Top 6 Demographic Factors to Consider When Choosing a Business Location

March 15, 2024 By
Photographer: José Martín Ramírez Carrasco | Source: Unsplash

Location, location, location. It’s not just your next real estate purchase that depends on it; the success of your business often depends on its location too. Understanding the characteristics of the local population is crucial, as are factors like market trends, competition, and economic conditions. However, knowing who lives and works there can be the key to unlocking sustained growth, engagement, and customer loyalty.

The easiest way to find that perfect new location is to reverse engineer the demographics of your best customers. Look at your existing customer database or other successful locations and do some demographic research. You can use that information to choose a new business location with confidence. But what demographic factors should you look at?

While some of the factors you’d consider might be unique to your business, you can always start with these six demographic factors.

1. Population

Population characteristics provide information about the number of households, the size of the area (in square miles), and population density. This gives you an idea of your potential customer base and whether the location is worth further consideration. For example, a business that relies on mostly high-volume new customers will thrive in an area with higher density, ensuring a constant pool of people to draw from.

2. Age

The age of the population in an area is also important depending on your business. At a minimum, you’ll want people to be old enough to be able to purchase from you or work at your business. If you’re in a niche market, knowing if there are enough people in that segment to sustain your business is essential. For example, if most people are mostly under 18 years old, they likely have little to no disposable income and may not sustain your business.

3. Sex/Gender

This data refers to the sex or gender of the people living in an area. It becomes relevant if your business caters to a specific group, like a women’s hair salon or men’s barbershop. Businesses often combine the gender data with other relevant data such as age and population size as it may not be significant by itself. For instance, knowing there are over 10,000 women aged 25 to 34 may help you more than simply knowing there are 25,000 women in the area.

4. Income

Understanding the income levels of the population can be very important, depending on the primary price range of your products. For example, if you sell luxury products, you’ll want an area with residents earning more than $200,000/year living or working there. This information can also guide marketing strategies, helping you decide if out-of-area campaigns are needed due to a limited number of residents in your primary income range.

5. Home ownership type

Home ownership data is generally divided into segments like renters, home owners, structure size, units by year built, and households by year moved in. This data provides insight into the type of people living in the area, whether they’re college students, temporary workers supporting a local industry, or permanent locals. This knowledge could be crucial because your products or services may only be relevant to one segment. For example, if you cater to renters or condo owners, detached home owners may not need your services.

6. Family status

The Family Status data refers to the makeup of the family unit, such as married spouses, with or without children, common-law partners, or single parents with multiple children. This data can indicate whether your business would be well-suited to the area based on the population type. For instance, opening a dance club in an area mostly filled with married couples with small children may not be a good idea; opening a restaurant that caters to families with small children could thrive.

Choose the right demographics to discover the perfect location

The demographics that are relevant to your business are as unique as your business itself. Use these six factors as the foundation of your search for a new location.

Contact EASI today to get the demographic information you need to choose your next business location.