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What is location strategy? And why is it important? Your questions answered

Karim Budabuss
Director - Grant Advisory
Shyla Sudhir FCCA Technical Specialist
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Investing in new premises is a significant business decision – particularly when relocating to a new geographic area. Investment decisions will be determined by a range of factors – each needing careful evaluation – before potential locations are visited and a shortlist compiled. To navigate this process effectively, the support of a location strategist, able to provide a confidential bespoke service, should be considered.

For any overseas business exploring the UK as a new global hub, the support of an adviser takes on even greater importance. They can explain the regulatory framework or share insights on workplace culture, as well as providing an indication of available subsidies that a business might be eligible for. In industries such as life sciences, where the UK encourages inward investment, a range of incentives may be available in established regional clusters.

Before engaging a location strategy consultant, you may have more foundational questions about how a strategy works and what it might look like in practice. Here, we answer those questions and share insights on why a consultant can help you streamline the process.

What is location strategy?

Location strategy is the adoption of a clear process to help you find the best location to invest. The search for a new location might be triggered by a range of factors, including inward investment (from within the UK or internationally), the adoption of a growth strategy where headcount is increasing, or the consolidation of existing sites. 

Defining a project strategy starts by identifying and agreeing factors that will be critical to the success of the project and then evaluating a range of location options based on those criteria, before agreeing on a shortlist and eventually choosing the optimal location.

The evaluation of the shortlist is based on a range of factors including the availability of government support and incentives, skills profile of the local workforce, and infrastructure. Location strategists will draw on their geographical knowledge and extensive networks of contacts to identify the best opportunities at shortlisted locations.

What is the main objective?

It aims to support businesses to make the right investment. While one location may look attractive from a premises perspective, if the skills profile of the local workforce or connectivity doesn’t support it being there, then it might not be the optimal location. A logistics hub will need strong transport links, for example, while an automotive manufacturer may benefit from being in an established cluster where sector-specific grants are available.

Need grant support?

ForrestBrown’s experienced grants team can advise on all aspects of the grant application process. If you are a business seeking grant support, do get in touch to find out how we can support you.

A well-defined location strategy will take a holistic approach – that puts critical success factors front and centre – rather than focusing solely on real estate. Once potential locations have been shortlisted, discussions with real estate advisors can then begin.

Why is location strategy important?

The right investment can bring significant returns if completed in line with defined objectives. It can ensure that businesses are located within a relevant cluster, that access to funding has been explored and that digital connectivity meets the needs of the business.

From a process perspective, finding a new location for your business can be time consuming and involve multiple stakeholders. Centralising that process and handing over the heavy lifting to an external provider who can help co-ordinate efforts, saves time and resources.

When is a strategy beneficial?

Location strategy can be deployed in a range of scenarios, though is particularly useful for large multi-national businesses looking to move to a different region or territory. In this scenario, a business may lack contacts, need insights into local customs or working practices and require support to access government funds or schemes. There are also scenarios where a third-party insight is needed to conduct a portfolio review of existing premises free from internal conflicts or where a firm simply does not have the capacity to undertake a site search itself.

Who is it for?

Defining a location strategy when investing in new premises is useful for businesses across all sectors, from food and beverage manufacturers and banking institutions to data centre operators and pharmaceutical companies.

A good location strategy will engage stakeholders from across the business, including Directors of Incentives, Heads of Finance, Chief Financial Officers, Finance Directors and Global Heads of Tax and HR. It will also engage those in real estate roles – though typically much further down the line once a shortlist is being evaluated.

What factors are considered in a location strategy?

While the weight given to certain factors will differ for each business, consideration is typically given to:

  • workforce, 
  • business environment, 
  • logistics, 
  • infrastructure and cost.

Does the local workforce have expertise in a particular area, for example? Or does it support a particular type of business? Are the transport links strong?

Alongside this, businesses will want to know which incentives they might be able to access. Is a particular region looking to attract inward investment for a sector such as life sciences? If so, what government incentives might be available and how can these be unlocked?

A location strategy will take account of each of these factors and ensure that businesses are making decisions based on all the available data and information.

What metrics are used?

A location strategist will draw on their network of national and international contacts to provide insights and finalise a shortlist of locations. They’ll review available incentives, evaluate critical factors such as workforce and infrastructure and ensure that any selected location meets the original project aims and mitigates risk.

The work they undertake is not just desk based either. They’ll visit potential locations to undertake research and due diligence; as well as meeting with real estate agents, recruitment agencies and local government officials to scope out locations and regulatory frameworks.

What is business location analysis?

Once the shortlisted locations have been visited, the location strategist will evaluate the data gathered and make final recommendations. The business will then be able to make an informed decision.

How can a business develop a location strategy?

The starting point for any strategy is to define the project aims. But with multiple stakeholders, each bringing their own unique perspective, this can be a time-consuming process that risks delaying the project.

Drawing on the expertise of a consultant can help to streamline the process and ensure that priorities are properly documented, given a weighting and consistently evaluated throughout the process.

Case study: establishing a new digital lab

A financial services company sought a full location strategy evaluation for a new European lab. Through this strategy, its leadership was able to understand:

  • why existing locations were unable to support the project; and
  • which European locations had deep pools of data scientists and active fintech start-up markets that would align with their needs.

Shortlisted locations were then visited and a consensus built with senior stakeholders on finalist locations.

How can ForrestBrown support me?

ForrestBrown can support businesses seeking their next location – particularly if you’re a large multi-national looking to invest in the UK, Europe or India. We have an experienced grants team who can provide insights into available incentives, in addition to drawing on the expertise of location strategy experts with extensive experience of supporting businesses when making investment decisions.

Our multi-disciplinary team of experts can also support with accessing incentives post investment, when you might be investing in capital expenditure or research and development.

Ready to invest in a new location?

If you’re ready to start exploring your next location, why not get in touch to find out how ForrestBrown can help you? As a firm with expertise across a broad range of sectors and with a deep understanding of the innovation incentive landscape, we can support all your location strategy needs.

Contact us today.