Determining the Right Location
One of the most important decisions the small business
operator has to makes is choosing the right location for his business.
The location decision must be made before actual operations begin.
The wrong location will make it very difficult for the business to
achieve its objectives.
What is the Right Location?
In any given area, there are many possible locations the
small business owner can consider as his business location. Plotting
the different locations in a spectrum, one will be situated on the
extreme side of the “right location.” Another will be on the extreme
side of the “wrong location.” Those in-between the extremes may
be classified as “nearly right” or “nearly wrong.”
The right location refers to that one which will bring the
highest possible benefits to the firm. The wrong location is one
which will bring the most disadvantages to the small business.
General Criteria for Selecting a Business Location
Different types of small business need to use different sets
of criteria in determining the right business location. The criteria
for locating the retail business will be different form that of the
manufacturing firm and the service business. Some of the factors in
the criteria set, however, are generally applicable to all types of
small business.
Selecting the Region
A mere look at the statistical reports on the growth
patterns and economic performance of the nation’s different
regions will reveal information that some regions are more
desirable areas of investment than others. Some regions like
National Capital Region have higher rates of population
growth and average family income. Most prospective
investors consider such information as plus factors.
Many manufacturing companies are situated in
Region IV-A or CALABARZON.
Selecting the Province
In a given region, a province may be identified as
more promising for a small business than other provinces.
For instance, due to the growth of surfing enthusiasts
coming up north, La Union is becoming a good market for
various SMEs. Now, even businessmen from as far as
Metro Manila do business in La Union to cater to the needs
of surfing enthusiasts and those that attend to their regular
events.
The following factors must be considered when
identifying which province the small business will be
located:
1. Proximity to markets
2. Proximity to supply of raw materials
3. Labor supply
4. Business climate
Many experts agree, though,
that the answer to where you
should locate is more
straightforward than many
entrepreneurs make it. "Quite
simply, the best place to be is
as close to your biggest
competitor as you can be,"
says Greg Kahn, founder and
CEO of Kahn Research Group in
Huntersville, North Carolina,
and a behavioral research
veteran who's done location
research for Arby's, Buffets
Inc., Home Depot, Subway and
other major and minor players.
"Foot traffic is obviously
important, but landing the
'perfect' customer is far more
crucial. By being in close
proximity to your competitors,
you can benefit from their
marketing efforts."
Selecting the City or Town
The estimated population of
the Philippines as of July 2011
is 101,833,938!
The estimated population of
Baguio City based on census
conducted in 2007 is
301,926!
Batanes, the country's
northernmost province,
reportedly has a zero crime
rate.
After identifying the province where the small
business will be located, the specific city or town within the
province must be selected. In choosing a specific city or town,
the following must be considered:
1. Population trends (population size
and density, growth trends, family
size, age breakdowns, education,
income levels, gender, religion, and
ethnic groups)
2. Local laws and regulations
3. Competition
4. Compatibility with the community
5. Transportation
6. Public services
7. Police and fire protection
8. The reputation of the location
Steps in Selecting a Business Location for Retailers
1. Choosing a viable community (economics, population, competition)
2. Selecting the trading area (including the composition of the trading area – primary,
secondary, fringe trading area)
3. Evaluating the specific site (central business district, shopping center, free-standing)
Answering these 22 questions for each of the sites you're considering can help you decide on the best retail location
for your business:
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Is the facility located in an area zoned for your type of business?
Is the facility large enough for your business? Does it offer room for all the retail, office, storage or
workroom space you need?
Does it meet your layout requirements?
Does the building need any repairs?
Do the existing utilities-lighting, heating and cooling-meet your needs or will you have to do any rewiring or
plumbing work? Is ventilation adequate?
Are the lease terms and rent favorable?
Is the location convenient to where you live?
Can you find a number of qualified employees in the area in which the facility is located?
Do people you want for customers live nearby? Is the population density of the area sufficient for your sales
needs?
Is the trade area heavily dependent on seasonal business?
If you choose a location that's relatively remote from your customer base, will you be able to afford the
higher advertising expenses?
Is the facility consistent with the image you'd like to maintain?
Is the facility located in a safe neighborhood with a low crime rate?
Is exterior lighting in the area adequate to attract evening shoppers and make them feel safe?
Will crime insurance be prohibitively expensive?
Are neighboring businesses likely to attract customers who will also patronize your business?
Are there any competitors located close to the facility? If so, can you compete with them successfully?
Is the facility easily accessible to your potential customers?
Is parking space available and adequate?
Is the area served by public transportation?
Can suppliers make deliveries conveniently at this location?
If your business expands in the future, will the facility be able to accommodate this growth?
http://www.entrepreneur.com/article/73784
Locating the Small Manufacturing Firm
The small manufacturing firm is saddled with certain
limitations in choosing a location. Big cities are desirable
locations because of proximity to a bigger percentage of the
population. However, zoning laws implemented in big cities are
more restrictive than those imposed by small towns. To avoid the
said difficulty, some manufacturing firms locate in a small town
just outside the boundary of the city. This makes the
manufacturing firms very near the market but out of reach of the restrictive ordinance of the city.
Even if some manufacturing firms wanted to be near their market, they cannot afford to
be situated away from the source of their raw materials.
Procedure:
1. Determine if the proposed area allows the type of manufacturing under consideration.
2. Determine the following: (adequacy of shipping facilities, types of buildings available
for lease or rent, distance from factory to market and resulting shipping costs)
3. Determine the availability of: (cheap fuel, power and water, skilled labor, and
financing facilities)
Locating the Service Firm
Service firms are those specifically sought by customers. If the customers are satisfied
with the services they provide, they will be continuously patronized even if a competitor is more
accessible. Even if this is so, however, there is a point where the customer will be indifferent to
the quality of service if the firm providing is too far enough.
The choice of a location for service firms will depend on the traits of the target customer.
Information on where the target customers want to be served may be determined through market
research.