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8 Tips to Choose the Best Location for your Business

In this article, we will look at the effect of business location on the business success. Here, you will see how location can affect the growth of a business. You will also learn how to choose the best location for your business.

A business set up with small capital in Nigeria may become successful than the one established with huge capital, just because of the location of each.

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While starting a business in Nigeria, the location should be among the top priorities, because the success of any business in the country is about 40% determined by its location.

How to Choose the Best Location for your Business
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According to Adebayo O. I., Ogunyomi P. O. and Ojodu H. O., in their book, Introduction to Business Management: the success of any business organization …is subject to where it is located in a given environment on account of political consideration, religion, ethnicity etc. Without business or economic advantages in place, a business will fail.

Further research shows, as the experts confirm that majority of Nigerian entrepreneurs do not achieve their expected goals in terms of profit because of wrong location of business.

Some businesses are sited in wrong areas for political reasons, fear of stiff competition, and fear of being burnt down during riots or to satisfy the ego of the owner who does not want to relinquish his position as Chairman, Managing Director or CEO.

Things to Consider When Making Decision on Business Location

1. Type of Business

You have to put the type of business you are setting up into consideration before you choose a location. The type of location that works for a manufacturing business might be disastrous for a service business.

Researchers maintain that manufacturing business located near supply source of raw material is bound to succeed, while on the other hand a service business can only succeed if located near the consumers.

This is because a service cannot be stored.

2. Accessibility

This has to do with the ease customers get in contact with the business. This could be the road condition or pattern, nearness to the major routes, or the consideration of immediate environment.

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Parking space, visibility for easy identification of business premises, traffic flow etc. consider a situation where a customer spends up to an hour to get to your business premises, when 15 minutes can land him at your competitors business place to conduct similar transaction, as it happen in most Nigerian cities such as Lagos. Such a customer can only return to do business with you on special or personal grounds.

3. Legal Norms

It is also important to be aware of an area’s legal code before deciding to site your business there. Legal issues that may likely to affect your business according to experts include environmental issues, zoning, building code, signs and licensing. In Nigeria if your business is the type that produces a lot of waste or sewage, you should know about what the law says concerning that before choosing location for your business.

4. Proximity to Customers

If you want to open a stationery business or bookshop, you don’t leave a university community and site your business in a rural area where Farmers live; you have to locate the business where students stay.

A restaurant located near offices, companies, factories markets etc has more success potential, than similar business located in residential areas.

Therefore, when you are thinking business, think a location that suits your target audience.

5. Availability of Utilities

 Utilities such as electricity, water, internet services etc. are very significant for the success of a business. Most customers patronize businesses mainly to utilize their utility facilities such as the Wifi.

6. Security

security is another factor that affects business success in Nigeria. Increasing crime rates in Nigeria render some areas not good for business and unsaved for shopping.

If you enter a restaurant to eat and have to abandon your food and abscond as a result of gunshots emanating from cult clashes or armed robbery, likewise other businesses. I don’t think you can go back there.

Therefore, security consideration should top your decision about business location. Everybody loves their live and nobody is ready to lose it for whatever reason, let alone at a business premises. So take security serious while siting your business.

7. Labour

When considering a location for your business, you should not leave labour out of the equation. Closeness to the source of labour supply is very significant for the success of a business.

Business located close to the target consumers and near residential areas, where workers come from, is likely to see the light of day than the opposite.

8.       Competition 

There are certainly other companies or individuals, who are already in business before you. Thus, if you wish to garner a good portion of the market share, you need to locate your business a bit distance away from those fore runners, else they will present stiff competition to you.

However, there are some businesses you have to site close to competitors, though you will face fierce competition. Example of such businesses is restaurants and college canteens usually concentrated in a particular area.

In such a case, citing your business in a different location might draw less traffic even though you cook the best food and offer the best service.

Thus, sometimes it is better to cite your business near your competition since consumers of such goods and services already know where to get what they want.


Expert research and analyses such as Business Location and Success by Nuru Indarti has shown that location has a significant effect on the success of a business, even in Nigeria.

Findings also confirm that any business in Nigeria rightly located has high chances for success. A business is likely going to succeed when sited in an area that is suitable for that type of business, where customers can easily gain access.

Legal code that are friendly to the type of business, the business proximity to customers, availability of utilities, security and nearness to the source of labour are among the factors any entrepreneur should consider before deciding on where to locate his/her business.

Location is a very important factor in business decision making, and has a great effect on the success of a business. That is the reason the factors explained above must be critically examined before choosing location for a business.

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Samuel Udo

Samuel Udo is a graduate of Political Science. A Creative/Freelance Writer and Public Commentator whose articles have been published in top print media such as 'The Pioneer Newspapers'. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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