible. Consider what kind of commute you have to make. You may not be able to afford to operate in the city, but there are still many things you can do to help you be successful.

If you live in the suburbs, you may want to consider a location closer to home. Consider the expenses for gasoline versus public transportation. An electric vehicle will be helpful to cut costs over the long run, but be sure your business has or can obtain charging stations for you and your customers.

You also need a digital place for people to find you online. Give business cards to prospective buyers and promote the website. You need to make sure your customers can find you. People need to know where you are and what you do. The overall look of the physical office is critical, and it isn’t just the location that matters.

Related: Location, Location, Location!

The customer’s problem

I don’t mean this in the sense of “How do we solve their problem?”. I mean this in the sense of “What is the problem they face that needs solving?”

It is possible that your customer doesn’t have a problem, but think they do because they want something that they can’t afford. Your customer is seeking your services because they are trying to solve a problem that you will help them overcome. That is the reason they need to be close to you.

If you do not have any customer problems, it means you have no business to offer them. If you have a product they need but can’t afford, they can always afford other products that your product can complement. The goal of every business is to make money. So your customer needs to tell you what their problem is. They don’t know you until they know what your solution is. If you are unsure, ask them for clarification. But never assume. Ask questions. 

Related: How Content Marketing Can Solve Your Customers’ Problems

Business costs in the area

The greater the demand for your product or service, the higher your prices may be. 

Three areas will increase your costs: gross sales, revenue, income taxes, employee’s social security and Medicare taxes. 

If you are not familiar with these costs, review the Small Business Administration‘s website. Gross sales revenue sales tax is a tax that the State collects on most sales. They usually base it on a percentage of the sale price. 

Related: 5 Lessons We’ve Learned From Leading a Hybrid Organization for 8 Years

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