Question:
What Factors influence the location
of small business?
Answer:
Factors influencing the Location of
Small Business
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Personal
Factors -Economic
Factors - Socio-Cultural Factors
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Geographical
Factors -Specific Factors
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Good
Organization is Growth
Resulting from the Co-ordination of
All the Activities of a Business
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A
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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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