How to Choose a Location for Your Business in 10 Steps

Business along Main Street in Hudson, Ohio KSponslor / Deposit Photos

As a business owner, finding a suitable commercial space is one of the most important decisions you will make. Although there is a growing number of entrepreneurs running profitable businesses from their homes, a commercial space lends credibility to your company and, depending on your niche, allows you to sell products across more than one medium. Customers are also more likely to trust your business if you have a physical location where they can make enquiries and get to know you in person.

However, finding commercial space isn’t always a walk in the park. There are countless horror stories of “too good to be true” rental scams, incompetent lawyers misinterpreting lease agreements, or excitable first-time entrepreneurs locking themselves into unrealistic contracts.

Therefore, how do you find the ideal commercial space?

Choosing a Business Location

To help, and to guide you in the right direction – figuratively and literally – we’ve compiled a comprehensive guide on what to look for in your search, and what to avoid. This is how to implement a business location strategy that works for your business, every step of the way.

1. Count the Cost

Commercial spaces come in various sizes and designs, and they are all priced differently. Therefore, you need to evaluate the cost of renting (or paying the mortgage should you choose to buy), and determine whether your business will be making enough money to cover these costs.

This is where you need to be realistic. While the pull and allure of a downtown all-glass workspace might be difficult to withstand, the last thing you need is a buildup of rent arrears on your hands. If you are just starting out, and you aren’t sure of how much revenue the business will be generating, it is generally advisable to spend up to 15% of your estimated monthly income on rent. Also, don’t forget to account for other associated costs, such as security deposits, administration charges and maintenance fees that may also be due.

2. Consider Your Accessibility

It may be an age-old cliché, but location is indeed everything in business; it can enhance the profitability and value of your business, or hasten its failure. Therefore, it’s essential to understand how your location can affect your two core stakeholders: your customers and your employees.


You should aim to find a site that compliments the nature of your enterprise and brings you closer to your potential customers. For instance, if you are running a small coffee outlet, then a great location would be in gas stations or shopping malls. If you are opening a pharmacy, then it makes sense to find a location near hospitals or medical centres. Always consider where your target audience is likely to be, and keep this in mind when choosing a location.


You want your location to be easily accessible not just for customers, but for your staff, too. Examine the reliability of your local transportation network, and ascertain whether you are easy to reach; not everybody drives a car, after all, but not everybody lives near a train or bus route. In order to attract the widest possible pool of candidates, you should ideally be within easy commuting reach.

You also need to bear in mind what the local labour market looks like, particularly if you operate in a high-skills niche. It makes little sense to situate your tech startup in the middle of a rural farming community, for instance; instead, look at tech hubs that possess the skilled employees you will need.

3. Look at What Your Competitors Are Doing

Some experts argue that the location of your competitors is irrelevant, but it is still worth taking into account. For instance, if you are running a clothes store and all your competitors are located in the local shopping mall, then ideally that’s where you will need to be, too. Consumers are more likely to “wander” into your store in this context than come directly to you in an isolated location. Modern consumers like to compare and weigh up their choices, so being amongst your competitors gives you the best chance of proving that you’re worthy of their purchase.

4. Judge the Length of the Lease

A rental or lease agreement can be your greatest ally if misunderstandings arise between you and the owner of the building. It’s a legal contract that outlines, among other details, the rental cost of the space, terms of payment, tenancy restrictions and, importantly, the length of occupancy.

Therefore, before you move into a rented or leased space, have a clear idea of how long you want to stay there. Do you want a site for the long-term or just a place to start up and move from once the business picks up? If you have long-term prospects, then go for an extendable or renewable lease. Fixed-term agreements are more suited to business owners who want to rent a space for a shorter period, such as a year or two, and then move on to another location.

4. Look for Parking Spaces

With the number of vehicles on roads around the globe, parking space is rapidly becoming a vital driver for business growth. The modern consumer would rather purchase a single item in a shopping mall with ample parking than spend time fighting for a space along a busy high street. As such, try to find a location with sufficient parking space for your employees and customers.

5. Consider the Size of the Property

The size of your chosen property should be able to support all your current business operations, with enough floor space to stock products and comfortably accommodate all your employees and customers. Indeed, a 2016 study by the World Green Building Council showed that stuffy workplaces not only lower employee productivity, but also customer shopping experiences, too. If you lack the funds to rent a bigger area, you can hire an office designer to make your small space more functional and productive.

6. Explore the Potential for Expansion and Purchase

Of course, as your business grows, then your sizing needs will change. You may need a bigger space to house new employees, store inventory, or even create new facilities, such as meditation or workout rooms. If your current space cannot – or will not – cater for this expansion, then you will likely have to relocate.

This presents its own set of challenges, as you will have to build a new customer base and become familiar with new surroundings. It also costs time and money. Therefore, to avoid such costs, ask the building owners whether the commercial space you are interested in can be expanded to meet your future needs and, if possible, have that option inserted in your lease agreement.

To Lease or to Buy?

This is a question many business owners grapple with. While both of these options have their benefits and their downsides, purchasing commercial space enables you to invest in an asset that will increase the value of your business. For many small businesses, however, purchasing real estate – especially in volatile markets – is often out of the question. A suitable compromise is to rent out for the time being and, when market conditions are favourable, discuss the potential for purchase with the owner.

7. Judge the Security

Your business will struggle to thrive in a physically unsafe location, simply because many potential customers will avoid the area. While incidents of crime can happen even in the most secure neighbourhoods, it is preferable to find a location that has a good record of public safety and a low crime rate, in order to inspire confidence in your potential patrons.

In terms of building security, ensure that there are sufficient security system installations (such as alarms and CCTV) in place, and that they are functioning. If your company is going to occupy an entire stand-alone building, then you can also ask the property owner to hire a security firm to secure the premises.

8. Consider the Location’s Image

Like companies, buildings can cultivate reputations, with locations sometimes as iconic as the businesses themselves. Indeed, buildings with a ‘cool’ factor can play a significant role in adding to the perception and stylistic angle of your brand.

This is particularly important for businesses whose target customers – and target employees – lie in the millennial and Gen Z age group, where image is seen as more enduring. This is evident in the repurposing and conversion of older buildings into modern offices, and, although spaces in such buildings are costly, they are ideal for tech startups, high fashion stores, media firms and professional services providers.

9. Conduct a Background Check

Before you sign any agreements, it’s a good idea to get some feedback from the existing or previous tenants of your chosen locale. A good question to ask is how quickly the property owners respond to tenant complaints, especially in regards to maintenance issues such as a leaky boiler or an electrical fault.

If you are planning to stay in a property for the long term, or you are considering purchasing it, then feel free also to inspect the structural integrity of the space, and ask for repairs to be done in any areas that don’t satisfy you.

10. Be Compliant

Finally, it’s important to be aware of any regulatory restrictions that might affect your business, too. Zoning compliances or ordinances are a set of rules that regulate how a particular geographical area can be developed and used, and can limit or prohibit certain activities or business developments. For instance, in many regions around the world, it’s illegal to sell alcohol or run gambling operations within certain distances of schools or churches, while there may also be noise or smell restrictions that could affect your manufacturing processes. Be sure to study any such zoning compliances in your preferred neighbourhood, and identify how they might affect your business plans.

On the flip side, there might be government or privately-backed incentives for you to set up shop in a particular area, and you should check with local business agencies and policy bodies to see if this is the case. Depending on your line of business, you could potentially receive tax breaks and financial assistance, especially if your company operates in an in-demand niche.


Wherever you choose to set up your business, it’s vital that, before you sign any agreements, you have thoroughly researched what you are getting yourself into – especially if you are a new venture. In legal terms, ensure that you have the full picture of what your obligations are, and in business terms, understand how your choice is likely to impact your short and long term strategies.

What other advice would you give for entrepreneurs looking for a new business location? Let us know your thoughts and experiences in the comment section below!