Financial Incentives
Most community governments are faced with cash needs that go well beyond the tax tolerance level of their citizens; consequently, they work diligently with economic development agencies to attract new business – and the accompanying tax revenues – into the community.
One of the ways they attract business is by offering incentives such as lower taxes, cheaper land, and employee training programs. Some communities have enterprise zones, which give the businesses that locate in them favourable tax treatment from the state, on the basis of the number of jobs created, as well as lower land costs and rental rates. They also expedite permit processes and help in any way they can to make the move easier.
Look carefully, however at communities that offer up-front cash in compensation for the community’s lack of up-to-date infrastructure. They may be hiding a high corporate tax rate or some other disincentive that could hurt the new business’s chances of success. In general, the larger the incentives, the more exacting the entrepreneur’s homework must be.
Demographics
In addition to studying the economic base and the community’s attitude toward new businesses, look carefully at the population base. Is it growing or shrinking? Is it ageing or getting younger? Is it culturally diverse? The level of the quantity of disposable income in the community will indicate whether there is enough money to purchase what a new company is offering.
In Nigeria, population data is usually provided by the National Population Commission which tracks changes in population size and characteristics.
With information provided, it is possible to determine, for example, whether the city in which an entrepreneur wants to locate a new business has enough people to support the business.
Population data also indicate the number of people available to work. Demographic data are easily obtained from the economic development agency, the public library, the Internet or post office which tracks populations.
Choosing a Retail Site
With a retail business, the entrepreneur is dealing directly with the consumer, so naturally, one of the first considerations is locating near consumers. Because a retail business is unlikely to survive if not enough consumers have access to the business, it is important to locate where there are suitable concentrations of consumers. Understanding a trade area is one way to calculate the potential demand from consumers.
