How to Choose a Location for Your Business
A guide to finding and choose a physical location for your business.
This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.
All businesses need some kind of working location. For some businesses, their working location is key to their success. For others, all that matters is that it has the right facilities. Whatever type of business you run, it’s important to get the right business location for your needs. So here is a guide on finding and choosing a location for your business.
What is a business location?
These days business locations range from home offices to purpose-built campuses. They can be in city centres or the remote wilderness. They can be temporary, portable and even mobile.
In short, these days a business location can and should be whatever you need and want it to be. This means that the process of finding and choosing a location for your business starts by clearly defining your needs, wants and budget.
How to scope your business needs
A business location consists of three basic elements:
- Space for people
- Space for equipment and inventory
- Space to perform tasks.
You also need to allow space for general facilities such as kitchen, break room and toilets.
Space for people
This includes anyone who might be in a space, not just employees. For example, it could mean visitors, customers and suppliers.
Ask yourself what is likely to be the maximum and the minimum number of people to be on site at the same time. Group them into categories. Do these categories interact with each other? If so, what is the flow between them?
Space for equipment and inventory
Be very clear about needs versus wants. Prioritise your wants and think about how quickly you aim to get them. This has significant implications for your choice of business space.
Also, consider your options for splitting up your storage space from your working space. Hiring storage space is often much more economical than giving up working space for storage.
Space to perform tasks
Aim to minimise the amount of movement needed to perform a task. The one exception is when the movement is the task, for example if you are in the fitness industry. Also think about the overall flow of traffic. Ensure that people performing one task do not create a block for people performing other tasks.
This means anything not specifically related to work but still needed. Some of these facilities are required by law. For example, you need to have suitable toilet provision for your employees. Other facilities are determined by practicality. For example, if employees drive to work, they need somewhere to park.
Visibility versus accessibility
Business locations in high-traffic areas cost more than those in lower-traffic areas. Traditionally, this price premium has been justified due to the potential to capture spontaneous custom. Now, the situation is more complicated.
On the one hand, being in a high-traffic location may win you some spontaneous custom from passers-by. On the other hand, it’s now increasingly common for people who spontaneously decide to do something to go straight to their phone for guidance. Their phone directs them to the nearest or best location, regardless of how visible it is.
This means that modern business owners should think carefully before paying a high price for a highly visible location. It may actually be better to have a business location that’s less visible but more easily accessible. For example, look for one with good public transport links and local parking.
Also consider accessibility for people with restricted mobility. This means people who are classified as disabled and also means pregnant women, people with young children, and older people. The legal requirements around these may vary, but making reasonable accommodations for these people is good business practice.
Set your budget realistically
Budget does matter but so do creativity and strategic thinking. If money is tight, focus on the essentials and do as much as you can with them. Try to negotiate a short lease or the flexibility to move on from it relatively quickly. That way, you can upgrade your business location if you wish as your business grows.
Remember, a business location doesn’t have to be perfect forever. It just has to be good enough for your needs and wants just now. You can always upgrade it later or change location.
Choose the right type of business location
Before you start looking for a permanent, fixed business location, think about alternative options. Even if they may not work over the long term, they may be a good starting point. These location types can help you choose a direction:
Brick and mortar: Whether it’s a retail storefront or a full-service restaurant, a traditional brick-and-mortar location gives customers a standalone space to check out your offerings.
Warehouses and industrial spaces: Need your own area for manufacturing and distributing your products? Warehouse spaces with access to efficient transportation options can make that possible.
Home office: You may need permission to run your business from home, but it significantly reduces your up-front operating costs.
Mobile: Will your business succeed by going on the road? Food trucks, retail pop-ups, and stands at markets in collaboration with other businesses are great ways to build interest in your work — and you can always transition to a larger brick-and-mortar operation down the line if it makes sense.
Commercial office space: If your business won’t rely on foot traffic, a standard office space provides convenience with less of a buildout and fewer equipment needs.
Could you run a remote-first business?
If you’re a solopreneur, the answer to this question depends on your own personal circumstances. If you plan to hire employees, think about how feasibly they could work from home.
There are three aspects to consider. Firstly, think about the practical aspects of the role. For example, do they just need standard IT equipment or specialist equipment? Secondly, think about the law, particularly the health and safety implications. Thirdly, think about how to manage your employees.
As a rule of thumb, if your employees are knowledge workers, it’s entirely possible for them to work from home. If they’re doing manual work, it may be more prudent to bring them on site. This allows you to monitor health and safety more closely. Alternatively, you could hire freelancers instead of engaging employees.
Could you use pop-up locations?
With pop-up locations, you slot into somebody else’s unused space on a short-term basis. This can be as little as a few days or as much as a few months. Pop-ups can be a great way to get yourself in front of potential customers without committing to a long-term lease or property purchase.
Could you go mobile?
Similar comments apply to mobile businesses. In fact, mobile businesses are arguably pop-up businesses that take their business location with them. Mobile businesses can be hugely popular with customers, due to their high convenience.
Do you need a space that is completely yours?
If you can share a space, serviced business locations may be a great option. These can look much more expensive than regular business locations. The key point to note is that they generally include all key expenses e.g. utilities, and also usually offer both short-term and long-term rental options.
Would you benefit from having a separate, legal business address?
If you plan to work as a sole trader, you can keep the details of your business entirely private. If you plan to form a limited company, you need to register your business at Companies House. You also need to file annual financial records.
Both your registration and your records will have your business address on them. It can be useful to have a legal address for your business somewhere other than your own home. If you have an accountant, they may be able to register a business address for you. If not, there are many companies that can provide this service for you.
Useful resources for finding and choosing a location for your business
Rent pop up shops, markets and retail space in the UK with Appear Here
If you’re hiring employees, you need to know about auto-enrolment. Find out more here.
You’re legally required to keep your business location healthy and safe. Find out more about your responsibilities and how to fulfil them here.
Your business location must also comply with the Equality Act 2010. Find out more here.
You may need to register your business location with Companies House. Find out more here.
Launching your business
From choosing the right business licence and insurance to setting up payroll and hiring your first employee, we’ve got the resources and information you need to start your business successfully.
Managing your business
Once your business is actually open, learn how to manage its everyday activities. Finance, operations, marketing – they’re all down to you. We give you the help and advice you need to get to grips with these.