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Thursday, 14 May 2015

THE FACTORS THAT INFLUENCE THE LOCATION OF A SMALL BUSINESS-BUS 413



Question:
What Factors influence the location of small business?

Answer:
Factors influencing the Location of Small Business
-          Personal Factors        -Economic Factors -           Socio-Cultural Factors
-          Geographical Factors -Specific Factors
Business Slogans
-          Good Organization is Growth
Resulting from the Co-ordination of All the Activities of a Business
-          A Diseased Plant Will Not Benefit From Better Soil 

INTRODUCTION:
Some factors are paramount in influencing the location of business.  A good entrepreneur should take note of these major factors before locating his business because any business that misses this basic foundation will suffer for it.  Some factors are explained below:
 
Personal Factors – in locating a business, each entrepreneur has is values, dos and don’ts in mind before embarking on the business.  With constant strikes, riot, and tensions nation-wide, some entrepreneurs must have made up their minds on where to locate their business and where not to locate them.  Some of these personal factors influence greatly the location of business by the entrepreneurs.  

Economic Factors – Any serous entrepreneur must view economic factors very seriously because money is one of the mainstays of any business.  When choosing a location for business, the entrepreneur must look at certain factors like the purchasing power of the target audience, and the competitive power of the target audience.  Depending on the type of business the entrepreneur should take advantage of the available economic factors available before the final allocation. 

Socio-Cultural Factors – These play a lot of role in locating business. The entrepreneur should take into consideration certain socio-cultural factors like the norms and tradition of the people, the infrastructural facilities such as pipe born water, good roads and constant electricity supply.  Equally to be noted is the religious traditions of the people for example, there is no business wisdom building a beer factory in a Sharia State.

Geographical Factors – given the facts that different areas are blessed differently, the entrepreneur should exploit the comparative advantage of that geographical area when locating his business.

Specific Factors – there are other specific factors apart from the above general factors that the location of business depending on the nature of the business.  These specific factors relate to the line of business, which the entrepreneur may find himself establishing, thus; (Service Business – the entrepreneur should first of all take decision on what type of service business he is into; it is the type of the services business that determines the location.  Good and assessable location is very germane for the location of business, for example, schools, clinic and restaurants are good or better to be in highly populated neighborhoods. (Retail Business)-similarly, the entrepreneur should take care of certain factors when locating his retail business.  Hodgets (1982) identifies some retail stores, which do well when sited near certain other types of retail stores. 

Examples of such businesses are: (1) Men’s and women’s apparels and variety shops are commonly located near departmental stores (2) Restaurants, barbing shops, candy; tobacco and jewelry stores are often found near theaters. (3) Paint, home furnishing and furniture stores are generally in close proximity to each other.  (Wholesale Business) – it is always better for a wholesaler to site his business in an area where there is a heavy concentration of the retailers he supplies.  At times he may equally have some other retailers located in suburban areas. In this case, he can select a site at the outskirts of the needs of both the city and suburban customers. (Manufacturing Business) – The manufacturing business is best located in an area that has the best advantages of a minimal combination of cost of production and distribution. Jonah (1995) identifies some important specific factors that should influence overall location decision which should include:

 (1) Closeness to the market (2) Closeness to the suppliers (3) Availability and cost of labour (4) Transportation service and cost (5) Federal, State and Local Government regulations and taxes. (6)Accessibility to the site – there should be less traffic congestion to the factory site. (7) Enough land for the building of factory, parking facilities and for expansion when the need arises.


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