Site Selection: How to Choose the Right Business Location in 2024

Site Selection: How to Choose the Right Business Location

Selecting a new site for your business? Don’t brush off the saying “location, location, location” as a cliché in real estate. Where you set up shop can seriously impact your ability to cut costs, steer clear of risks, attract employees (and customers, especially in retail), and expand your business. Your chosen location isn’t just a formality; it plays a crucial role in shaping the success of your enterprise.

According to data from the US Census Bureau, on average, there are 4.7 million new businesses started every year–and in 2023, retailers across the United States were expected to open 1,000 net new stores, which means that commercial real estate is in high demand and that retail space availability has reached record lows.

So, if you are one of the over 5 million entrepreneurs who launched a new venture in 2023, you might be about to enter a bidding war for the best business locations available. But before you succumb to the allure of any overhyped location, remember that there’s more to selecting a business location than just an attractive lease in a buzzworthy zip code. Your site selection process must consider a range of factors to give you the best shot possible at success:

  • Easy access to major highways, interstates, and major roads
  • Short, favorable travel times for employees, vendors, and customers
  • Proximity to landmarks, population clusters, and other high-traffic areas
  • Availability of tax breaks and other financial incentives
  • Your competitor’s locations
  • Market saturation, including locations where your target demographics are concentrated—and areas you are currently underserving
  • Environmental concerns, including areas that may put your business operations at risk

And more.

Learn about the factors and principles of site selection, how to choose a business site selection successfully, and how Maptive’s robust GIS mapping software can streamline the site selection process.

What is business site selection?

Business Location Selection

Site selection is the process of combining financial, demographic, and geospatial research and analysis to choose the optimal location for your business.

Why is it important? Historical data from the US Small Business Administration indicates that about 70% of new businesses survive beyond two years, 50% beyond five years, 30% beyond ten years, and 25% beyond fifteen years. With those odds, selecting the right retail location might be the deciding factor between launching a successful enterprise or becoming a cautionary tale.

That’s why you should consider more than just downtown storefronts and strip malls–instead, explore a variety of options, including airports, free-standing buildings, and special event kiosks. This process, often conducted alongside catchment area analysis, involves strategically placing stores in optimal and densely-populated locations tailored to your target market demographics. A key aspect of retail site selection is a thorough examination of competitor locations, as their proximity can significantly influence success in the chosen area.

Industrial Site: Manufacturing or distribution businesses with unique needs should explore industrial sites, especially if large warehousing space, access to major transportation routes, or specific environmental considerations are critical to the operation.

Corporate Site Selection: If you are establishing an office or headquarters as a growth center, focus on identifying financially friendly and well-connected areas with a thriving workforce. The key is to achieve a delicate balance between low risk, minimal costs, and maximizing growth opportunities. The success of this selection hinges on finding a location that not only supports the current needs of the business but also facilitates long-term sustainability and expansion.

Retail Space: Businesses that rely on high foot traffic and easy need to strategically place stores in optimal and densely-populated locations tailored to your target market demographics. A key aspect of retail site selection is a thorough examination of competitor locations, as their proximity can significantly influence success in the chosen area. On the other hand, some businesses may need a physical presence while most of their sales are done online–and for them, commercial business spaces offer an ideal solution without requiring too much research for the site itself.

Mobile Business: Mobile card readers have multiplied the opportunities for small businesses to secure payments without a permanent retail store presence. Vendors at local markets, independent food trucks, and seasonal pop-up stores can all expand their reach with strategic site selection.

Home-Based Business: While running a business from your home has been thankfully normalized, sometimes your home office, garage, or basement might simply not be enough. If you want to keep working from home but require more space, you might want to consider moving into a bigger property, or–if you have the land and local regulations permit it–you might want to expand your existing home to create the necessary space.

In site selection, research is everything. The more valuable data you have, the smarter, more-informed business location decisions you can make.

However, research alone can quickly become abstract. And the massive volumes of spreadsheet data you’ll need for sound decision-making can be very overwhelming.

That’s why most teams conducting business site selection trust GIS software like Maptive to transform their troves of business location data into practical, intuitive, and actionable data visualization maps in seconds. Try Maptive free for 10 days.

What are the 5 Principles of the Site Selection Process?

Site selection without the guidance of principles is rudderless—and puts your business at risk of inefficiency, unnecessary expenses, and damaging decisions. Trust these five principles:

  • Business sites should be quick and easy to reach.
  • Business sites should be conveniently located for dense populations of your ideal employees and/or customers.
  • Business sites should take advantage of the best financial incentives like tax credits and tax breaks available.
  • Business sites should limit exposure to risks caused by compliance issues, environmental factors, entrenched competition, and more.
  • Business sites should be placed in locations forecasting long-term economic growth.

Data mapping can help you easily extract a shortlist of high-upside potential business locations. And Maptive’s wide range of powerful features can help you hone in on your best choice. Schedule your free live demo to get guidance, tips, and tricks on site selection for your business.

How to Choose a Business Location in 5 Simple Steps

Customer Data Heat Map

There’s no substitution for a clear process. Here’s how to choose a business location, from initial steps and what to research all the way through getting the best out of your data.

Step 1: Assemble your site selection project team

When it comes to picking a spot for your business, there’s too much at play to tackle it solo. Round up a crew for your site selection team—grab folks from your executive, operations, HR, and financial squads. Heck, throw in some site selection consultants if you think they’ll help.

Take, for instance, a retail store. You’d want a marketing manager on your site selection team to dig into customer demographics and shopping habits. It’s all about making the decision with a mix of perspectives to get it just right.

Step 2: Align your goals

Articulate the purpose of your new business site. Determine whether it will serve as a retail or corporate location and establish key parameters, including budget considerations. Develop clear criteria for measuring the success of the chosen site.

For instance, consider a coffee shop seeking a location in a high-traffic area, while a manufacturing plant might prioritize proximity to efficient transportation and utilities. Customize your site selection criteria to align with the specific goals of your business.

Step 3: Compile and filter initial data

Once you have your criteria in place, collect initial data. Internal business data, external commercial real estate data, and United States Census and Demographics data—available to you in an instant with Maptive—each give your site selection map valuable depth. Then, use Maptive’s Filter Tool to hone in on your ideal target areas.

This strategic use of data and mapping tools ensures a comprehensive and well-informed site selection process.

Step 4: Collect in-depth data to select top options

Now that you have target areas in mind, conduct comprehensive research on every important factor that may impact a site’s viability. Collect data on:

  • Access to major roads, highways, airports, and quality infrastructure
  • Demographics, analyzed zip code by zip code, focusing on the talent and customer pool, including education levels and household income
  • Competition, including size, location, and average wages
  • Finances: including utility and logistics costs, labor costs, tax rates, and government tax incentives
  • The local economy, including major industries, recent market trends, and forecasts
  • Environmental factors that could put your business, office, or employees at risk in the short- and/or long-term—or influence public policy, employee turnover, or operations

For instance, when choosing a location, a distribution center might take into account factors like proximity to suppliers and transportation costs, ensuring a comprehensive evaluation tailored to their specific needs.

Easily integrate your data from various sources—whether it’s an Excel spreadsheet, Google Sheet, CRM, or other .CSV files—into Maptive. The software streamlines the heavy lifting and analysis, facilitating a swift decision-making process. Maptive simplifies the selection of your top choices, allowing you to make informed decisions within minutes.

Step 5: Conduct site visits & decide on your site selection!

Visit your best potential site selections, conduct due diligence, make a decision, and negotiate your lease or purchase price. You now have your brand new business location!

And remember: location is important, but so is timing. If you are opening a retail location, you’ll definitely want to visit potential locations during peak hours to gauge customer traffic and assess parking availability. The same principle applies to corporate real estate: make an effort to commute to and from any prospective new location during different times of the day. This hands-on approach ensures that your business not only benefits from a strategically positioned site but also operates seamlessly within the rhythm of its surroundings.

While the selection process is far from easy, Maptive helps businesses choose office locations by making the most tedious and time-consuming steps as simple as a click of a button. Ready to choose your business location? Start your free, no-risk 10-day trial of Maptive now.

Site Selection Criteria for Specific Industries: What are Some Additional Factors of Site Selection?

Wholesale & Distribution: supply chain logistics between distribution centers, suppliers, and clients.

Real Estate: current market conditions and outlook, rental occupancy rates, real estate sales figures, and street-by-street insights for real estate brokers

Private Infrastructure: existing electric, fiber optics, water and sewer systems, and government contracts and spending data.

Airports: local domestic and international travel statistics, regional competition, access to interstates and major highways, and airline networks.

Restaurant Chains & Retailers:  local business climate, labor availability, access to suppliers, and local taxes.

Want to gain insight on factors specific to your business and industry? Brainstorm ideas and learn solutions with our rockstar support team. Schedule your live demo now.

Why Your Online Presence Matters in Location Selection

Marketing Metrics

For most businesses, your virtual storefront is just as important as your physical store. In fact, research shows that 76% of consumers look at your online presence before physically visiting a business. To give people a reason to choose your business both online and in-store you should strive to be easy to find and engaging enough to build real connections.

Here’s why:

  • Location Signals Online Visibility: Your social media profiles and websites are likely to be the first place potential customers will learn about you. Think of this as “digital real estate” because 46% of all Google searches are looking for local information. So a location with built-in online buzz will lead to more people stumbling upon your business just because they are looking up things in your vicinity.

Vice-versa, where you set up your physical shop might influence your online reputation. If you’re nestled in a safe, friendly neighborhood, people will be less likely to have negative experiences getting to your shop or waiting for their table.

  • Logistics and Online Operations: When choosing a location, find somewhere with internet providers known for being dependable and the infrastructure to back it up. This is as true for coffee shops and shared workspaces, as it is for any other business that relies on e-commerce and online bookings.

Plus, if you do a lot of online orders or deliveries, you should consider setting up shop somewhere with easy access to couriers and transportation routes.

  • Building a Local Online Community: Social media can draw in a crowd of curious neighbors hungry for something real. If you build your online presence right, you can harness in-store opportunities by creating immersive on-site events and even partnering with neighboring businesses for seasonal offers or collaborations.

Tap into Maptive for Confident & Productive Site Selection

With its industry-leading range of enterprise-level and user-friendly features, Maptive makes it easy to choose your best business location possible. Here are some (of many) examples.

Intuitively map your potential locations, suppliers, competitors, and more.

Your site selection map should be rich with layers of important data. However, that poses another question: how can you intuitively read so much information? With Maptive’s Grouping Tools: simply color and customize your markers by category, then filter them for easy retrieval.

Visualize market demographics with the click of a button.

No business location map is complete without demographic data. With Maptive, you get instant access to the latest U.S. Census Demographic Data, so you can get deeper insights into your chosen location’s population density, median household income, education, and more.

Meet your market demand efficiently with heat maps.

With hot spot heat maps available at your fingertips, you can identify where you’re succeeding—and where you need to open locations. All from your spreadsheet data. Visualize and track your concentrations of data, identify hot spots, and discover your cold spots.

Identify risky geographical and environmental factors.

A bad weather system can set your business back in an instant. Business-shattering factors can creep up on you with climate change. Identify geographic and environmental risks easily with rich satellite imagery sourced via Google Maps.

Optimize routes, drive times, and logistics in real-time.

When it comes to employees, customers, and delivery trucks, time and stress behind the wheel can have an outsized impact on your bottom line. Maptive’s dynamic duo of driving intelligence tools—the Driving Radius Maps and Drive Time Polygon Tools—can help you track how far you can reach, where you can go, and where your business should be—with real-time data.

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