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Where should a business locate, and how does a plan help it get going?

Business location and planning: the factors that influence where a business locates, and the purpose, contents and benefits of a business plan including a sales forecast and cash flow forecast.

A focused answer to the Eduqas GCSE Business C510 content on business location and planning, covering the factors affecting where a business locates and the purpose, contents and benefits of a business plan with its sales and cash flow forecasts.

Generated by Claude Opus 4.811 min answerUpdated 2026-06-02

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Where a business locates depends on several factors: proximity to customers (vital for a shop that needs footfall), proximity to suppliers or raw materials (vital for a manufacturer), the cost of premises (rent and rates), the availability of suitable premises and labour, transport links, competition nearby, and increasingly the option to trade online rather than from a physical site. The right location balances cost against access to customers and supplies, and it differs by type of business. A business plan is a written document that sets out the idea, the aims, the market, the marketing, the operations and the finances. Its key financial parts are a sales forecast (predicted sales over time) and a cash flow forecast (predicted money in and out each month). The plan's purpose is to clarify the owner's thinking, reduce risk by spotting problems early, and persuade a bank or investor to provide finance. The benefit is a clearer, better-prepared business that is more likely to survive its first year.

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What this topic is asking
Factors affecting business location
The purpose of a business plan
The contents of a business plan
The benefits and limits of planning
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What this topic is asking

Eduqas C510 brings together business location and business planning. You need to explain the factors that influence where a business locates, and the purpose, contents and benefits of a business plan, including its sales forecast and cash flow forecast. The exam often gives a start-up choosing a location or deciding how much to plan, so you must apply the factors to the specific business.

Factors affecting business location

A business chooses where to locate by weighing several factors, and the most important ones depend on the type of business.

For a retailer, customers and footfall dominate. For a manufacturer, the cost of premises and access to suppliers and transport matter more. The decision is a balance: a cheaper out-of-town site cuts costs but may reduce passing trade, so it suits a business that does not rely on walk-in customers.

The purpose of a business plan

The contents of a business plan

The sales forecast predicts how much the business will sell over time; the cash flow forecast predicts the money flowing in and out each month, so the owner can see whether the business will run short of cash.

The benefits and limits of planning

Planning makes a business better prepared and more likely to survive: problems are anticipated, finance is easier to raise, and the owner has a roadmap. But a plan is only as good as its assumptions: forecasts can be wrong, and markets change, so the plan must be treated as a living document and updated as real trading data arrives. Time spent planning is also time not spent trading, so a plan should be thorough but not endless.

Using a sales forecast to size the start-up finance

Set out the figures

A start-up cafe forecasts $300$ customers a week spending an average of $6$ each. Its weekly costs are: rent $400$ , wages $900$ , and bought-in supplies of $2$ per customer. It needs to know its weekly profit to plan its finance.

Weekly revenue

\text{Weekly revenue} = 300 \times 6 = 1{,}800.

Weekly costs

\text{Supplies} = 300 \times 2 = 600.

\text{Total weekly cost} = 400 + 900 + 600 = 1{,}900.

Weekly profit (or loss)

\text{Weekly result} = 1{,}800 - 1{,}900 = -100 \text{ (a loss)}.

Interpret the result

On these forecasts the cafe loses $100$ a week, so the plan flags a problem before a penny is spent: at $300$ customers it does not cover its costs. The owner now knows they must either raise customer numbers (better location or marketing), increase the average spend, or cut costs (lower rent or fewer staff hours) to break even. This is exactly why a business plan with a sales and cash flow forecast is worth the effort: it turns an optimistic idea into testable numbers and shows how much finance is needed to survive the loss-making early weeks.

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Q1. State two factors that affect where a manufacturer locates. [2 marks]

Cue. Cost of premises, proximity to suppliers/raw materials, transport links, availability of labour.

Q2. Explain one benefit of a cash flow forecast in a business plan. [3 marks]

Cue. It predicts the money in and out each month, so the owner can spot a cash shortfall early and arrange finance before a crisis.

Exam-style practice questions

Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

Eduqas 20192 marksState two factors that influence where a retail business chooses to locate. (Component 1)

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A 2-mark AO1 recall question, one mark per valid factor. For a retailer, acceptable factors include: proximity to customers (footfall in a busy area), the cost of premises (rent and rates), competition nearby, parking and transport links, the availability of suitable premises, and visibility on the high street. Markers want a factor that genuinely affects a shop's choice; a general answer such as "money" without linking it to the cost of premises would be too vague. Naming the factor is enough for the mark.

Eduqas 20216 marksA start-up online retailer is choosing between a town-centre unit and a cheaper out-of-town warehouse. Analyse how location factors should influence its decision. (Component 2)

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A 6-mark Analyse needing developed chains applied to the online retailer. Because the business is online, footfall and high-street visibility matter far less than for a shop, so paying a premium for a town-centre unit is hard to justify. The out-of-town warehouse is cheaper (lower rent and rates), giving lower fixed costs and a better chance of covering them in the early months, and it offers more space for stock and easier access for delivery vans and couriers. The chain to credit: lower premises costs reduce the break-even point, so the start-up needs fewer sales to survive, while good transport links cut delivery times and costs, improving the customer experience that drives repeat orders. A counterpoint worth marks is that a warehouse needs reliable broadband and good road access to function. Markers reward developed reasoning that links the firm's online model to the location choice, not a generic list of factors.

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Sources & how we know this

WJEC Eduqas GCSE Business specification (C510) — WJEC Eduqas (2017)