So how does it affect the expense account? Take an example of a retailer who is establishing a business far from your target consumers. Here, you will directly lose on sales from marketing, because it is important to create a convenient outlet for the consumer by making it as close as possible to his or her residence or office. On the other hand, if you are a supplier or distributor, transport is one of the highest costs that you will always encounter. If you base your warehouse far away from your client’s outlet will automatically mean more costs in operations. In the end. this would automatically affect the end consumer because these costs are factored into the market price of the product or service, forcing the customer to dig deeper into his pockets.
It is important to note that location does not only affect start-ups, but also established businesses who are looking to scale up their current size with more chain outlets. So what are the things that one should look out for when thinking of location?
1. Market range
The proximity to the market is a key consideration to where you should establish your business. The closer you are to your end consumers, the less costly it would be for you to get your products to them.
2. Labor availability
When choosing location,it is also necessary for you to consider whether your customers can reach the site in comfort and without spending too much time in transit. Choosing a location should also be convenient to your work force also or else they will be spending more time in transit between work and residence, eating into their energy and transport costs.
3. Nearness to natural resources
For companies that deal in manufacturing, it is of utmost importance that they set base near their sources of raw materials, as it will mean that would they would incur less in transport costs for transporting raw materials to and fro from the site.
Security is key for the success of a business. No firm would like to be located in a place where they are always under threat of thefts and break-ins.
5. Infrastructure availability
Good roads, rail roads, electricity and communication lines mean that businesses will feel more inclined to set up shop in such an area.
There are a number of checklists for businesses before choosing a location, as every business has its industry-specific requirements and which vary from one another.
The article is about business location which is the key factor to all aspects in many ways than you can imagine. It doesn’t matter where you are positioned in this chain – retail, wholesale or distributorship – at the end of the day location will still be a vital factor to be considered. So, the first question that we should ask ourselves is why location is so vital. For one, it’s because it directly affects the expense account, and the expense account as we know directly affects the net profit or income of the business.
Image courtesy: FreeDigitalPhotos.net