location analysis business plan

Business Location Analysis: The Key to Strategic Decision Making

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Location, location, location! It's a mantra we've all heard before, but how many of us truly understand its significance in the business world? This isn't just about picking any spot on the map. It's about making strategic choices that propel your business towards remarkable growth and success. Let's delve into the crucial factors to consider during business location analysis.

What is business location analysis?

Business location analysis is the process of studying and evaluating potential physical locations for business operations. It's the cornerstone of strategic planning, with a powerful influence on a company's performance, profitability, and overall success. The significance of choosing the right location cannot be overstated—it provides easy access to customers, employees, and suppliers, and can greatly enhance your brand's visibility.

Choosing the right business location is a crucial step in your company's journey. It's more than just a place—it's the setting for your story and the stage for your success.

Why do businesses use location analysis?

Location analysis pops up as a champion in the realm of business operations, offering a strategic edge to businesses across the globe. It's more than just pinning a spot on the map – it's about designing a roadmap to successful business outcomes. It's the silent hero behind boosting your business' competitive edge, accessibility, and brand visibility.

1. Competitive Edge: Become the Market Leader

Location analysis aids in identifying the best locales to set foot in, where competition is minimal and opportunities are abundant. This is where the magic of strategic positioning comes into play.

By understanding the competition landscape, businesses can strategically place themselves in a position that sets them apart, helping them get ahead in the race.

2. Customer Accessibility: Be Where Your Customers Are

Location analysis also plays a vital role in making businesses more accessible to customers. It’s not about being in the most popular spot, but being in the right spot where customers can easily find and reach you.

• Convenience: A location that's easy for customers to reach can significantly boost your business.
• Visibility: Being in a spot where you’re easily seen can naturally attract more customers.

3. Brand Visibility: Shine Above the Rest

Brand visibility is about more than just being seen – it’s about being remembered. Location analysis helps position your business in an area that not only garners high foot traffic, but also aligns with your brand identity.

Whether it's a bustling city center or a serene suburb, the right location can amplify your brand’s presence, ensuring you're not just seen, but also remembered.

4. Optimizing Operational Efficiency

Location analysis optimizes business efficiency. A strategic location enhances logistics, influencing factors such as supply chain efficiency , distribution convenience, delivery speed, and employee commute. The right location streamlines operations, saving time and resources.

Beyond operations, an ideal location grants access to crucial business services like banking, legal, and marketing consultancy. It facilitates not just survival, but also growth.

Because when we think location, we think efficiency. And in business, efficiency isn't just a buzzword - it's a lifeline. So, are you ready to optimize?

Components of Effective Business Location Analysis:

Data Collection:

Any savvy entrepreneur knows that location is key. But how do you determine the right location for your business? It starts with data collection. You'll need to gather and analyze a variety of data types to make an informed decision. Let's break it down:

• Demographic Data: This is the first type of information you need. Who are your customers? What are their ages, income levels, and occupations? You'll want a location surrounded by your target demographic.
• Traffic Data: How many people walk or drive by the potential location each day? More foot traffic could lead to more customers. But remember, that traffic needs to align with your target demographic.
• Competition Data: What other businesses are in the area? Other businesses could be complementary, boosting your sales. Or they could be competitors, potentially taking away customers.

Remember, data should guide your decision, but it shouldn't make it. Use the data to inform your choices and align them with your business goals.

It's a tricky balance, but armed with the right data, you can make a choice that sets your business up for success.

2. Spatial Analysis & Visualization:

Gas Station Density in Saudi Arabia's Key Regions

When it comes to running a successful business, location is key. That's where Spatial Analysis and Visualization come into play, taking us on a deep dive into the world of Geographic Information Systems (GIS).

GIS serves as a powerful tool in the analysis and interpretation of geographic relationships, patterns, and trends. It integrates hardware, software, and data to capture, store, analyze, and interpret all forms of geographically referenced information. Essentially, it allows us to view and understand data in ways that reveal relationships, patterns, and trends in the form of maps, globes, reports, and charts.

"A Geographic Information System (GIS) helps businesses to visualize, question, analyze, and interpret data to understand relationships, patterns, and trends."

• Mapping: GIS converts complex data into a visual format, simplifying the process of decision making. It can display demographic data, consumer behavior, and competitor locations in an easy-to-understand map.
• Analysis: GIS analyzes the data to identify patterns and trends. It provides insights into the best locations for business expansion or the areas that are most profitable.

Incorporating GIS into your business location analysis allows you to make informed decisions based on concrete data. It's like turning on a light in a dark room, illuminating opportunities and potential challenges that were previously hidden.

Benefits of Using GISExamplesEnhanced Decision MakingChoosing the best location for a new store or officeImproved CommunicationVisualizing potential business growth areas for stakeholdersIncreased EfficiencyRouting deliveries to reduce fuel consumption and save time

As we dive deeper into the realm of location analysis, it's crucial to recognize the role of Geographic Information System (GIS). In today's tech-savvy world, GIS tools are transforming the way businesses analyze their location choices. These powerful tools offer a range of benefits, all contributing to a more informed and smart decision making.

3. Predictive Analytics:

Imagine having a crystal ball that foretells how your business would fare in different locations before you even set foot there. That's precisely what predictive analytics offers! This remarkable blend of technology and statistical methods can help you anticipate potential performance in various locations based on historical data, customer behavior, market trends, and more.

How does it work?

• Predictive models gather data: First, these tools collect a wealth of valuable data from various sources, such as customer databases, demographic information, and market research.
• They analyze the data: Next, they use advanced algorithms to analyze this data, identifying patterns and trends that could impact business performance.
• They forecast future outcomes: Based on these patterns, the models can then make predictions about how a business might perform in different locations.

Businesses can use these forecasts to guide their location-based decisions, helping them choose spots with the highest potential for success. But remember, while predictive analytics can be an incredibly valuable tool, it's not infallible. It's always important to consider other factors, such as your business goals, target audience , and competition, to make the most informed decision possible.

Ultimately, predictive analytics is like a compass guiding your business through the complex landscape of location-based decision-making. It helps you avoid the pitfalls of choosing a location based on gut feelings alone and increases your chances of setting up shop in the most favorable locations.

Real-world Applications and Success Stories:

Let's look at some real-world applications and success stories that exemplify the power of strategic business location analysis.

Case Study 1: Starbucks

Starbucks, a global coffee juggernaut, is renowned for its strategic location choices. The company uses a sophisticated location analysis system, incorporating data like traffic flow, area demographics, and nearby businesses. This strategy has been key in their worldwide growth and success. source

Case Study 2: Walmart

Walmart, a multinational retail corporation, stands as a testament to the effectiveness of location analysis. The company focuses on establishing its stores in small towns, where competition is minimal. This strategy, combined with its vast product range and competitive pricing, has led to Walmart's dominance in the retail market. source

Case Study 3: McDonald's

McDonald's, a global fast-food chain, attributes much of its success to location analysis. The company strategically places its restaurants near highway exits, busy city centers, and suburbs. This approach, paired with their quick service and popular menu, has solidified McDonald's status as a fast-food leader. source

In conclusion, these case studies highlight the immense power of location analysis in business strategy. It demonstrates how, with careful consideration and smart decision-making, businesses can leverage location to maximize brand visibility, profitability, and growth.

Challenges in Business Location Analysis:

Choosing a business location is akin to playing a high-stakes game of chess. One wrong move can spell disaster for your venture. Yet, while choosing the right location can be daunting, understanding common pitfalls can ease the process.

• Common Pitfalls and Misconceptions: Many entrepreneurs fall prey to the misconception that a cheap location means higher profits. It's crucial to understand that a location's value is not solely determined by its cost, but also by its accessibility, demographic alignment, and potential for growth. Weigh these factors before making a decision.
• Overcoming Data Inaccuracies: Quality data is the bedrock of informed decision-making. Ensure the data you base your choice on is accurate, up-to-date, and relevant. Misinterpreted or outdated data can lead to costly mistakes.
• The Evolving Nature of Neighborhoods and Local Markets: Neighborhoods and markets are fluid, continually changing and evolving. A location that seems perfect today might not be the same in a few years. Always consider long-term projections and future growth trends in your analysis.

Remember: You're not just choosing a location, you're choosing a future. Make sure it's one where your business can thrive.

How xMap Can Empower Your Location Analysis?

Unlock the potential of your business with xMap , a cutting-edge platform that transforms location analysis. With a plethora of features at your disposal, xMap empowers you to make strategic, data-backed decisions about your business location. Here's how:

• Data Visualization:

xMap's intuitive interface presents data in a visually appealing and easy-to-understand format. This enables businesses to analyze complex data sets effectively and make informed location decisions.

• Comprehensive Database:

database of all the restaurants in dubai with their key information

With xMap, gain access to a vast database of demographic, geographic, and economic data that can be crucial in selecting the perfect location for your business.

• Advanced Analytics:

Use the power of xMap's advanced analytics to uncover hidden patterns, trends, and insights that can significantly impact your location strategy.

With xMap, the power to choose the right location for your business is literally at your fingertips. The platform's unique combination of data richness and user-friendly design makes it an invaluable tool for businesses of all sizes.

Now, let's talk benefits. The advantages of incorporating xMap into your business strategy are manifold:

• Increased Profitability: By providing you with actionable insights based on data, xMap aids in selecting locations that promise maximum profitability.
• Improved Decision Making: xMap's data visualization and advanced analytics facilitate better, quicker decision-making, saving valuable time and resources.
• Competitive Edge: With access to comprehensive data and analytics, you can stay ahead of the competition and identify untapped market opportunities.

Ready to take your business to new heights? Don't wait any longer to harness the power of location analytics with xMap. Whether you're a small startup or a well-established corporation, xMap has got you covered. Explore xMap today or get in touch for a personalized demo.

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10 Factors to Consider During Business Location Analysis

Selecting the best location for your new business is a decision that you should not take hastily.

Your first consideration in terms of comfort and cost concerns is to go on a quest to find the perfect location for your business.

In this article, we are going to shed more light on the concept of business location selection and then go deeper to discuss the terms of business location analysis and business location strategy and talk about their importance on business location selection.

Business Location Analysis: Definition and Objectives

Location refers to the choice of the region and the selection of a particular location for establishing a business or a factory.

But the choice is made only after the cost and benefits of the various alternative sites are considered.

It is a strategic decision, which can not be changed once it has been undertaken.

If the location is only changed at a considerable loss, it should be selected according to its requirements and circumstances. Every plant is a case in its own right.

A businessman will attempt to find the most suitable or ideal location.

An ideal location is one where the cost of the product is kept to a minimum, with a large market share, the least risk, and the highest social gain.

It is the location of the highest net benefit or which offers minimum unit cost of production and distribution.

Business Location Analysis Definition

Location analysis is a dynamic procedure in which entrepreneurs evaluate and compare the suitability or otherwise of alternative sites for choosing the best site for a given client. It is composed of the following:

1. Demographic Analysis

This includes the analysis of population in the region in terms of total population (in numbers), age distribution, per capita income, level of education, occupational structure, etc.

2. Trade Area Analysis

This is the analysis of the geographic area that offers the company continued clientele.

This analysis would also consider the possibility of entering the trade area from alternate locations.

3. Competitive Analysis

This analysis helps in assessing the nature, location, size, and quality of competition in a given area of trade.

4. Traffic Analysis

To get a rough understanding of the number of potential customers passing through the proposed site during the working hours of the location, the traffic analysis is aimed at determining possible locations in terms of foot and car traffic passing through a site.

5. Site Economics

Under this section, alternative sites are analyzed in terms of establishment costs and operational costs.

Establishment costs are the costs incurred for permanent physical facilities but operational costs are incurred for running a business on a day-to-day basis, these are often called running costs.

Business Location Analysis Objectives

The location of a business needs to be determined while keeping the following targets in mind:

1. Holding Minimum Investment And Operating Costs

The primary goal of choosing a suitable location is to ensure minimal investment and lower operating costs.

This could be achieved by locating the business in a place where raw materials, labor, transportation, and power are readily, regularly, and sufficiently available.

2. To Make Sure The Business Operation Is Smooth

Another goal of the optimal location is to ensure the business operations are running smoothly.

This could be achieved if the business is located in a place where banking, communication, transportation, repair, and maintenance services are easily and regularly available.

3. To Improve Welfare Of The Employees

If the business is located where educational recreational, media and religious needs of the employees are met, they will definitely feel attached to the business and develop loyalty and commitment to it.

4. To Coordinate With The Government Policies And Regulations

Whilst selecting a location, the entrepreneur must ensure that their decision does not conflict with the policy of balanced regional development issued by the government.

Business Location Strategy Factors

Being in the right location is a crucial ingredient in the success of a business.

If a business chooses the wrong location, it may not have sufficient access to customers, workers, transportation, materials, etc.

Consequently, location often plays a significant role in the profit and overall success of a business.

A location strategy is a plan to achieve the optimal location for a company by identifying the needs and goals of the company and searching for locations with offerings that are compatible with those needs and goals.

In general, that means the company will try to maximize opportunities while minimizing costs and risks.

The location strategy of a business should adhere to its overall corporate strategy, and be part of that plan.

Therefore, if a company dreams and plans to become, for example, a global leader in fashion production, it must consider establishing plants and warehouses in regions that are consistent with its strategy and optimally positioned to serve its global clients.

Executives and managers of a company usually develop a business location strategy but companies however, may select consultants (or economic development groups) to undertake the task of developing a location strategy, or at least assist in the process, especially if they have little experience in location selection.

The standard formulation of a business location strategy includes the following factors:

• Facilities: Planning facilities requires deciding what sort of room a organization would be required, considering its short-term and long-term objectives.
• Feasibility: Analysis of feasibility is an assessment of the various running costs and other considerations related to the different locations.
• Logistics: Logistics assessment is the examination of the transport choices and costs for the manufacturing and warehousing facilities in question.
• Labor: Analysis of labor determines whether or not prospective locations can meet the labor needs of a company, given its short-term and long-term objectives.
• Community and Site: Evaluation of the Community and site includes understanding whether or not a business and a prospective community and site would be compatible in the long term.
• Trade Zones: Companies will want to consider the advantages that free-trade zones provide, which are closed facilities supervised by customs services where goods can be brought in without the normal customs requirement. There are some 170 free-trade zones in the United States and other countries have them too.
• Political Risk: Companies considering expanding and spreading to other countries must take political risk into consideration when establishing a business location strategy. Because a number of countries do not have stable political environments, if companies plan long-term operations in such countries, they must be prepared for upheaval and turmoil.
• Governmental Regulation: Companies can also face government barriers and severe constraints and regulation if they plan to expand to other countries. Therefore, when developing location plans, businesses need to investigate regulatory – as well as cultural – challenges in other countries.
• Environmental regulation: The various environmental regulations that could affect their operations at different locations should be considered by companies. Environmental regulation can also impact the relationship of a company with the environment surrounding a prospective venue.
• Incentives: Incentive negotiation is the process of negotiating land between a business and a group, including any incentives that the business may obtain, such as tax cuts. Incentives can play an important part in the selection of a site by a business.

Companies may also have to look at other aspects of prospective locations and communities, depending on the type of business. Based on these considerations, businesses are able to choose a site that best serves their needs and helps them develop a business location strategy and therefore achieve their objectives.

Requirements Of The Company

The initial part of developing a business location strategy is to determine what a firm will need from its locations.

These needs then serve as some of the primary criteria that a business uses to evaluate various options. Some of the basic criteria that an organization has to remember are:

• Size: A business has to determine the size of the property or the facility it requires for its actions.
• Traffic: If you are in the service business, your company must obtain statistics on traffic volumes or the number of pedestrians passing by a prospective location every day.
• Population: If you are running a service or a manufacturing activity, your company needs to analyze the population of prospective locations to ensure a sufficient number of potential clients (if a service business is in discussion) or a sufficient number of qualified or trainable employees. Additionally, manufacturers also benefit from being close to their customers, because customer proximity reduces shipping time and cost and increases customer responsiveness for the company.
• Total costs: Companies should determine the maximum total cost of a new location that they are willing to pay. Total costs include costs related to production, property, labor, taxation, services, and construction. More baffling costs, such as materials for shipping and costs of  supplies transportation and the loss of customer responsiveness should also be considered if it moves further away from the customer base.
• Infrastructure: Businesses need to consider what their infrastructure requirements are going to be, including what modes of transport they will need and what types of telecommunications services and equipment they will require for their operations.
• Suppliers: All businesses need to consider the types of suppliers they will need close to their locations. Additionally, having nearby suppliers can help companies lower their cost of production.

In addition to these specific criteria, businesses have to take their particular specifications of prospective locations into consideration. These requirements may be consistent with their overall corporate strategy and corporate goals, and with their specific industries.

Business Location Strategy Trends

Over the last thirty years, globalization and technology have been the greatest drivers of change in the business location selection process.

In recent decades, location activity has been very high due to technological changes, economic growth, international expansion and globalization, and corporate consolidation, mergers, and acquisitions.

Price, infrastructure, labor characteristics, policy and political problems, and the environment are the top five location considerations for global companies.

The availability and quality of labor force, the quality and reliability of utilities, the quality and reliability of transportation modes, telecommunications systems, wage rates, worker motivation, government stability records and industrial relations laws are crucial sub-factors.

Other sub-factors such as patent protection, availability of management resources and specific skills, and cost of system and integration are becoming increasingly important.

Whereas wages and the environment of industrial relations are important factors in making decisions about multinational locations, the main determinant is by far the market size of the host country.

Moreover, global economic considerations have become dominant in the business location strategy, as businesses consider the advantages offered by various locations in terms of positioning themselves on international markets and against other competitors.

In general, when companies seek new locations, they strive to keep operating and start-up costs low, and so they often choose locations to achieve these goals in collaboration with economic development groups.

Companies also now expect to move faster than in the past to new facilities so they tend to focus more on leasing facilities than buying land and building new facilities.

Plus, by leasing equipment and facilities, businesses can migrate every few years if they are required by the market.

Mapchise Technology

Technology, in particular communications technology, has not only been a catalyst of change, but also facilitated the location selection process.

Managers can get initial information via the Internet and promotional software on alternative locations.

Site selection agencies are increasingly using Geographic Information System (GIS) technology, and email has become the most powerful and popular mode of communication in the quest and through negotiation of business locations.

Location databases have allowed businesses to do their own initial screening, thereby reducing their need to rely on economic developers to provide only very basic information and position details — such as commuting habits and workforce characteristics.

This is where Mapchise comes to play. Mapchise is a platform for analytics and location management, designed to expand and manage current and prospecting locations.

The primary purpose is intended for multi-chain prospecting and management.               

Analytics Map is built on demographic analysis for prospect locations. This concept is the primary product and principal selling point of Mapchise.

It consists of three different sources of data: Demographics and Socio-demographic (still in production), Commercial Real Estate, and Residential Property. Socio-demographic is a categorization of different age groups, race, and income.

The main features of this product include:    

• Commercial Real Estate Data (Data is for all of US)
• Competitor analysis                                                               
• Customized target demographic reports to clients needs                                                    
• Socio-demographic data                                                                   
• Real estate data
• Traffic and regional market analysis                                                             
• Territory zoning to prevent canabolization                                                                
• Different layers customized to clients target demographic   

Why Choose Mapchise?

• It provides all the data you need to open a location easily. The data is also proprietary so it won’t be found online for free.
• Task management system is designed and built for multi-chain stores and ease of use by corporate and store management.
• Fully Customizable analytics system designed for the users target market and target demographic, the map and data are built around users provided target market. After answering a few simple demographic questions, the map is fully customized to users’ input.
• Competition Analysis on the map
• Task management system is incorporated into the map for easier management of all locations tasks

How To Find The Best Location For Your Business?

Every business owner has to figure out how the location will (or will not) contribute to the success of a business — and select a spot according to it.

Although when you are looking for a space to house your business, there are many issues to consider, make sure you ask yourself these four important questions:

• Is location significant to the success of your business?

What kind of location would be best for your business?

How much rent you can afford to pay.

• Is the location you have in my mind appropriate for what you want to do there?

Is Location Significant To The Success Of Your Business?

The classic “location, location, location” advice for some businesses is right on the mark— location can bring the difference between feast or famine into reality.

But location may be far less important for other businesses than finding affordable rental space.

In fact, for some businesses, the location is almost irrelevant: service businesses that do all their work at the locations of their customers (such as roofers and plumbers) and businesses that have little public contact (such as mail order companies, Internet-based businesses, and wholesalers).

Picking a low-cost spot in an out-of-the-way location might be a benefit because these types of businesses can pass on rent savings to their clients and their profit margin.

The key to choosing a profitable location is to evaluate the factors that will increase the amount of customers for your company. Ask yourself questions such as:

• Will customers be walking to your location?
• Will customers drive and, if yes, where will they park around your area?
• If you locate near other similar businesses, will you receive more customers?
• Will the reputation of the neighborhood or even of a specific building help you attract more customers?

Bear in mind that different types of businesses draw clients in different ways.

Foot traffic versus car traffic is one of the main distinctions.

For example, if you are opening an urban coffee shop, you can expect your customer volume to be the highest if there is plenty of pedestrian traffic nearby during the hours you plan to keep your business open.

On the other hand, the most suitable locale for an auto repair shop is a well-traveled street where many drivers will see the shop, and are able to easily pull into the lot.

Note also that it would be of benefit to your business to be around similar businesses that already attract the same type of customers you are planning attract.

For example, a women’s clothing store will certainly profit from being close to other clothing shops because many people who shop for clothes prefer to spend at least a few hours in a given location.

In the end, the perfect location for any business is a very individual matter. Spend some time finding out the consumer preferences you would like to draw to your business, and then pick the most suitable location that meets all your needs.

Chances are that you will eventually rent out instead of buying a space for your business.

Most small businesses do not posses the funds to purchase real estate, and in any case it is not necessarily a smart idea to saddle the company with high interest payments.

When looking for a commercial space to lease, one obvious and important concern is finding a location that you can afford.

When preparing your financials (as part of your business plan), you would have calculated how much rent your company will be able to pay on a monthly basis, considering its expected sales and other expenses.

How to assess the average rent in any area?

Agents and brokers are excellent sources of rental cost knowledge in different neighbourhoods.

They will generally give you an average figure for the cost of commercial space per square foot per year in a given area. If you have this number, you can compare it to other spaces you are considering to rent.

If you have not already done so, check out the average rental costs in your area to make sure that the amount you have budgeted for rent makes sense, considering the cost of commercial space in your area, and how important your location is to your business.

For instance, if you decide that location is very important to the success of your business, make sure your budget would allow you to rent a good space given the average cost of space in your area.

If not, then your business plan may need to be reworked.

Is The Location You Have In My Mind Appropriate For What You Want To Do There?

The biggest consideration when choosing a business location is sometimes not where it is but what it is.

The building facilities must be suitable for (or adaptable to) your business. For instance, if you intend to open a coffeehouse, you need a place with limited kitchen facilities, at least.

Unless you are able to convince the landlord to put in the necessary equipment — plumbing, electrical work, and the rest — it is highly unlikely that it will be worth it to lay out the cash to do it yourself.

In short, if a building lacks something substantial that is essential for your business, you should probably look for something else.

Communications Wiring

Another consideration that is important for many businesses these days is having access to modern phone and other data lines that are required by the business.

When considering a particular space, ask the agent or the landlord for communications wiring details, such as whether the space is connected to a fiber optic network or wired for DSL or T1 line (high-volume Internet connections).

Even try to find out who the landlord sold the rights to the risers (wire conduits) in the building. A commercial landlord can not be involved in exclusive contracts with a single provider of telecommunications, such as MCI or AT&T.

It could however be expensive to bring in another provider of your choice.

Electricity and Air Conditioning

Besides high-tech communications wiring, when choosing a business space, do not overlook plain-old electrical power as an important consideration.

Make sure that every room you are looking at has enough power for your needs, both in terms of space outlets and the capacity of the circuits.

If you are going to be operating machinery or other electricity-hungry equipment, find out how much energy the circuits can tolerate from the landlord, and if a generator is available during power outages.

Moreover, if you are going to keep sensitive computer equipment in your office, ask the landlord how many hours of air conditioning will be included in the terms of your lease, and if necessary negotiate longer hours.

Another growing requirement for many businesses is sufficient car parking.

If a significant percentage of your customers come to your establishment by car and there is not enough parking at your chosen spot, looking elsewhere is probably the best alternative.

In addition, the city planning or zoning board can not allow you to function in a space with inadequate parking.

Zoning Rules

At last, the location that you choose for your business needs to be legally acceptable for whatever you plan to execute there.

A certain spot may be good for business, but you are asking for trouble if it is not zoned for what you are planning to do.

You must never sign a lease without being sure that you will be allowed to operate what you are planning in that space.

Your city planning or zoning board will determine what activities are allowed at a given location.

If your zoning board is having a problem with any of your business activities and you are not willing to work out a way to accommodate your company, you may need to find another space for your business.

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Location Analysis: Three Questions to Ask

Get data for any location

Location analytics built on spatial data can help find your next business location, but it's only when it's combined with other data that you can understand your customers, manage supply chain issues better, and make your next investment smarter.

First question: Do you need a location analytics solution? Or are you looking for specific data like foot traffic data or points of interest?

What people mean when they refer to  “location analysis” or “location intelligence” can cover a lot of ground. Let’s take a look at how they’re typically defined:

Location Analysis: Location analysis, also called site selection,  is the process of collecting and analyzing data on specific locations to ensure its suitability for a company’s specific objectives or planned usage. In other words — “Does this specific site we’re considering have the potential to successfully meet our needs?”

Location Intelligence: On the other hand, Location Intelligence is the practice and processes of gleaning insights by layering and visualizing geospatial data sources with other data sources in order to drive better-informed business decisions.

Geospatial Data: Geospatial data are the specific types of geospatial data that can inform and shape both location analysis and location intelligence. These data types are incredibly varied and can include foot traffic data, points of interest, historical census data, and much, much more.

So the first question really is — which solution is right for you?

Location Analysis

Location Intelligence

Geospatial Data

You’re planning to expand your existing business and need to find the best possible sites for your new locations.

You’re looking for an edge in business planning across expansion, marketing and sales, production or shipping logistics, and more — and want to combine location data with your business intelligence efforts.

You have a location analysis or location intelligence solution in place and want to make sure you’re using the best available data in those processes.

You need to have a better understanding of local or regional regulations and zoning in your expected expansion area to plan and budget appropriately.

You need real-time intelligence on foot traffic, consumer behavior in a region, or migration patterns to better understand your customers’ needs.

Unexpected results indicate something was missed in previous location intelligence efforts and you need additional inputs to find the reasons why.

You’re starting a new business and need a better understanding of where your business would be most successful.

You’re building customer profiles for a specific region and need to ensure your understanding is as deep as possible.

Regional, cultural, or technological changes have altered consumer behaviors and additional data is required to see how that impacts your business.

These use cases are far from exhaustive — but by understanding your needs, you can determine which type of solution is right for you, helping narrow down your search early on. If you're not sure, schedule a meeting with Unacast and we'll be happy to help walk you through things.

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Second question: What other data sources do you want to work with?

Unacast routinely works with consultants , software companies , investors , insurers and others that want aggregated location data to supplement their own data streams (e.g. demographic data, transaction data). In this case, clearly defining how location data is expected to interact with and add to the output of the combined data stream is essential.

The use cases for finance , insurance , real estate , telcos and supply chain logistics are all very different. Dealing with a location data provider with experience servicing the unique needs of your own industry is important. Otherwise, you’ll likely overspend on a kludgey data set that's tough to ingest and even harder to use.

While the demographic data requirement (age, education, income etc.) is most pronounced in retail site selection use cases, it is becoming very common for the insurance industry and real estate investment industry to want some level of insight into the demographic makeup of a given region or consumer profile.

Likewise, when combined with a company’s transactional or customer data, location intelligence and human mobility data can paint a portrait of movement, intent, and consumer action. Further fused with the accurate demographic data mentioned above, this often reveals hidden insights.

So maybe a better question to ask is what data types are available and how are they typically used?

Description

Typical Uses

Points of Interest Data

Points of interest (POI) data includes a wide variety of specific, non-residential physical locations such as businesses, government buildings, landmarks, and more. It typically includes data like street addresses, phone numbers and connections to companies.

Retail, Real Estate, Supply Chain, Forecasting, Site Selection / Location Analysis, Site Performance

Property Data

Property data is concerned with the actual physical boundaries of locations such as property lines and the shapes of buildings. It can also include smaller divisions such as individual apartments, offices, or shops within larger buildings.

Real Estate, Insurance, Site Selection / Location Analysis, Site Performance

Mobility Data

Mobility data is data about when and where people move. It’s aggregated from multiple sources — including GPS information from individual devices. Because mobility data sources are so granular, this data is anonymized and often cleaned using machine learning to provide not only a more stable dataset, but in order to provide ethically-sourced data that maintains privacy.

Retail, Financial Services, Telco, Real Estate, Site Selection / Location Analysis, Site Performance

Transaction Data

Building on mobility data, transaction data anonymously catalogs how people are spending their money by aggregating credit card based retail and ATM transactions.

Retail, Commercial Real Estate, Site Selection / Location Analysis, Site Performance

Demographic Data

Focused on specific population details, demographic information is often sourced from census data and can include things like age, gender, income, housing costs, and more.

Retail, Insurance, Real Estate, Financial Services, Telcos, Site Selection / Location Analysis, Site Performance

Address Data

Critical to accurate location intelligence, this data can be provided in the form of street addresses or coordinates.

Boundary Data

Boundary data is similar to property data — just at a larger scale and including multiple properties, addresses, and points of interest. This data can cover everything from country borders to specific counties, school districts, and zip codes.

Insurance, Supply Chain, Real Estate, Site Selection / Location Analysis

Environmental Data

Environmental data is concerned with naturally occurring events — climate and inclement weather, elevation, animal migration patterns, tides, and more.

Insurance, Real Estate, Site Selection / Location Analysis

Street Data

More than just a map of the streets, this data often includes traffic information and the causes of that traffic.

Retail, Supply Chain, Real Estate, Site Selection / Location Analysis, Site Performance

Imagery Data

Imagery data includes aerial and satellite imagery to provide photographic representations of locations.

Third question: Are you more interested in geospatial data as a tool of competitive intelligence?

Location analysis for site selection is important, but it's only a single part of a broader location intelligence effort. Location data can be used throughout the enterprise, to help manage the supply chain, keep an eye on the competition , improve business processes, or conduct a growth analysis.

In one supply chain use case, a leading paper goods supplier studied how the exodus from offices affected their need to deliver goods. They discovered which products — and when and where they needed to move them — had drastically changed in downtown business areas.

In one very cool use case Unacast examined, a major retailer conducted a detailed competitive intelligence process to find out where their target market currently shops and how they move between different brand locations and then used this data to find their ideal location.

Business processes can be improved by location analysis in a variety of ways.

For instance, by understanding when customers shop by analyzing  foot traffic, you can more efficiently schedule your staff. By understanding how your host community or facility is growing, you can plan your own growth more intelligently. By understanding who else your customers visit , you can inform key marketing relationships and tactics.

The point is, the business applications for location analysis are as broad as the datasets at your disposal. Narrowing down to what matters for your specific use case is part of the art of location data science.

A few words about site economics and logistics

It’s important to consider the total costs of a potential site for your business. Even if the location seems perfect, several factors can impact its economic feasibility, causing the business to be unsuccessful. You probably know them well, but here are a few basics to consider:

• Do you want to buy, build, or rent space?
• What renovations are required before you use the space?
• Who is responsible for maintenance and repairs going forward?
• How close is the site to distribution centers and your suppliers?
• How will your staff get to and from work?
• Ditto for customers getting to and from your location?
• Is your host community growing?
• If so, how are demographics shifting?
• How does that affect your potential workforce?
• What does it mean for localized foot traffic patterns around nearby points of interest?

Frequently asked questions about location analytics

What does location analysis include.

A location analysis should include the following elements:

• Demographic analysis: Understanding population data, such as age, income, and lifestyle, can determine if your target market is present in the area and if your products or services will be in demand.
• Market analysis: Understanding the local competition, market saturation, and market trends.
• Site analysis: Evaluating the physical characteristics of a potential location, including access, visibility, and foot traffic.
• Accessibility analysis: Analyzing transportation and connectivity, such as proximity to highways, public transportation, and pedestrian access, can help determine the accessibility of the location for customers and employees.
• Economic analysis: Understanding the local economic conditions, such as unemployment rate, per capita income, and real estate market, can help determine the economic viability of a location.
• Environmental analysis: Evaluating environmental factors, such as natural hazards, environmental risks, and sustainability, can help determine potential risks.
• Geographic information systems (GIS) analysis: Utilizing GIS technology and geospatial data, such as human mobility data and demographic data, can help you make an informed decision about your potential investment.

What is the importance of location analysis?

Location analysis helps businesses make informed decisions about selecting their ideal physical locations, which can have a significant impact on their success. It also helps businesses make better decisions more quickly in the future. Some of the key benefits of location analysis include:

• Intelligent site selection: A thorough location analysis helps businesses make the best possible choice for their business in determining a new location.
• Better market understanding: Location analysis requires companies to gain a comprehensive understanding of the local market and determine the potential demand for their products or services.
• Increased efficiency: By analyzing transportation and other accessibility factors, businesses can determine the best locations to optimize for foot traffic, efficient operations, supply chain, and distribution.
• Reduced risk: Location analysis can help mitigate potential environmental and economic risks.

What is location analysis in the context of a business plan?

As discussed above, location analysis is the process of gathering and analyzing data in order to analyze a site, or multiple sites, for a potential business location. A location analysis is part of a comprehensive business plan that includes examination of the physical, economic, and demographic characteristics of a potential location. The purpose is to determine the viability of a particular location for the business and to provide information that will inform strategic decisions.

What are the different location analysis methods?

How you approach your location analysis depends on your needs, but several common methodologies include:

Analysis Type

Demographic analysis

This analysis uncovers details about the population and can include things like age, gender, income, housing costs, and more.

Market analysis

This analysis looks at the competitor landscape from a geospatial point of view — helping know the distance between your proposed location(s) and competitor locations, residential areas, and even commuter routes and spaces.

Foot traffic analysis

This mobility-based analysis is concerned with how consumers move through a region or even specific property, like a mall, and helps inform.

Accessibility analysis

Accessibility analysis better helps you understand the mobility between not only where your customers and workforce live and your proposed sites, but also how a site impacts supply chain logistics as well.

Economic analysis

Understanding the current economic growth or downtrend in a specific area and future projects for changes to that growth or lack thereof help you make more strategic decisions during site selection.

Environmental analysis

Focusing on historical environmental data and current trends including climate and inclement weather, elevation, animal migration patterns, tides, etc., this analysis can impact multiple aspects of your business such as insurability, supply chain logistics, and seasonal changes in consumer behavior.

What is the purpose of a location strategy?

The purpose of a location strategy is to ensure that a business is located in the best possible place to maximize its chances of success.

Don't just ask questions about location analysis, get the answers you need. Schedule a meeting now with one of our friendly location data experts, or request a data sample to get started.

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What Is a Business Location Strategy?

Why is a business location strategy important, how to choose a business location, examples of business location strategies that worked and why, final thoughts, business location strategy: a complete guide to finding your optimal location.

Jul 24, 2024

You have a great idea for a business. The plan is ready to go, and you have your financing lined up. Now, you just need to choose your location to get started—but the right decision is not always obvious and calls for careful analysis.

In this guide, we’ll explain the concept behind business location strategy and some key considerations to keep in mind when choosing the best spot for your business. Plus, we’ll provide some examples of real business owners’ location strategies and how they worked out.

A business location strategy is your plan to find the optimal location for an organization. This requires an analysis of company goals and objectives and finding a location that meets them. Your company’s location strategy should align with any overriding corporate structure or strategy.

Some businesses require foot traffic, such as retail and restaurants. Medical practices and other healthcare facilities might prioritize patient access or proximity to growing neighborhoods. Yet others serve B2B customers, so location objectives may focus more on expense reduction.

Having a strategy in place for choosing your business’ location is important because it allows you to make better decisions about choosing a location that balances all the things you need.

Business location, regardless of your industry, affects your operating costs and your stakeholders.

Think About Your Customers

Think about the type of customer you hope to attract. If your business location is off the beaten path, is difficult to find, or does not offer parking, that can be an issue. If you’re not in a safe neighborhood or one that’s well-lit and you have hours after dark, that can also be a problem.

An urgent care clinic, for example, may be fine in a strip mall with enough parking. However, a surgery center may need a more discreet location.

If your business caters to locals, you may be fine in a city center or congested area. If people travel from out of town, you’ll probably want to be near a major roadway.

If you run a B2B business, most of your business dealings might be handled face-to-face, online, or on the phone. In that case, where your business is located might not matter to your customers.

Think About Your Employees

Your business’ location can make a big difference in attracting and retaining employees.

For example, easy access to free parking or public transportation to and from can play a role. If an employee has to pay for parking every day, it cuts into their paycheck. You may prefer to open your business in a location with restaurants or coffee shops nearby to make it easy for employees to grab a meal or take a break.

Think About Your Suppliers

If your business needs to store substantial inventory, think about your supply chain. Faster delivery cuts down on your costs and gets products back in stock more quickly. Locations without street parking or in a difficult-to-access area may increase costs for deliveries.

“Site selection is a process of elimination,” said Christine Wong Rambo , CEcD, MBA, certified economic developer, and president and founder at the economic development marketing firm Upsize Marketing Strategies .

Data should be your guide when choosing real estate for your business.

Data-Driven Site Selection

“The site selection process is driven by data,” said Rambo. “Collecting this type of data may be challenging if a company is not using a site selection consultant. Companies can partner with state, regional, or local economic development organizations to gather this information based on the company’s criteria.”

For example, in the healthcare sector, it’s common to do cohort analysis to find patterns in patients and care. The Agency for Healthcare Research and Quality provides detailed information on medical expenditures for cohort analysis.

Site selection criteria include a range of attributes, including:

• Real estate costs
• Site work needed
• Cost of doing business, including taxes
• Market potential
• Competition
• Potential for future expansion
• Neighborhood reputation
• Available infrastructure

Consider Key Metrics

The elements or metrics most important to your business will determine your ideal business location. However, nearly every organization will have some common themes.

According to Rambo, most optimal locations will:

• Meet consumer or production demands
• Improve operational efficiency and costs due to proximity to other resources
• Lower overall business costs
• Offer sustainability and potential for growth
• Meet workforce requirements
• Provide a more favorable business climate

Consumer businesses that carry large inventories will want to consider the cost of warehouse space and distance from shipping hubs.

Access to a Skilled Workforce

“For the professional services sector, the ability to recruit a skilled workforce and proximity or access to a major client would be important considerations,” said Rambo.

Healthcare facilities, clinics, and medical practices may want to be located near hospitals or universities that train medical professionals for easier access to potential employees. Field service businesses may want to be near a community college, vocational tech school, or career training center. Businesses with a less-skilled labor force that pays lower wages may need to be near public transportation.

Access to Customers

“Your business can optimize its operations and market reach if it’s located in the right location,” said Michael Hammelburger, CEO at business consulting firm The Bottom Line Group . “This is especially true for retailers and food-related establishments that take advantage of heavy foot traffic in areas during rush hour. When situated in the right location, they can reach more people and thus have the potential to sell more.”

For consumer-facing businesses, accessibility and safety for customers are key considerations. The same applies to healthcare facilities. Patients have to be able to access your facility easily and feel safe when doing so.

Consider the Long-Term Implications

Your business location strategy should be far-ranging to accommodate your future plans. If you are open to the possibility of expanding your footprint in the future, you want to make sure there’s enough real estate nearby to make that a reality—even if it may be years down the road.

“When you start a business, you may have assumptions on what business you are in, where you are located, and where your customers are,” said Joseph Meyer, financial consultant and business strategist at The Dollar Soldier . “These assumptions are locked in for your business. If you try to change those assumptions after you start, the risk of business failure grows.”

The assumptions you make today about your business location strategy can help or hinder your efforts down the road.

For businesses that rely on foot traffic or get regular visits from customers or patients, location is crucial. For example, 62% of patients said they selected a physician based on the convenience of the location . Fifty-eight percent of patients that had a choice of hospitals to use said they prioritized locations as a key factor in their choice.

The only factor that was more important than location was whether a practice or facility accepted a patient’s health insurance. After that key consideration, location ranked second.

For businesses that don’t rely on foot traffic or customer visits, the location selection strategy is quite different. Mold Busters , a field service company that handles mold removal, wanted a central location that was close to their customers.

“Our teams out in the field may gather supplies and equipment in the morning then travel to customers,” said Charles Leduc, Mold Buster’s COO. “A location that provides minimal miles in between locations or jobs helps keep expenses down.”

Ralph Severson , president at Flooring Masters , agreed.

“Our crews must be able to get the equipment and supplies that they need each morning with minimal travel time,” Severson said.

At the same time, Severson said they wanted a location that balanced the convenience with lower costs.

“We chose our location because it is only 10 minutes from Louisville, Kentucky, the most densely populated city in the area, but we are north of the Ohio River in Indiana, where overhead costs are lower,” he said.

The right location for your business plays an important role in your success. Businesses need to assess their overall goals and think carefully about how they are serving their customers and employees to optimize their strategy.

Ready to take the next step in protecting your career and business? Take a few minutes to learn more about our suite of insurance products and find out how Berxi can help you.

Image courtesy of iStock.com/ Orbon Alija

Last updated on Jul 24, 2024. Originally published on Aug 25, 2021.

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