Nature of the business activity
Retail
Retail companies generally want to be located as close to their customers as possible. Retailers sell products directly to customers so are most likely to be located in busy areas and around other retail outlets. The exception to this is where a retail business only sells products through the internet.
Service
Service companies sometimes need to be located near their customers but sometimes they can be located anywhere. Some examples of service companies that need to be near their customers are train operators and taxi companies. Some examples of service companies that can be located anywhere are contact centres and web designers.
Manufacturing
Manufacturing companies generally prefer locations with cheaper rent rather than being close to their customers. Many manufacturing companies transport products around the country or even further. Business location for these companies generally is decided by costs, especially for small businesses. If a product is bulk gaining, the manufacturer may consider being located close to its market, depending on cost. If a product is bulk reducing, it usually makes sense for the manufacturer to be located closer to its raw materials.
The importance of infrastructure
Infrastructure refers to the facilities that support everyday economic activities, eg roads, phone lines and gas pipes.
An efficient transport network enables staff to get to work easily. It also allows supplies to be brought in from far afield and permits finished products to be moved to market cheaply and quickly.
The impact of location depends on the type of business. For example, it is important for shops and restaurants to be conveniently located for customers. A delivery-only takeaway may prefer to be located in cheap premises on the edge of town, close to good transport links.