Factors to consider when locating the business

  

Date Posted: 11/22/2012 1:46:28 AM

Posted By: saucer  Membership Level: Gold  Total Points: 4885

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The location of a business is the place where the business conducts its business operations. The location of the business may determine whether it succeeds or not.

These are the factors to consider when locating the business.

1. The business should be close to the market. This is to reduce on the transportation costs after production. This will also save on time of transporting goods to the market.

2. The business should be located near the source of raw materials. This applies when the raw materials are bulky like timber. It will reduce the cost of production when the firm is near the source of raw materials. This is because it is cheaper to transport the finished goods instead of the bulky raw materials.

3. A business should be located in place where labor is readily available. Situating the firm in place where labor is readily available will reduce the cost of production. This is because it is expensive to move labor to and from work daily.

4. A business should be located in a place that has electricity. Most businesses require power to carry out its operations. Electricity is used in the production process and so the business should be located where there is enough power.

5. A business should be located in a place that is accessible. A business should be in a place that is well connected with transport and communication. This will aid in its production and distribution processes.

6. A business should be located in a place that is near secondary services to business. These services include; banking warehousing and insurance. They supplement the business in its operations and ensure smooth running of the business.

7. A business should be located in a place that is near water supply. Businesses that use large quantities of water in their production processes must suited

in an area with a good water supply. The water is essential also for the workers’ productivity. It is a very important factor.

8. A business should be located in a place that has room for expansion. This is an important factor for those entrepreneurs who are future oriented. As the business operations grow so will the business physically. It is advisable to have room for this expansion.

9. A business should be located in a place that is near the suppliers of the raw materials. This will reduce the cost of transportation between the supplier and the firm. It will ensure there is a constant flow of goods.

10. A business should be located in a place that has social amenities. These social amenities include; hospitals, schools and recreational facilities. These are going to be used by the employees and their families.

11. When locating a business it is important to consider the government policy. The government may have set rules how which business can be started in which areas. One such guideline is when the government encourages businesses to be set up in rural areas.

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