The impact of location decision on small, micro, and medium enterprises' performance in Johannesburg

SMMEs are drivers of economic growth in many economies. In South Africa, they play the strategic role of mediating on the triple challenge of poverty, unemployment, and inequality. However, many SMMEs fail within the first five years because of diverse challenges which they face regularly. Location decision is one of the ten critical decisions of Operations Management. Although, numerous SMMEs owners or managers do not pay attention to the importance of location decisions, yet the location of a business significantly impact on the performance and survival of the business. Several factors affect a location decision, which either provide a positive or negative outcome on business performance. The objective of this research is to examine location factors that may affect location decision and how these factors affect the performance of SMMEs. The results of the study show that positive relationships existed between electricity affordability, customer flows, safe and healthy areas of business environment (independent variables) and business performance (dependent variables). Affordability of electricity tariff scored the strongest positive relationship; showing that business owners/managers consider electricity cost as an important factor to observe when searching for suitable business premises. Each location choice provides various potentials opportunities and sometimes threats which often emerge as an advantage or an impediment. It is therefore imperative that business owners or managers pay attention and consider seriously, those factors that will determine the quality of their location decisions. This study provides SMMEs owners or managers with empirical evidence that location factors indeed affect location selection, and hence business performance.