Choosing the Location for a Business

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  • 0:00 Business Location…
  • 0:34 Demographics
  • 1:15 Competitors
  • 1:59 Traffic Patterns
  • 2:47 Financial Concerns
  • 4:34 Lesson Summary
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Lesson Transcript
Instructor: Sharon Linde
One important aspect companies need to consider when opening a business is location. Business educators need to detail the ideas behind this consideration. This lesson gives an overview of aspects to consider when choosing a business location.

Business Location Considerations

Bruce is a businessman who is choosing a business location, or where a business will be primarily housed. Though his decision may seem like a cake walk to some, Bruce is struggling with this important decision. A seasoned businessman knows that making such a choice means doing necessary research. When choosing a business location, owners need to consider things like business needs, finances, and laws. Let's take a closer look.

Demographics

The first thing to think about when opening a business is demographics. Demographics means data about the people that live and travel through a particular area. Let's go back to Bruce and his ice cream shop, Screamin' Ice Cream. He needs to think about what kinds of people are most likely to spend money buying ice cream. Is age a factor that affects ice cream buying trends? Household income? Gender? Family size? Bruce will probably want to have workers who live near the store, which makes recruiting employees easier. High school and college students would probably like to work at this store part-time.

Competitors

Next, Bruce should think about possible competition for his customers' money. He should consider all the competition, not just other ice cream stores. Frozen yogurt stands, candy stores, and any other places their target customers, those most likely to buy from them, might like to go for a tasty treat, is competition. The best location for a business might already have so many competitors selling similar products and services that it is likely to be difficult to make a product known and establish a business. In those situations, it might make more sense to choose a location that doesn't fit a target customer quite as well but has a lot less competition.

Traffic Patterns

Where do you stop to buy your coffee? Is it an out-of-the way place or on your normal path to school or work? Bruce should think about the traffic patterns near the location where he is thinking about opening his business. Places with lots of foot traffic are often good locations because it is easy for pedestrians to stop into the store. Locations with lots of nearby car traffic can be good, but a lot of that depends on how the potential customers would move from the busy traffic lanes and into the store. An ice cream store on a street with a lot of car traffic might only have an entrance for traffic flowing in one direction. Or maybe parking spots are hard to come by, which would mean interested customers would have more difficulty getting into the store.

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