Why Facility Location Matters
Choosing the right site for a new facility is a strategic decision that can affect profitability, growth, and competitiveness for years to come. A well‑chosen location reduces operating costs, improves supply‑chain efficiency, and gives you access to the talent you need.
Key Criteria for Site Selection
1. Cost Considerations
- Land or lease price – Compare purchase versus rental rates in each market.
- Total Cost of Ownership (TCO) – Include taxes, insurance, utility rates, and anticipated capital improvements.
- Moving & set‑up expenses – Budget for equipment relocation, retro‑fitting, and permitting.
2. Infrastructure & Utilities
- Reliable electricity, water, and gas supply.
- High‑speed internet or fiber connectivity for IT‑intensive operations.
- On‑site waste‑management and environmental compliance capabilities.
3. Labor Market and Talent Pool
- Availability of skilled workers for your specific industry.
- Average wage levels and labor‑union presence.
- Proximity to training institutions or technical schools.
4. Regulatory Environment
- Local zoning laws and land‑use restrictions.
- Environmental regulations that could limit expansion.
- Tax incentives, grants, or subsidies offered by municipal or state governments.
5. Logistics and Transportation
- Access to major highways, rail lines, ports, or airports.
- Distance to key suppliers and major customers.
- Availability of freight services and loading docks.
Industry‑Specific Examples
Below are quick snapshots of how the above criteria play out in three common sectors.
- Manufacturing – Prioritize heavy‑duty power, proximity to raw‑material suppliers, and easy truck/rail access.
- Warehousing & Distribution – Focus on highway proximity, ceiling height, dock count, and low property taxes.
- Technology / R&D – Look for high‑speed internet, nearby universities for talent, and a business‑friendly tax environment.
Step‑by‑Step Checklist for Choosing a Facility Location
| Step | Action | Tools / Resources |
|---|---|---|
| 1 | Define strategic goals (cost reduction, market access, talent, etc.). | Business plan template – https://mrdashboard.com/business-plan-template/ |
| 2 | Create a weighted scoring model for each criterion. | Balanced scorecard and strategy map toolkit – https://mrdashboard.com/balanced-scorecard-and-strategy-map-toolkit/ |
| 3 | Gather data on candidate sites (cost, utilities, labor pool, regulations). | Financial statements templates – https://mrdashboard.com/financial-statements-templates/ |
| 4 | Score each site and compare total TCO. | Excel long‑tail keyword generator – https://mrdashboard.com/excel-long-tail-keywords-generator/ |
| 5 | Conduct site visits and validate assumptions. | Small business growth strategy pack – https://mrdashboard.com/small-business-growth-strategy-pack/ |
| 6 | Finalize decision and negotiate lease/purchase terms. | Finance profit growth toolkit – https://mrdashboard.com/finance-profit-growth-toolkit/ |
Tools & Templates to Streamline Your Decision
Leverage these free resources to add rigor to your site‑selection process:
- Business Plan Template – Align facility goals with overall strategy.
- Small Business Growth Strategy Pack – Identify growth drivers and funding needs.
- Financial Health & Profit Boost Strategy Pack – Model cash‑flow impacts of each location option.
- Balanced Scorecard & Strategy Map Toolkit – Create a visual scoring matrix.
Ready to Make the Right Move?
Start applying these guidelines today with our free Business Plan Template. A solid plan gives you the confidence to negotiate terms, secure financing, and launch a facility that fuels long‑term success.
Suggested tags: Facility Location, Site Selection, Operations Management
Suggested category: Operations
