4.5 Business Location Practice Questions

Text 1 – Quarlton Joinery Ltd

Quarlton Joinery Ltd makes handmade fitted kitchens to order. It employs 14 staff and rents a small workshop in the village of Elverby, 12 miles from the town of Marsden. The owner, Yvette Crossland, says the workshop is now too small and that she is finding it difficult to recruit trained joiners, because most skilled joiners in the area live in Marsden.

Yvette has found two possible new premises. Unit A is on an industrial estate on the edge of Marsden, three miles from the sawmill that supplies the company's timber. Unit B is a larger unit on a retail park in the centre of Marsden, where Yvette could open a showroom for the public. Around 70% of the company's orders come from customers living within 10 miles of Marsden.

The annual fixed costs of the two units are shown in Table 1.

Table 1 – Annual fixed costs of the two units

Annual fixed cost	Unit A (industrial estate)	Unit B (retail park)
Rent	£25 200	£41 400
Business rates	£6 800	£9 900
Insurance	£4 300	£7 250

Text 2 – Pennywell Pet Supplies Ltd

Pennywell Pet Supplies Ltd sells pet food and accessories online. The owner, Dev Chandra, runs the business from a converted barn in the village of Oakmere, where the rent is £9 000 a year. Nine staff pick and pack the orders, and a courier collects the parcels every day. Oakmere is 18 miles from the nearest motorway junction.

Dev has been offered a larger unit on a distribution park beside the motorway at the edge of Caldermouth, a large town. The rent for the unit is £26 000 a year. The courier would charge Pennywell Pet Supplies Ltd less for collections there, and Caldermouth has many experienced warehouse workers. All nine of Dev's current staff live in or near Oakmere.

The company's transport and delivery costs are shown in Table 2.

Table 2 – Pennywell Pet Supplies Ltd transport and delivery costs

Year	Transport and delivery costs
2022	£36 000
2023	£39 200
2024	£44 100
2025	£49 500

Fern & Fettle

Rosie Clarke is a sole trader who makes chutneys and preserves under the name Fern & Fettle. She rents space in a shared kitchen in Keswick and sells her jars for £4.50 each at farmers' markets across Cumbria every weekend, and through her website. The shared kitchen is now too small, so Rosie must move. She has savings of £6 000 and no bank loan.

She has found two possible locations:

Unit on a rural business park, 8 miles outside Keswick. The rent is £450 a month. The unit has three times the space of the shared kitchen and parking for delivery vans. It is less than a mile from the fruit farms that supply Rosie's damsons and apples. Almost no members of the public pass the business park.

Shop unit on Keswick high street. The rent is £1 100 a month. The kitchen at the back is smaller than the business park unit, but around 2 000 tourists pass the shop front each day in the summer. Rosie could sell directly to customers six days a week. Deliveries of fruit would have to be unloaded on a busy road.