This article is part of our Business Startup Guide—a curated list of our articles that will get you up and running in no time!
If you’ve been thinking about starting a business for a while, chances are you’ve got an idea of what your business location is going to look like.
That’s great, but it’s not enough.
Choosing the right location is about so much more than finding the place that looks closest to the one you’ve envisioned.
It’s about being somewhere your customers will see you, about being in a competitive location, about staying within budget, and about meeting local and state regulations and laws.
In this article, we’re going to review the things you need to keep in mind when choosing a location, offer you advice on where to look for a business location, and provide you with a few resources we think you’ll find useful as you work through the process.
Listen to Peter and Jonathan talk about the friendliest and least friendly cities for businesses on the fourteenth episode of The Bcast, the Bplans official podcast (at 27:42):
1. Questions to guide your business location search
Before you get into the nitty-gritty details of choosing the location, consider the following things.
- Where is your target market located?
- What image or brand do you want to convey?
- How do you fit in with or stand out from your competitors?
- How close do you need to be to suppliers?
- What kind of neighborhood do you want to set up shop in? Is safety very important?
- Will you easily be able to find employees?
- Is your area business-friendly?
- Do you have access to an engaged community that is eager to help?
- Will you have to do extensive renovations before you can move in?
- How much are property taxes? How much are income and sales taxes? Balance them out.
- Could you pay less by choosing to start up in another state?
- Can you afford to pay your employees at least the minimum wage?
- Do you qualify for any government economic programs or incentives? Might you qualify somewhere else?
- Can you legally conduct your business in this area?
- If you want to make renovations or changes to the building, are there any legal restrictions?
- Are you going to run into restrictions because of zoning laws in your area or location?
2. Understand zoning laws and rental terms
Before you begin the “hunt” for the perfect location, it’s worth knowing a little bit about how zoning laws may affect you.
Zoning laws and setting up shop
In terms of where you can legally operate your business, you should consider local zoning regulations and ordinances. These will affect your ability to make changes to the property you purchase—and indeed, to purchase it in the first place. They will also define how various properties can be used and could place restrictions on things such as the height or size of a structure.
In general, a property is zoned either for commercial or residential use. This stops businesses from building in residentially-zoned areas, and vice-versa.
The best thing to do to find out how property in your area or city is zoned is to contact your local planning agency. You can also look to an attorney for help through the process.
A simple Google search should turn up a zoning map of your area as well, so give it a try.
Here’s an example:
If you’re operating a business out of your own home, many of the same zoning laws will apply to you. Common restrictions may include: limiting or prohibiting signage related to your business outside or on your home, making exterior changes to your home that relate to business activities, and traffic- or noise-related restrictions.
Depending on your city or council, you may also be required to obtain a Home Occupation Permit. Here’s an example permit for the city of Portland, Oregon.
It’s also worth remembering that if you rent your home, it may not just be zoning codes you have to contend with. Often, landlords will have a clause in a lease stating that the property may not be used for commercial purposes. In this case, if you break the law, you risk not just having your business shut down, but getting evicted.
The point? Do your research!
3. Start your search on foot and online
Knowing what kind of location you want and what you need to consider is all very well, but where do you go to find a physical business location?
A few of your general options include:
- Your local SBDC
- The local Chamber of Commerce
- Walking the neighborhood keeping an eye open for rental signs
- Commercial real estate agencies
A few sites that list commercial properties to rent include:
4. How others found their business location
Location prestige and SEO
Loveletter Cakeshop is a boutique wedding cake bakery located on 535 Fifth Avenue in Manhattan. Owner and head chef Brandon Baker says that he picked this location for a couple of reasons.
Firstly, that being on Fifth Avenue is a must for any luxury company in New York. “If you live in a city where certain streets carry clout and meaning over others, you must consider your address as an integral part of your overall branding efforts,” he says.
And secondly, that being positioned in the middle of the city gave his company an SEO benefit. “When you search for a local business in Google (e.g. New York Wedding Cakes), Google will show you businesses that are located nearest to your precise location. By positioning ourselves in the geographic middle of a large city, we made sure we were never too far from a searcher in Manhattan,” says Brandon.
For Bridgette Freeman, managing broker at Juwai Realty, location and prestige were also important deciding factors. “Although I am not pretentious, the industry I am in is very pretentious and location matters,” she says.
Of course, a great looking location in a good area isn’t all that counts. Bridgette adds: “I [also] looked at neighboring businesses, proximity to the interstate, and ease in getting to us. In this case, those things fit the bill and it was down to what’s in a name, or rather, a street name. Our business in located on Country Club Drive and down the street from a large country club community.”
Because Juwai Realty specializes in luxury property, it’s important that their business reflects the same. “An interior designer was hired to make the space shine. We close deals once people know our address and visit our office. We all know how important deals are to any business, especially a real estate business.”
Location, location, location!
Be where people expect you to be
For London-based tech startup Crozdesk, picking a business location had a lot more to do with where others like them were going to be located.
“As a tech startup, it was paramount for us to be located in what is called ‘The Silicon Roundabout.’ We identified a trend in London: the setting up of offices, communal spaces, and warehouses under the rails of the overground, inside ‘The Arches.’ Once we were sure about our location, we used Gumtree.”
In the tech world, access to talent is of paramount importance. When you situate yourself in the middle of the exact place things are going to be happening, you make your life that much easier.
Crozdesk is now located in the hub of London’s startup scene, granting them access to exactly these things: talent and a thriving lifestyle with lots of foot traffic (they’re just behind the famous Cargo Night Club).
Put your clients’ needs first
For Polaris Counseling & Consulting, having a location that would be easy to get to was a primary consideration.
“We did some market research with our clients before we opened up shop. As therapists, we had existing clients at other agencies that chose to follow us to our new location. We made sure to let them know that we were leaving, and asked them where the easiest central location would be to get to,” they said.
Ultimately, they decided on a location in Pawtucket, Rhode Island, located right off the 95 and on every major bus route.
“For our local and some non-local clients this allowed easy access to all. We also saw after a few months the need to open up a virtual office for more of our out-of-state clients who wanted access to our services.”
Consider doing your own market research, and ask your target audience where the ideal location for them would be.
Think about your own values and where you will be happy
Harold Hughes was told that if he wanted his technology startup Bandwagon to be successful, he’d have to move to Silicon Valley.
The problem? He wanted to stay rooted in his community in South Carolina. “My company, Bandwagon, is a ticket market for college sports, so where better than the South to start a company? This is the home of college football, so by staying here in Greenville, SC, I get to stimulate job growth in my community while staying close to our customers—the fans!”
At the end of the day, Harold made the choice that was right for him, and he really couldn’t sound happier!
Other useful resources:
Do you have experience choosing a business location? What did you do right, and what would you change? Tell us on Twitter @Bplans!