Factors To Consider when Choosing a Business Location in Nigeria

There are factors to consider when choosing a business location? But when considering these factors, questions like: How can one conduct a business location analysis? What are the importance of location to a successful business, come up to the mind.


Ironically, Choosing a small business location is an issue most entrepreneurs carryout without blinking an eye. Many entrepreneurs are believed to overlook this trend believing that in order to reduce expenditure, one can willingly settle for a cheap location. Others believe that location doesn’t matter provided the product is right.

However, one most understand that getting a good location is very essential to the success of your business but this can prove quite challenging because not all entrepreneurs has a good business site.

If trying to trend into the process of starting a business and getting a good location is proving quite a challenge for you, below are 10 useful factors you must concur to before choosing a business location.

Factors to Consider before Choosing a Business Location

1. Availability of raw materials

Entrepreneurs who wishes to run a manufacturing or production business, proximity or availability of raw materials is a factor to be considered when choosing a business location. This is a factor that can kill the profit of any business, as lack of transportation to where those raw materials are being acquired and bad road to where those materials are been bought could dent the growth of the business

2. Proximity to market

This is another key factor to consider when choosing a business location for business because it stands as a strong link between your customers and the business location. At the end of the day, your customers has to be provided with the product. Remember that for your business to succeed, you must make it easy for customers to find your product.

3. Availability of basic infrastructure

When choosing a small business location, basic infrastructure can affect your choice of small business location if the are not available at the area where your business is suited. Amenities and infrastructure such as water supply, power supply, good road, communication network and security are things every business should not lack when locating your business.

4. Economic principles

The economic principles or system of a particular region may also affect your decision and choice of business location. Some economy favor capitalists and others are driven by socialism; where the government controls all businesses like states like Lagos, Rivers, Bayelsa etc. Other sub-factors to consider are government’s policy, fiscal and monetary policy, exchange rates, taxes, levies and duties.

5. Demographics

Demographics as a factor can have a big influence on your choice of business location. If your type of product or service your business offers and the gender of the customers will play a key role in your choice of small business location. For example :

If a entrepreneur is into the business of sanitary pad. That means your demographics should be made up of women or females as the case may be, so your best bet of location should be within an area covered with a large number of females in order to boost the demand rate of the product.

6. Psycho-graphics

The mindset of your customers or the area of a particular region is also a factor that should not be over looked when choosing a location for your small business. For example; if you site your business in a region where tribalism exists, then there will be an issue because the comfort of the business will be dented as those occupying that area will tend to make it uncomfortable for your business to thrive.

7. Industrial zone/areas

Some entrepreneurs may decide to site their business in industrial areas due to the fact that infrastructures and amenities are already on ground. Industrial areas are areas curved out specifically for commercial purposes especially manufacturing firms.

These areas are sometimes given special attention such as good road network, constant power supply, etc. In some certain regions, heavy duty manufacturers are forced by the government to site their companies in these industrial areas.Some entrepreneurs believe that whenever they are in an industrial zone, competition will come as many customers will have more freedom to choose from different products.

8. Export processing

Locating your business in an export processing freedom may be a smart choice for you especially if are an exporter. Locating your business in such regions means a reduction in transportation cost, faster inspection and clearance of your products by custom officials, it is also worthy to know that this export zone should be crime free, especially from hoodlums and 419.

9. Free trade zones

International trade zones and trade fair centers are also good places to site your business locations because it is accessible and mostly attracts a wide range of publicity from different country.

10. Distributive channel (final chain)

This factor comes last in the list because, this channel of distribution tends to be the chain of every successful business of any kind.Then it’s wise to put your distributive channel into consideration when choosing a location for your small business.The products must be channel down to the final target, (the customers). The more you make it easier for your distributors to access your products, the better for your business.

Finally, when choosing a location for your small business, the following factors listed above can be a platform in decision making. Nowadays, most businesses die today because of their inability to make the right choices in choosing a business location for a small business because they overlook these factors.

Vital Factors To Consider Before Choosing Your Business Location

It is no news that where you decide to setup your business can make or mare the business. Yet, a lot of people start business without considering it.

To some people, in as much as they can find a space to rent, then they can start a business. However, not all places are good for a particular type of business.

That I start a sport betting business in high density area with high football fan base does not mean you can start selling cars there.

Check the important factors below and consider them before starting your business.

Target clients

Like I stated earlier in the introduction, you only setup business in a place where your target audience can be found.

So, if you want to start a primary school that targets the low class in the society then the best thing to do is to locate the school where they are or else, you will run out of business.

This is critical and if you don’t consider this, it might lead to regrets at the end of the day.

Financial cost

Everyone want to start a business in the Central Business District (CBD) but not everoyone can.

Why? Capital! If you don’t have money to rent or buy a space/shop in an area, you definitely cannot start business in that area.

So, choose wisely and don’t end up being sent parking after your rent expires.

Expansion factor

Oh well, what you have now at hand in terms of startup cost is just enough to start small but at the long run, would you like to expand the business?

If you would want to then choose your business location wisely as some location tend to resist expansion.

Government policy

In business, government of a place can make laws that inhibit the growth of some kind of business in an area.

For example, do you want to start a poultry business in residential areas? Well you are not allowed to do so for health reasons.

Government can also restrict the use of some machines and implement in certain areas. Also think of taxes and also government policy on buildings and licenses.


In business class, they would tell you competition is good for business. however, this is only good for the consumers not the producers.

Yes, a little competition will make you and your competitor give your best but in the case when competition becomes high, it is best not to even start business in that place.


How accessible is your place of business to you, your staffs and clients?

This is very important as people will always look for the most accessible place to either work or buy from.

This is why you need to define your target customers and site the business where is most accessible to them.


When I say safety here, I mean the safety of you, your staffs, your products and your customers.

Nobody wants to buy from where they know they are not safe. People buy because they lack and as such, no one will go to a place where he will buy and something will be stolen from him (making to lack another thing).

Basic facilities

There are some basic facilities some businesses need. To some, it is power supply, to another, it is light.

Look out for what you need and make sure it is in the located before you start the business there to avoid extra cost.

In conclusion, it is important to note that requirements for businesses varies and as such, what they consider differs.

So this is a general guide, choose what is required in your case and lookout for other things not included here based on the research on what you need to start the business.

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Oluchi Chukwu

Oluchi is a seasoned Information blogger, content developer and the editor of Nigerian Queries. She is a tech enthusiast who loves reading, writing and research

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