Business Location (SQA National 5 Business Management): Revision Note

Factors affecting the choice of location

• When choosing where to set up or relocate, a business must carefully consider a range of factors that influence its costs, convenience and customer reach

• The right location can improve sales and provide a competitive advantage, while the wrong one can lead to higher costs and poor performance

Key factors affecting business location

Location of customers

• Businesses often choose locations close to their target customers to make purchasing easy and convenient.

  • Shops and cafés benefit from being in busy high streets or shopping centres with high footfall

  • Service businesses, such as garages or salons, need to be near where customers live or work

  • Online businesses may focus less on locating close to customers, but still need good access to delivery networks

Location of competition

• The presence of competitors can either attract or discourage businesses, depending on the situation

  • Some businesses, like fast food chains, cluster to attract large numbers of customers looking for choice

  • Others, like independent shops, avoid being too close to competitors to prevent splitting the market and reducing sales

Accessibility

• A good location must be easy for customers, suppliers and staff to reach

  • Nearby public transport, car parks and delivery access points are important

  • For businesses with customers on-site, such as restaurants or gyms, safe and convenient access is essential

  • Poor accessibility can reduce customer visits and make deliveries more expensive or slower

Availability of suitable buildings or land

• A business needs premises that are the right size, layout and cost for its needs

  • Start-ups may need small, flexible spaces, while manufacturers require large, purpose-built units

  • Costs vary depending on whether the building is owned, leased, or shared

  • Renovations or planning restrictions may also affect suitability

Available incentives

• Local councils and governments sometimes offer incentives to attract businesses to specific areas

  • These can include reduced business rates, grants or financial support for creating jobs

  • Enterprise zones or regeneration areas often provide these benefits to encourage development

Availability of workers

• Businesses must ensure they can recruit enough suitable and skilled employees

  • Areas with high unemployment may offer plenty of applicants, but not always the right skills

  • Locations near colleges or universities can be good for recruiting young, trained staff

  • For specialist industries, businesses may need to locate near existing talent or universities