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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
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