When starting a business, why may a cheap location for the business not always be the best location?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The reason for this is because there are aspects to a location other than price that make a huge difference in determining whether that location is good.  For a retail business, the most important thing is the ease with which customers can get to the location.  With a manufacturing concern, a bigger factor might be access to transportation.

Imagine starting up a restaurant.  If you had a choice between a cheap location out on a quiet street where no one ever goes and an expensive location on a busy street with lots of foot traffic, which one do you think would be better?  Or imagine if you have a business that needs to get large supplies of raw materials.  An expensive location on a railroad line would be much better than a cheap location away from tracks.

These types of factors are much more important than price in finding a good location for a business.

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