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Complete Guide to Location Strategy

A location strategy is a plan for obtaining the optimal location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives.

What is location strategy?

Location strategy is the setting of objectives and finding the most appropriate location for a business to conduct its operations successfully.

Why is location strategy necessary?

Before opening a business or franchising an existing business, a company must decide where it will be most beneficial to do business. Lack of an appropriate location strategy may result in a company’s failure.

Various criteria determine business site selection criteria, but the following are the most vital:

The geographical location of the business determines its success or failure. In the case of suburbia, businesses can choose where to locate themselves geographically. A company should look for the best location and in the most profitable areas. A business owner can then easily determine the most effective plan to position their business to meet their objectives.

How to conduct a location strategy?

When creating a location strategy, the following must be considered:

The site must be easily accessible to a large number of consumers. If the site is not easily accessible, this can affect your business and you may not be able to reach a significant number of consumers.

The site should be well-located. A business should be located in a high-traffic area with high visibility. Such visibility is a must for any business looking to conduct a marketing campaign and advertise its products and services.

A site should be affordable. A company has to consider the creation of the infrastructure necessary to provide the services which will allow for the most potential revenue. If this infrastructure is expensive, this must be considered in the company’s budget.

A site must be safe from crime. This affects the physical structure of the site as well as the company’s operations and property. Security measures are a must, including at least one security guard and a company-wide security system. This will enable management to monitor all entrances and exits, as well as monitor all employees’ locations continuously.

What to look for in a location?

Each location has certain characteristics which make it the most appropriate for different businesses. If a site possesses certain characteristics, it can be beneficial for a business. Identifying the most appropriate location can be achieved by first listing the advantages and disadvantages of each potential site. For example, a site that is located in a low-revenue area but has greater visibility is more likely to attract more clients.

The company must then consider the potential of each site. If the site is located in a business park, it can be assumed that it will be accessible and has a high potential to attract customers.

The company must then consider the following:

Are there any existing businesses in that area? If there are many existing businesses in an area, a business’s chances of survival will be greater.

Does the business have access to employees? Choosing a site in close proximity to where the company’s workforce resides is a must. Contact employees at the location, and find out if they are happy with their commute and living situation.

What business laws must I consider?

When choosing a location for one’s business, one must have a choice of sites to choose from. To ensure that all development, construction, and zoning requirements are met, it is a must to receive zoning permits from the municipality where the company will be located.

What is zoning?

Zoning is the classification of a piece of land in accordance with the various uses of the land. A zoning regulation determines which types of projects can be erected in which areas. For example, a residential area may not fit the requirements of a commercial zone. It is necessary to have zoning laws to protect land and ensure that the most appropriate use of earth is made, in order to ensure its long-term use

What types of zoning laws exist?

There are two sets of zoning laws:

POPULATION-SCALE ZONING LAWS:

Most municipalities use zoning laws for population-scale zoning, which divides a municipality into areas that allow for different business types. For example, a residential area may not permit a company to sell items such as musical instruments, while a business park would be the most appropriate place for such a business.

LOCATION-SCALE ZONING LAWS:

This zoning law determines the type of use that can be made of real estate in a specific area. It must be noted, however, that this zoning law is used less frequently.

Taxes and regulations

When thinking of opening a business, some entrepreneurs do not think of the taxes. When considering a new location, one must think of how much the taxes will affect the budget and the business’s revenue. Each state and nation has different regulations and tariffs. calculating all the costs for a new business is essential.

Comparison of business taxes

When comparing different locations, it is crucial to understand which business tax each location has. Each tax will affect the company’s budget, as different taxes must be paid every month. Some of the most common taxes and tariffs in the US are:

Sales tax: This tax varies depending on the state, and is determined by the amount of profit that the company makes. This tax is usually calculated after all costs and expenses have been taken out.

Gas and Diesel tax: This tax is calculated according to the number of gallons of fuel which a company uses.

Property tax: This tax is determined according to the land’s taxable value. This taxable value is established using the assessed property value, which is calculated in accordance with market value.

Tax exemptions and credits

A location that is exempted from tax and tariffs can be considered when selecting a site for a new business. Such a location is preferable due to the following reasons:

  • This location is more attractive, as investors can pay less to the government.
  • The taxes have no effect on the business’s revenue.
  • This type of location will be easier to develop.
  • Other business benefits of this type of location, include the elimination of the possibility of some conflicts, such as:
  • The government’s cut from the company’s profit does not affect the company manager’s salary
  • The government is not criticized for taking from the company

What types of taxes can I get?

Some states have incentives for investing in certain sectors of the economy. In this way, states encourage the development of certain sectors of the economy, and one can benefit from these benefits. There are also benefits for newly registered companies, and for investors who have not paid taxes in a certain period of time. There are also non-tax benefits. Such benefits, in turn, can favor a certain business, as it will enable it to benefit from the government’s financial support.

Non-tax incentives are not the only benefits for which a company can compete. Depending on the nature, procedures, and requirements of the competition, a company can receive a free entry permit, a visa, and documents, or a tax exemption.

In addition, it is possible to receive all of the aforementioned benefits for a project which will be carried out in a government-owned site.

How to qualify for non-tax benefits?

It is important to know how to become a non-tax benefit, as it will be necessary in the future when assessing the company’s revenue. This is how you can qualify:

  • The site on which the project will be built must be a government-owned.
  • A service or product must be identified which meets the said criteria.
  • The choice of the site is based on the following criteria:
  • Current economic conditions
  • The financing budget
  • The potential and feasibility of the project
  • The required agreement structure

How are tax benefits calculated?

This type of benefit is calculated according to the area and the costs associated with a project. This means that a larger area and a higher cost, a greater tax benefit can be obtained. Many countries around the world provide tax benefits to investors, as well as financing. Each country sets limits, which are usually determined in accordance with the site. It is important to note that these areas in which tax benefits can be received, are usually restricted to certain industries.

Tax benefits should be considered when choosing a site for a new company, as it will significantly affect the company’s revenue

Market perception

Each location has a different market perception. Some sites within a certain location have a wide market perception, while other sites, which are also located in that place, have a narrow perception.

The market perception

This perception of a location is rooted in two aspects:

  • The perception of the site
  • What the site contains

The market perception is important, as it determines the feasibility of a certain location:

If the location does not have good perception, there will be a lower number of potential investors.

  • More taxes that must be paid.
  • Less profitability

DIfferent restrictions on the usage of the land

In order to gather information relating to the market perception of a certain location, it is necessary to work with a company that specializes in market research.

Although the market perception of a site may be negative, it is possible to change it

The market perception of a site can be changed, but it will take time and continuous efforts to do this. It is necessary to be patient and persistent, and to establish a comprehensive plan of action in order to achieve the desired results. It is crucial for such a plan to include a marketing strategy.

It is a good idea to invest in the promotion of a business, before starting to work. The first step is to advertise a business as much as possible, and when advertising aims to entice potential investors. It is important to keep in mind that when choosing a site, the location will be more important than the brand. Therefore, the primary factor that a potential investor will consider is the location.

A company should choose a location based on the potential for establishing further branches, as well as the awareness of the store’s activities, as this will enable investors to become familiar with it.

It is important to hire a marketing company to highlight a store

A company must hire a marketing company, as it will help to emphasize its presence, and to make people aware of its activities. This can be done in the following ways:

  • Advertising
  • Promoting
  • Asking for recommendations
  • Writing articles

The company can benefit from the help of internet marketing companies, which will assist them in establishing a presence on the Internet. This will enable investors to become familiar with the company’s activities, and to recognize its name, and thereby be influenced to invest.

It is possible to open up a store in a given area, but it is difficult to develop this location, and therefore it is more worthwhile to open a store in a location which has a broad market perception, as it will be easier to develop this location, and one can open up more stores and develop its great potential.

It should be noted that when opening up a store in a location with a narrow market perception, it is necessary to operate with the utmost concentration and determination, as this business is not self-evident.

A location with a broad market perception should be the first consideration when choosing a location

Combine business and pleasure

The type of location in which a company decides to set up is an expression of many aspects:

  • The company’s future
  • The company’s strengths
  • The owners’ preferences
  • The company’s activities will be located where the owners wish to launch them
  • The company may need to set up a location which can serve as a branch, as well as a place for meeting with clients
  • The company’s image will also be affected, as its location will influence its customers

Therefore, when choosing a site, it is important to consider all these criteria, and in the future, when evaluating the company’s revenues from operations, the location should be considered.

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