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Location, Location, Location: Where You Run Your Business Matters

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Location, Location, Location: Where You Run Your Business Matters

By BarbaraWeltman, Guest Blogger
Published: July 20, 2010

Some places are business-friendly; some are not. If you are about to start up or expand your business, consider what your choice of location can mean to your success.

Why location matters
Many entrepreneurs start up where they happen to live and fail to give much thought to the implications that their choice of location can have for their business. Their home city or town is the place they know best, among the people they know well. Yes, this can be advantageous to a point, providing networking opportunities which are very helpful to a business. But initial connections to a spot only go so far in helping a company to operate and thrive. Location can impact you in many ways:

Crime. There is an invisible cost to business in crime-ridden locations and businesses in such locations will suffer, so you want to be sure that you choose a spot with a low crime rate.

. Depending on the type of business you run, there may be a number of rules to follow concerning waste management, use of certain chemicals, and more.
. Mandated minimum wage rates, which in some states are higher than the federal minimum wage of $7.25/hour, affect payroll costs.
Individual income taxes (which are the rates affecting most small business owners), corporate rates, taxes on gasoline, and property taxes can make a business difference on what businesses pay and how much profits owners can keep after tax.
. Labor-intensive businesses have a higher cost in states with higher insurance rates than in lower-tax states.
Businesses consuming a lot of electricity may pay substantially more in one state or part of a state versus another.
Some states more highly regulate this insurance than others, making it more costly for some employer in certain industries to operate than if the'd chosen another location.

State-level concerns
Every state says it wants to be business-friendly, but only some deliver on this promise. Government rules, taxes, and other factors can make it more difficult to open a business, operate and grow. Look for a state that makes it easy to get started and function. Find a link to regulations in every state from Here yo'll find answers on how to register your business or incorporate, taxes filing requirements, worker' comp and unemployment tax requirements, and more.

Local-level concerns
Like states, some cities and towns also make it easier than others for businesses to get started and operate. New York Cit's Small Business Services, for example, has a Small Business Express, which is a one-stop site to apply online for licenses, permits and certificates that are needed by a business to operate. Some locations, however, have red tape that can tie a business up and keep it from opening for months. In considering a specific location, check:

¢ Neighborhoods. Some areas may be prospering while others are declining. The fact that you may be able to obtain an attractive rent should not be the deciding factor if that rent gets you a store in a neighborhood with high crime and low customer traffic.
¢ Transportation. If your business depends on customer traffic, check access to transportation. Is there public transportation near your proposed location? Is there adequate parking for customers who drive to your business.
¢ Zoning regulations. These restrict where you can operate a business and even what type of business. For example, you may be barred from setting up a commercial concern in an area zoned for residential property. Zoning can even impact home-based businesses.

It's a good idea to talk with local merchants to get their take on the town's attitude toward business. You may find, for example, that the area has more rules than those in the Internal Revenue Code, and this could make your business life difficult there.

Finding business-friendly states
Some businesses have to locate in specific areas to take advantage of natural resources, transportation hubs, or for other reasons. If you want to run a charter-fishing boat for deep sea fishing, you can't operate from Kansas. Many businesses, however, are essentially free to choose a location. This is especially true today for Internet-based businesses that could be operated from just about anywhere.

There are some resources you can use to find states that are favorably-disposed to business. These include:

¢ *Business Owner's Toolkit has a graphic easily depicting the best and the worst states when it comes to individual income taxes, corporate taxes, and property taxes.
¢ *Small Business & Entrepreneurship Council's Small Business Survival Index ranks the policy environment across the nation.

Final word
The point to remember is to take your time before choosing a location. Do your research. Talk to other business owners. Then make an informed decision.

*Denotes a non-government web site

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes and The Complete Idiot's Guide to Starting a Home-Based Business, and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® at and host of Build Your Business radio. Follow her on Twitter at BarbaraWeltman.

About the Author:

Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.


Yes i totally agree with you that if you are starting new business take your time before choosing a location, think 100 times because let me tell you one real story like my brother and his friend starting there own IT business seperately, my brother choose his office in IT HUB which is very costly and his friend selected his office near his home. Now my brother business is going very well as lot of good client come at IT HUB, they attact by location, employees also get attracted by too mnay facilities and security. ( like gym, canteen, games, greeny area) so employees statisfaction is there. And in my brother's friend case employees stability is very less, they leave in few months, due to bad location and parking, he loose good clients, no extra facility for employees. So what i want to tell you that my brother has invested more money before starting business but now his decision to choose IT HUB location make him sucessful. So really location play very important role. I told this as per my real experience--jamith ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

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