The importance of location to the success of a business is acknowledged but by individual observation many new businesses are located in the wrong place. Surprisingly, some do survive but the majority either fail or are forced by circumstances to relocate. The objective of this paper is to outline the various approaches to location procedures that have been developed over the years and are available for use by management. Since small businesses have failed and poor location has been cited as the cause, doubts arise about the appropriateness or thoroughness of the location procedure utilized by those failed business owners.
A review of literature was the methodology employed.
The “convenience” factor was cited in various sources and this conflicts with researchers’ assumptions of economic rational man.
The existence of this "convenience" approach explains why many businesses will continue to fail.
Intangible variables, particularly the perceptions of managers, exert a powerful influence on the decision-making process. Perceptions act as filters of information and this may predetermine the final site.
Firms restrict the area of location search according to the spatial extent of their operations. The smaller the firm, the less rigorous is the search.
There is no easy substitute for a time-consuming location analysis which seeks the optimum location.
Recent location survey results and subsequent relocation survey results of local Brisbane industrial firms were analysed as an additional methodology to provide further insight into the location procedure.
Site factors such as availability, size and/or cost have a significant influence upon the final location selection and this influence has not diminished 'over time. The dependence upon local buyers appears to reduce as the business becomes larger.
Businesses operating for less than 20 years and especially those in leased premises are more likely to be contemplating relocation. The need to expand and the desire for freehold ownership of premises are major reasons for contemplating relocation.
Most businesses indicated their intention to search for a new site within the same area if they were forced to relocate. Management is reluctant to take this option unless virtually forced by circumstances mainly beyond their control.
A rigorous search procedure should not only be applied to the initial location decision but also to every subsequent relocation.