Business location & Choice of ownership
To all businesses one of the most important things is where the business is located. The correct location is crucial in order for business to be successful. Bad location can cause a lot of problems and cut down the profit. Good business location attracts more customers and increase profit. The following are factors considered by Poplar Newsagent when choosing their location. As a business you have to be near your customers. Poplar Newsagent owner chose to locate its business in Poplar because it is near college flats and houses. This is where most customers come from.
Only few minutes away from Poplar Newsagent is Tower Hamlet College. Students come to Poplar Newsagent at lunch time to buy things they need. They come to buy snacks, drinks, cigarettes and other things. Also teachers from Tower Hamlets College come to Poplar Newsagent to buy the same things. Usually student and teachers from Tower Hamlets College come to the shop to buy cigarettes, because newsagent shop which is inside the Tower Hamlets College doesn’t sell cigarettes. Also people from flats and houses come to the Poplar Newsagent to buy things they need, milk, bread and other necessary things.
Also read essay on success factors of Woolworths
A good transport link is very important to some business. Poplar newsagent is located only few meters away from Poplar DLR station. Trains go to different areas, such as Stratford, Becton, Lewisham and Tower Gateway, when people are going to their job, they like to read some newspapers or magazines, some people event have their breakfast in the train! So it is very important to Poplar Newsagent to open up very early. People want to buy newspapers, magazines and snacks, so they don’t get boring while they are traveling. Also Poplar newsagent is very close to Bus stop.
Some people use busses to get to job, so they also want to read newspapers in their journey, so they don’t slumber away their stop! To some businesses the very important thing is to locate near good and broad road links, so that big lorries with supplies can get in. Newsagents don’t get supplies, and they have to go to wholesaler to get products. Usually Newsagent owner have their own vans, so they don’t need board roads to get to the shop. In some cases it might be better for a business to locate near its competitor, but not to newsagent business. Poplar newsagent has few competitors, such as Woolworths, Summerfield and Tower General Store.
Some businesses find disadvantage locating business away from the others, because customers like to shop around, people like to go to the places where they have more choices, where they can find a lot of shops, restaurants and so on, but newsagent business find useful locating business away from competitors. If they are together they will split the market and lose sales. To Poplar Newsagent, a very big competitor is Tower General Store, student more often go Tower General Store, because it’s within the college, if Tower General Store would be located not that close to Poplar Newsagent, Poplar Newsagent would make much bigger profit.
When you choose a location you have to see if you will find the right staff in the area. Because newsagent business is a sole trader, and there is no need to employ a lot of people. It is owned and normally managed by the owner. For some businesses it is very important to locate in place where they can find the right staff. For example the restaurant might decide to locate in an area where a college offers courses in catering. Customers coming into Asian restaurant probably would like to see Asian waiters and Asian cookers.
So owner has to choose a place where he can find easily the right staff for his business. Sometimes business owners decide to locate the business in a place which is somehow important or memorable to the owner. Usually franchiser, Ltd or Plc businesses choose a place which can bring them big profit, but Sole trader or Partnership business might decide to locate the business in a place which is special for them. For example if the owner was born and brought up in the area, he doesn’t want to move away from his area, so he might decide to locate its business in the same area he has born.
Another example could be if their children go to college or school in the area, parents doesn’t want their children to travel a lot, so they got more spare time. Or maybe there is a family history of running businesses in the area. Firms generally need to pay rent to hire their shop/premises and also have to pay high rates to the councils if located in a sought after area. Sole traders and other small business are likely to locate where rent is cheap, because the business is very small, they don’t make very high profit, so owners can not cover very high rent. But I think that N.
Patel’s rent is not that cheap. Poplar Newsagent is in a high road, it’s close to city and the business is near good transport links, so these reasons makes me think that Poplar Newsagent owner pays high but not the highest rent. Why she chose to locate the business where the rent is high, is because she thinks the business will bring in sufficient revenue to cover her costs and she can make profits. A very good piece of work which not only discuss the key location reasons – but gives many examples discussed in class to explain the importance of these reasons. Well done!