Location, Location, Location

Factors that influence new businesses

• Research by the World Bank shows that it takes just 13 days to set up a business in the UK compared to the European average of 32 days.

• It ranks the UK first in Europe and sixth in the world as a location for running a business.

New entrepreneurs….

Where do most new business

start up?

In th

eir

loca

l

area

At home

Local market

stall

On line…

Most start-ups begin life at home, but then need to find extra/different space as the

business grows

Quick task

You will be given a set of ‘cards’

Sort them into TWO groups…

Qualitative factors Quantitative factors

Can you remember what these

mean?

Possible answers….

• Quantitative • Costs of property / rent• Technology• Availability of workers• Transport costs• Transport links• Suppliers • Competitors• Laws• Govt support

• Qualitative • Proximity to market• Image• Quality of life • Personal knowledge of

the area• The weather• Local amenities• Convenience• Inertia

Main factors affecting choice of location• Communications

• Labour

• Customers

• Suppliers

• Government assistance

What do these mean?

Communication• This includes transport facilities

(road, rail, air) as well as information infrastructure

• Transport links are particularly important if the business delivers products, sells direct using a sales force or is dependent on import and export

• Information technology is less of an issue these days – most start-ups can quickly establish reliable broadband Internet connections

Labour• When a start-up needs to hire

employees, then access to a reliable pool of staff with relevant skills is important

• Businesses that are labour-intensive often look to locate in areas of traditionally low wages

Market – Customers & Population

• A start-up may need to be located near particular centres of population

• For example, if the product is a service targeted at affluent older-aged people, then it is important to be located where there is a sufficient population of such people

• Franchise businesses often analyse the population characteristics of a potential new territory before setting up in a new location

Suppliers• The business may be dependent on

supplies of a particular raw material, so costs will be lower if the business is located near the source of supply (e.g. where the raw material is grown or where a distributor is based)

• This factor tends to be more important for manufacturing businesses rather than service businesses

Government help• Aims to encourage start-ups &

business growth in poorer locations

• Assisted areas – benefit from grants & low-cost loans

• Regional Development Agencies – focus government investment in target regions and industries

• Government support can be the difference between one location and another – particularly if it affects the location costs

Technology and home-based start-ups

• 60% of new businesses are started from home

• 2.1 million home-based businesses in the UK

• Popular sectors

– Business & professional services

– Online trading

– Food products

Location, Location, Location factors….

We know where you

live!

Prioritise the

factors

Using the mini case studies!

• Working in different groups…..

• You will be given a business to work with…. Using the factors that influence location cards….

• Create a priority order for that entrepreneur that influenced them when locating their business….

• Far Left = most important• Far Right = least important

You will have to

justify your decisions…

Feedback

From each group

Next task

Individual work….

Location, Location

Location???Be ready to justify your choices

Homework….

• Using your ‘map’ – Identify three places where a hotel could be sited. Mark with a H on your map.

• Write an explanation for your choice – to include some of the KEY factors that influence location