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What are location advantages and how can they help my company?

How do you find the right location for expansion? Here's our overview of the location advantages to consider including access to trade, talent and more.

There are two primary reasons to consider expanding to a new location: 1) the new location provides tangible advantages over your current location, and 2) it offers concrete solutions to ongoing challenges you’re facing.

Editor’s note: This article was first published in July 2020. It has been updated to include more recent information and links.

There are a wide variety of location advantages that may tip the scale when deciding whether to expand to a new country and which country (or location within a new country) best fits your needs.

Five location advantages you should consider are trade access, consumer/market proximity, adjacent business communities, proximity to talent sources and lower costs.

Let’s explore each of these five location advantages further.

1. Trade Access

One of the biggest location advantages for a company that sells physical products is access to a comprehensive trade network. Trade agreements can reduce tariffs, making it cost-effective to enter new markets and making your products cost-competitive with similar offerings.

Canada has the world’s most comprehensive trade network . We have trade agreements with more than 51 countries representing 1.5 billion consumers and more than 61% of the global economy.

This makes our country a one-stop shop for access to some of the world’s largest economies, including Japan, the United States of America and the European Union.

2. Consumer/Market Proximity

Like trade access, strategic consumer/market proximity is about moving product with the objective of to minimizing travel time while maximizing the number of potential customers.

For example, if your company sells automotive parts or products, it’s advantageous to locate near automotive manufacturers and suppliers. If you sell consumer goods, you’ll want to locate within a short distance of large population centres.

Waterloo is located a very short distance from Canada’s largest consumer market (Toronto), and within North America’s largest automotive corridor and Canada’s largest manufacturing corridor.

It’s also only a one-day drive (1200km/745mi) from 187+ million consumers in cities like New York, Chicago, Boston and Montreal.

3. Adjacent Business Communities

A strong local ecosystem that supports your type of business is a primary reason for expanding to a new community.

Does it have similar businesses? What’s the local business culture like? What kinds of support organizations, like accelerators, research supports, etc., are available? The answers to these questions can impact your ability to innovate, attract and retain talent and, ultimately, grow your business.

In addition to having customers in proximity and a strong local ecosystem, businesses should also consider the communities that are adjacent to their target location.

Industries aren’t often contained within a single community, so proximity and access to related business communities and ecosystems can appeal to businesses looking to expand to a new location.

For example, Waterloo is part of Canada’s largest manufacturing corridor, North America’s largest automotive corridor and North America’s second largest tech cluster.

While the greater manufacturing, automotive and tech industries aren’t contained within Waterloo, they are in close enough proximity to spur partnerships, ensure talent/workforce availability, and present other opportunities for businesses in any one of those areas.

4. Proximity to Talent Sources

A successful expansion – or business for that matter – isn’t possible without access to good talent.

Improving talent attraction and retention through greater proximity to existing workforces or strong talent pipelines is the primary location advantage for many companies.

Communities that have a strong workforce in place have demonstrated that they can grow and retain talent, so businesses looking to expand should seek out locations where other growing brands have established a presence.

Strong talent pipelines are also built on excellent post-secondary education. When looking at potential locations for expansion, consider the quality of the educational institutions in the area, including the programs they’re best known for.

The Toronto-Waterloo Corridor – the second largest tech cluster in North America and quickly gaining speed on Silicon Valley – has 15,000+ tech companies, 318,000+ tech workers and many of Canada’s top universities.

Google, Apple, SAP and IBM have all located in the Toronto-Waterloo Corridor as a result of the high-quality tech talent available.

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5. Lower Costs

This is very likely the most obvious location advantage. Cost savings come in all shapes and sizes, including labour costs, office rental, energy rates, business taxes, etc., and each one of these types of costs can differ between countries.

Businesses based in Canada, for example, benefit from the lowest overall business costs in the G7 (made up of Canada, France, Germany, Italy, Japan, the UK and the US), and additional cost savings are available through regional, provincial and federal incentives.

Considering an expansion? We can help.

Is business expansion in your near future? Waterloo EDC offers one-stop, complementary concierge services to help you get acquainted with the community. Contact us to speak with one of our Market Development Managers today.