Business Plans and Location
Business Plans and Location
A business plan is a written document that outlines the objectives, strategies and financial forecasts of a new or existing business. Choosing the right location is one of the most important decisions a business makes.
What Is a Business Plan?
A business plan typically includes:
- Business idea — what the business will sell and its unique selling point (USP)
- Aims and objectives — what the business hopes to achieve (e.g. profit targets, market share)
- Target market — who the customers are (age, income, location, interests)
- Marketing strategy — how the business will attract and retain customers (4Ps)
- Financial forecasts — projected revenue, costs, profit and cash flow
- Sources of finance — how the business will be funded (savings, loans, investors)
- Operations plan — how the business will produce and deliver its product or service
Why Write a Business Plan?
| Benefits | Limitations |
|---|---|
| Forces the entrepreneur to think through their idea carefully | Based on predictions that may be inaccurate |
| Helps secure funding — banks and investors require one | Can become outdated quickly in a changing market |
| Identifies potential problems before they occur | May give a false sense of security |
| Sets clear targets to measure progress against | Time-consuming to create |
| Provides a roadmap for the first months and years | The real world rarely follows the plan exactly |
Choosing a Business Location
The right location can make or break a business. Key factors include:
| Factor | Explanation |
|---|---|
| Proximity to customers | Retail businesses need high footfall; online businesses are less location-dependent |
| Proximity to suppliers | Being near suppliers reduces transport costs and delivery times |
| Proximity to labour | Locating near a skilled workforce makes recruitment easier |
| Costs | Rent, rates and wages vary hugely by area — city centres are expensive; rural areas are cheaper |
| Infrastructure | Good transport links (roads, rail, airports) are essential for distribution |
| Competition | Being near competitors can attract more customers (clustering) OR increase rivalry |
| Technology | E-commerce means many businesses can operate from anywhere with an internet connection |
| Government incentives | Some areas offer grants, tax breaks or enterprise zones to attract businesses |
| Nature of the business | A factory needs space; a consultancy needs a city office; an online retailer needs a warehouse |
The Impact of E-Commerce on Location
- The growth of online shopping has reduced the importance of a physical high-street location for many businesses
- Businesses can sell globally from a warehouse in a low-cost area
- However, some businesses (restaurants, hairdressers, gyms) still rely entirely on physical location
- Click and collect combines online ordering with physical collection points
Exam Tips
- Be able to evaluate whether a business plan guarantees success (it does not)
- When discussing location, always consider the type of business — a cafe has different needs from an online retailer
- Link location decisions to costs and revenue — a cheaper location may save rent but lose customers
- For longer questions, discuss trade-offs — e.g. a city centre location brings more customers but higher costs