Nature of the business activity

The nature of the business activity is what a business does and how it sells its products. It decides which location factors matter most, so a manufacturer and a retailer can judge the same site very differently.

Where customers come to the business, being close to them matters most. Where the business goes to the customer, the position of its premises matters much less: a mobile dog-grooming van still needs dogs nearby, but its lock-up can sit on a cheaper industrial estate because customers never visit.

Products that are perishable, bulky or used on the spot, and services delivered in person, generally have to be close to the customer: fresh cream cakes spoil on a long journey, heavy garden benches are expensive to deliver far, and a piano teacher who travels to pupils still needs enough of them within a short drive.

Some activities need particular sites. A bespoke staircase maker needs a large workshop, a haulage firm needs motorway links for its lorries, and a recording studio needs soundproofed rooms, so each must choose premises that provide them.

Fixed premises or selling online

Fixed premises are a physical site that customers visit. They let customers see, try and collect products straight away, receive personal service and build trust, and some activities, such as a dental practice or a swimming pool, cannot run without them. E-commerce means buying and selling online. A business may sell only online, use fixed premises only, or combine both: a pottery studio could run classes on site and post glazed mugs to online buyers, widening its reach while keeping a physical presence.

Worked example

A picture framer who frames customers' own paintings needs a shop that is easy to reach, because people carry in fragile frames and collect them later. Selling ready-made frames online instead would let it rent a small unit on an industrial estate, since buyers never come to the door.