8 Tips on Choosing a Factory Location for New Businesses

Well over a hundred thousand jobs were added to the US economy recently. That number is a positive glimmer in what has been a difficult 2020.

As we see jobs reenter the economy on the back of renewed consumer confidence, now might be the time for you to take advantage of low costs by investing in that new factory location you’ve been mulling over.

Finding and developing factory locations has been historically difficult. It takes cutting through red tape, buying or leasing huge swaths of land, and spending ample amounts of money.

If the process is executed correctly though, a new factory will expand your company’s footprint and help you rake in more revenue.

So, what should you be on the lookout for when considering options for sites? Below, our team answers that question by sharing 8 imperative factory location considerations.

  1. Real Estate Costs

Factories typically sit on acres of land. If that land is expensive, that’s a problem because construction costs will likely follow suit.

To save on a new factory location, start with focusing your development efforts on areas that offer cheap land and development services. Getting those two line-items below budget will set the table for the rest of your costs.

  1. Consider Regulations

Factories tend to be eyesores that pose certain environmental concerns. The last thing you want is to develop your factory only to find out later that your community doesn’t want you around anymore.

To avoid that fate, pick a factory location that is less focused on regulations and more focused on a burgeoning economy. Once you’ve found that location, ensure that whoever is approving your factory location understands everything your location will emit, its size, and any other pertinent details.

The more transparent you are with your city council or other governing boards, the less likely you’ll run into trouble later.

  1. Think About Connecting to Your Supply Chain

If your product’s pathway to consumers involves loading up ships at a port and them sailing your goods to Asia, it wouldn’t make sense to invest in a landlocked factory location. This is where supply chain considerations come into play.

You need to be willing to spend more on a factory location if it means easing the expenses involved with supporting your product’s pathway to market. If you don’t, you’ll spend tons on transit expenses.

  1. Assess Local Qualified Labor

You have your factory built and ready to start operating. Now you have to figure out where you’re going to find labor.

Labor shortages, even in down economies, are a real concern for businesses if their locations are isolated. Get ahead of that problem by going with factory sites that connect to populated places with relative ease.

In addition to ensuring you have labor nearby; you’ll also want to take a look at local mechanical experts and other contractors in your area. If you ever need machine maintenance or other forms of specialized help, you don’t want to be left hanging.

  1. Look Into Financial Incentives

While some communities would protest the arrival of factories, others would welcome them. As a matter of fact, some communities want factories so badly in their areas that they’re willing to offer significant incentives to attract them.

For example, a city may pay for the land in which you build your factory on in exchange for committing to staying in the area for an extended period of time. They might also offer a slew of tax advantages that can help you run your factory profitably sooner than you typically would have.

  1. Take Topography Into Consideration

Topography refers to how the land is shaped under and around where your factory is going. Certain topographies are better suited to development and types of operations.

If your factory sits in a bowl-like topographic setting, how will you manage drainage? If your topography isn’t flat, how much will it cost to level so you can start building?

These are things you need to consider carefully under the council of a development expert before settling on land.

  1. Expansion Potential

Different levels of business success beg different factory sizes. If your business starts to take off in the next five or ten years, will your land allow you to expand your operation?

We recommend picking locations that offer room to grow since you never know how your business needs will evolve.

  1. Livability

Livability may not be a consideration for all business owners since not everyone will be living in the same location as their factory. If you’re going to be hands-on in your business though and need to live nearby your operation, take the time to explore your community.

Being comfortable where you live will have a big impact on your quality of life. Make sure your community is one where you feel you can thrive on a personal level and weigh that into your factory building considerations.

Finding the Perfect Factory Location Takes Time

With development costs being low given the down economy, you may feel pressure to seize great deals and get your factory off the ground, fast. Fight that urge to rush.

Building a factory is costly and, in many ways, the decisions you make will be permanent. The more time and diligence you take upfront to ensure you make the right factory location decisions, the happier you’ll be with your result.

If you’re hungry for more business advice, real estate advice, and conversations on other topics, check out the newest content on our blog.