Any MBA marketing student will tell you the importance of the Four P’s of distribution. They are Price, Product, Promotion, and Place (not necessarily in this order). Unfortunately, many businesses do not give much preference to the last named P, also known as business office location in the management parlance.
We shall see the importance of business office location and look at ways to secure the best location for your business. What are the factors that affect your business office location?
Competition as a factor in business office location:
Yes, competition does play a great role in choosing your right business office location. There are people who believe that your business can thrive in an area where there is less competition. But, there is a school of thought that thinks otherwise. They are of the opinion that you perform at your best when you are pitted against the strongest player in your field. There is a strong reasoning behind this rationale. One of the reasons is that you need not spend much on advertising as your competitor has already spent a fortune on attracting customers to his location. Secondly, you can tap into his suppliers and customer base and build up your clientele. Passing on these benefits in terms of rates to your customers can get you good business. This is a business office location advantage for you.
Tax benefits of a favourable business office location:
There are industrial estates in India where you are exempt from paying certain taxes and duties. Some states in India give tax holidays thereby providing incentives for setting up of industries in their area. Choosing such locations can reduce your overhead expenditure on the taxation front. Secondly, industrial estates have various logistics facilities that you can take advantage of. This is another business office location importance MSME units in India should not ignore. SEZ’s are one example of an area which offers significant tax benefits.
No industry in the world can survive without customers. It is imperative that your customers should be able to locate you. Hence, it is best if you have your office location in a prominent location easily accessible to your customers. Each industry has its individual customer characteristics. You should know the demographics and preferences of your customers before choosing your business office location.
The Price factor:
In this materialistic world, you need to quantify your profit. Various factors go into the computation of your profit. They include overhead expenses like transport, communication, rent, and so on. Having your office location in an area that demands exorbitant rents can work to your disadvantage. This is more evident when you can very well flourish in an area demanding lesser rent. Of course, some businesses consider it their prestige to function from vantage locations but prudence suggests otherwise.
Various other factors come into play when you look for the right business office location. The proximity to the markets is one. Your banks should be easily approachable. Labour is an important constituent. Office connectivity is an important factor to consider. Easy accessibility to raw materials can reduce your overhead expenditure. Potential investors in your business should find it attractive as well. Your employees should also find it easy to commute.
The points that we have discussed should make the office location meaning very clear. Now, you understand why this fourth P in distribution is very important. Your business office location has an important role to play in your productivity and profitability.