Factors That Determine Business Location

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.

1)Supplying goods and services that satisfy demand
Identifying a particular need in a market and developing a product that will supply that market need improves standard of living and increases the overall revenue (GNP) earned in a country. Small businesses have the advantage over large businesses to identify changing market trends as they are closer to the customers. They are also able to produce unique products to suit the needs of each customer.

2)Creating employment
Small businesses account for a large percentage of total employment in Caribbean economies.

Making profits
The main purpose of starting and operating a business is to make profits. Profit makes it worthwhile for the entrepreneur to continue business. Profit earned may be reinvested to expand the business.

3)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.

4)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.

5)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.

6)Adequate Infrastructure
Firms will locate where there are adequate supplies of water, lighting, airports, seaports, good roads, transportation, and communication facilities.