1. BUSS1.9 Locating the Business Starting a Business Locating the Business Technology is dominated by two types of people: those who understand what they do not manage, and those who manage what they do not understand. Putt’s Law We're not lost. We're locationally challenged. John M Ford

2. BUSS1.9 Locating the Business In this topic you will learn about  Factors influencing start-up location decisions

3. BUSS1.9 Locating the Business Factors influencing start-up location decisions In this section candidates need to learn about a number of factors that influence the location of a small business and that the importance of each factor will be different for each type of business. The location factors should include: 1. Technology 2. Costs 3. Infrastructure 4. The Market 5. Qualitative Factors Introduction to where to work

4. BUSS1.9 Locating the Business Factors influencing start-up location decisions Technology Technology is the application of what has been learned through science. This includes forms of communication and information provision through such mediums as the personal computer, the Internet, fax and mobile phones. New technology has allowed the small business to communicate from home, gathering, processing and sending information through, for example, the Internet. Teleworking means that the small business can work from home with instant communication methods. They can gather any information required through a home office.

5. BUSS1.9 Locating the Business Factors influencing start-up location decisions Costs A small business faces a number of costs that it will try to reduce. Firms will have factor costs – land, labour and capital. Land costs will include the costs of premises. Most start-up businesses will remain in the geographical area in which they live. The cost of relocation is often prohibitive and the owners value the support network that they have in the local community. It is important to realise that town centres are more expensive than out of town areas. For this reason, many firms will choose to locate away from the town centre or even at home. However, the town centre might include the majority of the target market. Run video clip from internet

6. BUSS1.9 Locating the Business Factors influencing start-up location decisions Costs Labour costs can be a significant drain on the business’ resources. Often, a firm might employ young people on minimum wages to try to keep these costs down. However, specialist jobs might be more expensive e.g. an accountant or lawyer. In the UK labour costs vary geographically with London and the South East having much higher wage rates. Nowadays, many small businesses are footloose – locating in areas that are convenient to the firm without affecting costs too much. Costs can be reduced if there is a good infrastructure, markets are nearby and there is a good pool of skilled workers. For example, university towns tend to provide an educated workforce so it makes sense for a small business to locate in such areas. Not directly linked to location but an interesting debate if time allows – should the minimum wage vary across the UK?

7. BUSS1.9 Locating the Business Factors influencing start-up location decisions Infrastructure Infrastructure will include transport links such as roads, railways and airports. It will also include communication links and local services. Small businesses will need access to the above in order to provide their good or service. If customers find it difficult to access a firm they will go elsewhere. The significance of infrastructure will depend on the nature of the business. Businesses that do not rely on face to face contact might be able to set up anywhere, even a remote location. On the other hand, a retailer needs access to customers in order to succeed.

8. BUSS1.9 Locating the Business Factors influencing start-up location decisions The market The market is where buyers and sellers come together to exchange goods or services. Again, the significance of the market to a firm’s location decision will depend upon the nature of the business. Many service sector businesses must be in an area where there is large footfall. Wetherspoons started off as a small business, locating near tube and train stations in London. Restaurants, salons and newsagents need to be in areas where the customers are. If the small business is a supplier to a larger firm it will wish to be as close to that business as possible. This will help in the case of just-in-time production. Choosing the right location

9. BUSS1.9 Locating the Business Factors influencing start-up location decisions Qualitative factors These factors are based on the personal desires and needs of the owner. They are very important for the small business, but their significance will depend upon the owner of the business. The quality of life and lifestyle of the owner is likely to be fundamental to a location decision. Small businesses might easily find cheaper premises in other areas but will these areas provide the same standard of living? Attractiveness, crime levels, school standards, family and friends all play an important role in location for a small business. Often, it is difficult to separate the owner’s business and personal life. A large firm might relocate but the impact of location for a small business is far greater in personal terms.

10. Activity – a suitable location near you?  Think of two or three new businesses that have opened up near you recently? What is the business? Why do you think they chose their current location? If finance allowed in 2-3 years do you think they would change location? If so why and where to?  For each of the following business start-ups recommend and justify a suitable location in your local area A Greek restaurant A PC repair service A dry cleaners A hand car wash A fashion boutique Produce an advertisement for a national paper advertising a new office and warehouse development in your local area as the perfect location for new business start-ups.