Why Location Matters for Your Small Business

by Danielle Bloom

2 min read

Selecting the right location for your new small business plays a crucial role in determining its success. Having your business situated strategically helps it establish new customers. As part of your business development strategy, have a clear idea of what your business requires regarding location before you begin your search.

The Right Customers

Establish your small business in a location that attracts customers in your specified target market. For example, if you own a car dealership that sells expensive vehicles, opening in an affluent suburb is likely to result in more sales as opposed to conducting your business in a lower socioeconomic suburb. Once you ascertain the type of customers your business wants to attract, research the demographics of several locations to determine which one best suits your operations. Consider visiting the Statistics Canada website as a starting point for conducting your research. Visually survey the location where you intend to open a business; does the neighbourhood have other businesses that target customers you want to attract? If it doesn’t, it may not be the optimal location to start your business.


Analyze competing businesses in the location you intend to open your business. Do businesses in the area offer similar products and services? Opening in proximity to other businesses that target a similar customer base may benefit your business as potential customers already visit the location; you can offer different services in a specific area, such as price or customer service, or focus on a particular niche of a generic market. For instance, if you own a small accounting business that specializes in taxation for the self-employed, you may secure clients who are independently employed and require more detailed tax advice than what your competition provides.

Cost of the Location

Don’t dismiss a business location just because it is expensive; if the sales your business is likely to generate offset the cost of conducting business in the location, it may be viable. For example, if you operate a small cafe in a trendy shopping precinct and pay hefty rent, it may be justified if the passing foot traffic converts into sales. Before purchasing a business location, consider leasing or renting to determine if the area has long-term potential for success. If an area does not have an established customer base, it is prudent to be mindful of conducting your business at that location.

Compatibility With Your Business Operations

It is imperative that the location you choose to run your startup is consistent with your business operations. For example, if you own a small online business, it could benefit from being near large logistic companies to expedite delivery times to your customers. Advancements in technology have made it easier to run your business from a home office. For instance, if you operate a bookkeeping business, you could service clients throughout Canada using cloud accounting software. If you need to conduct face-to-face meetings with your clients irregularly, working from home and renting out a serviced office when required could provide a solution.

References & Resources

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