How to Choose a Location for Your Business in 2025

You’re about to open your dream coffee shop. The latte recipe is perfect, the funds are ready, and excitement is high. Now comes a crucial decision: Where should the coffee shop be located? 

It’s not just about finding an empty shop; it’s about choosing a location where customers can find you easily, costs stay under control, and your business has room to grow.

But how to choose a location for your business that makes your business thrive? In this blog, I’ll explain what a business location strategy means (and why it’s more than just picking an address).

Further, we’ll break down key factors to consider when choosing a location, learn how to present your location choice, and get practical tips to help with your decision.

Let’s get started.

And it’s not just about customers either. You also think about:

• Costs (rent, taxes, utilities)
• Suppliers (how easy it is for your stock to reach you)
• Staff availability (are good workers nearby?)
• Competition (too much of it nearby can be risky, but none at all could mean no market)

How to choose your business location (factors to consider)

Now that you understand what a business location strategy is, let’s explore it a little further. I’ll explain how to choose the right location for your business and what things you need to think about before locking down any place.

1) Target customers

You need to be where your customers are. No matter how good your product is, if people don’t find you, you won’t get the sale you want. Choosing your location near your target customers will benefit your business with:

• Better foot traffic
• Higher chances of regular customers
• Lower marketing expenses (since you’re already where your market is)
• Better customer relationships as you connect with customers more often
• Strong brand recognition as people see you around frequently
• Quicker feedback adoption because you’ll be able to observe customers' behavior closely

2) Foot traffic

Places where people walk by naturally are valuable for retail shops, restaurants, cafés, etc. The more people passing by, the higher your chances of getting walk-in customers.

Moreover, the benefits of choosing a business location where the footfall is higher are:

• Free promotion because people notice your shop
• Impulse buying happens a lot in high-footfall areas
• Free advertising as seen by hundreds or thousands daily
• Better ROI on rent because a high footfall area increases the revenue potential

To know the footfall for your business location, go and check different spots at different times—morning, afternoon, and evening. Count how many people pass by. See if they match your customer type.

3) Competition

Too much competition can be risky. But no competition at all might mean there’s no market. Hence, choose the location where you can see the opportunity to share your customer base, get the opportunity to learn things, and where healthy competition exists.

To conduct a competition analysis for the location, visit nearby businesses. See what they’re selling, how busy they are, and what prices they charge. Decide if you can stand out or offer something better.

4) Accessibility & parking

It’s one of the most important factors to consider in business location strategy, especially when you’re thinking of locating your business in old cities, narrow streets, or buzzing areas.

These places don’t have large spaces for accessibility and parking, which affects your business. Because if people can’t reach your shop easily or there’s no place to park, they won’t come again.

Hence, choose your business location where you can provide:

• Better customer experience
• More chances of repeat visits
• Easier for deliveries and staff

5) Cost

Sometimes, you’ll come across locations where you know you can make good money. But you’ll still have to walk away. Why? Even the best location for business can cause you to lose if the rent is too high.

Because it eats up all your profits, even a great location won’t help your business grow.

Thus, choose a business location that benefits you with:

• Stable monthly expenses
• Better profit margins
• Less financial stress in the beginning

6) Safety and security

Another important factor to consider is safety and security. Choosing a location where there’s a constant risk means you’ll always be worrying about theft, damage, or trouble in the area.

A risky area can scare away people, increase your insurance costs, and even hurt your business reputation. Thus, look for the location that provides you with:

• Peace of mind
• Lower insurance costs
• Safer environment for customers and staff

7) Future growth potential

When choosing a business location, don’t just look at what’s happening today. Smart business owners always think a few years ahead.

A place that seems quiet now might turn into a busy market area in 2-3 years because of new residential societies, shopping complexes, or office spaces coming up nearby.

Choosing the location considering the future growth potential:

• You’ll get in early when rent is still affordable.
• As the area grows, so will your customer base.
• Your shop will become a known, trusted name before new competitors arrive.

How do you present your location strategy in your business plan?

After you’ve done the hard work to choose the right location, you’ll want to communicate that decision effectively in your business plan. Investors and lenders will be looking at why you picked that spot and how it benefits your business.

Hence, here are a few tips for writing about your location in the business plan:

Be specific and connect to your strategy

Don’t just drop an address and move on. Anyone can write, “We’re at 123 Main Street.” What matters is why you picked that place.

For example, “We chose 123 Main Street for its high visibility, consistent foot traffic from nearby colleges, and easy access for delivery vehicles.” That instantly tells people you’ve picked your spot with a solid business strategy in mind.

Highlight the top 2–3 benefits

Focus on the biggest advantages of your location. It could be:

• High daily footfall numbers
• No direct competitors within a 2 km radius
• Quick access to a major highway
• A neighborhood that’s growing fast
• Or a government scheme offering tax benefits

Pick what matters most for your business and mention it clearly. This will make your investor clear about your intention and show them that you’ve made a smart, thought-out decision, not just picked a place because it was available.

Keep it brief and to the point

You don’t need to write a full essay here. A short, sharp paragraph or a few well-made sentences are enough. The goal is to show you’ve done your homework and chosen your location wisely.

If you have extra data (like area demographics or traffic counts), you can always tuck it into an appendix later.

Show that you’ve planned for future growth

Smart investors like to know if your location will still serve you well as your business grows. So, when you talk about your location, mention if there’s room to expand, nearby units you could take over later, or signs that the area itself is developing.

“We selected this space with expansion in mind, with additional units available next door for future growth.”

or

“With two upcoming residential projects nearby, the customer base is expected to increase by 30% over the next two years.”

Tips for an effective business location strategy

Here are a few tips that you should use to make an effective business location strategy:

Always start with your customer first

Before looking at any shop or office, ask yourself, “Where are my customers hanging out?” Find out where your target audience lives, works, or shops. The closer you are to them, the better your chances of making steady sales.

Don’t get blinded by fancy areas

Just because a place is posh or famous doesn’t mean it’s good for your business. If the rent is so high that it eats up your profits, it’s a bad deal. Remember, money made should stay in your pocket, not all go to the landlord.

Test the spot with a temporary setup first (if possible)

If you can, start small—a pop-up stall, a weekend kiosk, or a small rental for a month. It’s a smart way to test customer response without committing to a long-term lease. I’ve seen many people save themselves from bad deals with this trick.

Study traffic movement & parking patterns

Spend a few hours observing how people move around the location. Where do they park? Which side of the road is busier? Is your shop visible from a traffic signal or hidden behind something? These small things decide whether people stop at your shop or drive past.

Always visit the area at different times

Remember, don’t just visit a place at noon and make a decision. Go early morning, evening, and on weekends. You’ll get a clear picture of how foot traffic, safety, and activity levels change throughout the day.

Need extra help?

With everything we’ve covered about how to choose a business location for your business, I’m sure you’ll be better prepared to pick a place where your business can truly grow.

However, choosing the right location is a big step, but you don’t have to navigate it alone. Plangrowlab can guide you through the process and the rest of your business plan.

Our team of experts can assist with market research, location analysis, and crafting a solid plan that impresses investors. We’ve helped many entrepreneurs find that “sweet spot” for their business.

If you want a second opinion on a site or one-on-one support in planning, Plangrowlab is here to help.