3 Reasons Your Business Location Matters

Finding the perfect location for a business could help increase sales, but there are so many things to consider before picking a spot. You need to think about what you want out of a location to what area would cater to the style of operation your business is. However, the location of a small business matters for three main reasons: the effect of minimum wage and taxes on your profitability, rental trends, and gaining exposure to your target audience.

1. Minimum wages

An increase in minimum wages could affect the profitability of a business. If there is an increase in minimum wage, then you could potentially increase the cost of your goods and services. Borderlands Books, an independent bookstore in San Francisco has closed down because of the increase in minimum wage. The minimum wage has been announced to raise from $11.04 and hour to $15 an hour by July 2018. The minimum wage caused the business to have an increased cost that they couldn’t afford. Because books have a set price labeled on them, the bookstore was unable to raise the price of the items being sold, which unfortunately put them out of business.

2. Rental trends

It is important to understand how much money your business has to spend on rent and rent-related expenses. If your business does not have a budget that allows for some movement in rent (and other related) expenses, you have a greater chance of overspending and cutting into your hard-earned profits. Over 1,400 small businesses closed shop in New York City in the face of steep increases in rent over the last three years.

3. Targetting the right market

There are so many ways to reach out to the each demographic, and the location of a business is a huge one. There are obvious reasons as to why location is a necessity for a business to prosper — opening a surf shop in the middle of the desert is not going attract many customers. The location of a company could bring you closer to your intended audience, which can significantly increase your sales. As a business owner, it is important to understand who your target audience is and where they are. Find businesses that are similar to yours and see why they picked that particular location — it could be for rent affordability or to reach out to their intended consumer base.

Sources: Borderland Books, Rental Trends