Why Location Matters in Business: 5 Reasons and Counting

With the COVID-19 pandemic and its economic aftermath fueling the launch of a record number of businesses, competitive pressures on those new business will be significant. Many may not realize it, but the location of a business plays a pivotal role in its success. Business locations that garner great first impressions and bolster brand awareness and perception will have a competitive edge.

Business Location Options

In the past, many entrepreneurs with businesses that did not require storefronts assumed a permanent workspace was a requisite. In addition to being expensive, those permanent workspaces involve long-term leases—often for workspaces that went partially unused for years. Plus, if the business grows faster than the length of the lease, the business may find itself searching for a larger location (and paying a penalty for breaking its lease). 

For those entrepreneurs unable to afford permanent office space, they ran their businesses out of their homes. While home offices give new businesses the ability to scale without expensive leases, they have disadvantages—especially when solopreneurs and businesses rely on them exclusively. Some professionals miss the collegial interactions that occur in workspaces and feel isolated and unproductive. Home addresses also have various disadvantages—and even liabilities.

Rise of Virtual and Hybrid Work Arrangements

Even before the pandemic, many businesses were embracing virtual offices like Davinci Meeting Rooms—not only for virtual addresses but coworking space, day offices, and rented meeting rooms. As the pandemic diminishes and businesses begin to reopen, studies indicate many will not return to permanent office locations and require employees to spend hours every week driving to a physical office location from which they work from 9 a.m. to 5 p.m. 

Instead, businesses are redesigning their physical offices or eliminating all or portions of their permanent workspace in lieu of on-demand workspace like Davinci Meeting Rooms. These hybrid work arrangements allow employees to collaborate with colleagues and attend in-person meetings in a corporate or virtual workspace and spend the rest of their time working from their home offices. 

Reasons Why Location Matters in Business

Even for businesses that opted for 100% virtual workspace arrangements and solopreneurs who elect to work 100% of their time from their home offices, their business location still matters. Regardless, for every business, those with 100% work-from-home arrangements and those with hybrid work environments, the location of their business matters. Following are some of the key factors that both solopreneurs and small business leaders need to consider.

1. Compliance and Regulations on Listing a Business Address

Home addresses are problematic for a number of reasons. As a starting point, first impressions count. When solopreneurs or businesses register their businesses using their home addresses, they suffer brand degradation—customers attribute smallness and a lack of professionalism. Second, some apartment complexes and home-owners associations restrict residents from running a business from their homes. Zoning laws and rental agreements can also prohibit residents on home-based businesses. Finally, the address under which a business is registered is public—something a solopreneur or business does not want revealed. 

To prevent this from occurring, a third party such as an attorney or a company that serves as a registered agent. Other options include virtual office or address services like Davinci Virtual Office.

2. Business Tax Rates

Tax rates vary from one municipality to the next, not to mention across states. Deciding the location of your business can make a huge difference in terms of your tax bill at the end of every year. A lot of different taxes are involved as well—from franchise taxes, to income taxes, to sales taxes, to gross receipts tax.

3. Clients Meetings 

For many solopreneurs and small businesses, leasing permanent workspace that is in a professional office building is simply too costly. The permanent office they might be able to afford doesn’t garner the respect customers expect and may not have meeting rooms needed for customer meetings. Rented meeting rooms through providers like Davinci Meeting Rooms are a great alternative, which often come with virtual office services. These professional meeting rooms like virtual addresses are in locations that demand respect. They also come with various accoutrements such as lobby greeters, food and beverage catering, and administrative services.

4. Talent Recruitment and Retention

Today’s workers place a high priority on work-life balance and seek out businesses that are willing to offer them flexibility—in terms of when and where they work. One of the outcomes of the COVID-19 pandemic is that workers want to retain the ability to work from home—at least part of the time. But many solopreneurs and professionals working for businesses require time in an office with other colleagues and professionals. As a result, studies show that many organizations will embrace hybrid work environments. Businesses must find locations that are convenient for their workers and with configurations that facilitate collaboration. 

Businesses in large metropolitan areas may want to seek locations that are close to where their workers live. Major metropolitan innovation centers like San Francisco, San Jose, New York, Seattle, Boston, and Northern Virginia are beginning to lose their attraction, with growing numbers of professionals making an exodus to other areas without the traffic congestion, sky-high real estate prices, and enormous cost-of-living challenges. In these cases, location plays a critical role in helping them to recruit and retain top talent. 

5. Clusters of Entrepreneurial Businesses and Professional Networks

Location also matters when it comes to the other businesses and professionals with which you surround yourself. Coworking spaces are a great location for businesses seeking to network with other like-minded businesses and professionals. These networking opportunities provide you with the chance to get ideas on strategies and tactics, new products and services, and ways to tackle perplexing business challenges. Additionally, collaborating with other professionals help assuage the isolation many solopreneurs feel when working from their home offices. 

Determining What Matters When It Comes to Business Location

One could obviously include other factors that a solopreneur or small business needs to consider when evaluating office locations. For example, a law firm specializing in serving Fortune 500 enterprises should seek a location that is formal and elegant. In contrast, a marketing agency that touts a fun brand and off-the-wall engagement strategies is a much better fit in a location that is less formal and more open. Demographics is another area that demands consideration—not only for recruiting and retaining the right talent but the right clientele. A coworking space with a bunch of technology startups would not be the best location for the above law firm. 

Deciding the location for a business address and office requires serious consideration. Solopreneurs and businesses need to determine if they want a long-term lease for an expensive permanent workspace or simply a coworking space or rented day office? What types of businesses do they want to surround themselves with? Where the workers with the best talent for your business live?


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