City Or Suburbs: Which Is More Efficient For Your Business?

This post is sponsored by UPS.

Use Skype, Facebook, or email, and it can seem like location doesn’t matter. Is the same true for business?

Companies that sell products entirely online can be run from a garage or a spare bedroom. For those that hire employees and operate as bricks-and-mortar locations, however, there are real logistical differences between operating in a city and operating in the suburbs.

Urban Congestion

Businesses that don’t rely on online sales have a larger potential customer base in a city than in a typical suburban area. But while city customers may be physically closer, it can be harder for them to reach certain locations because of limited parking, one-way streets, and traffic congestion. Many city-dwellers opt out of owning a car altogether and use public transportation almost exclusively. This means the most desirable business locations are often the ones closest to train stations or bus stops.

Suppliers may also have a difficult time servicing some urban businesses. Unloading a truck filled with large or valuable items can be tough, especially in high-crime areas or on extremely crowded streets. A business that offers delivery service faces all of those same traffic and parking woes.

Despite the challenges, solving for urban congestion can bring about larger benefits in the long run. As The Atlantic reports, Daniel Chatman at the University of California Berkeley argues that with better transit systems comes greater agglomeration (or more people in one place), which leads to a clustering of the labour force, resulting in economic growth.

Suburban Sprawl

Businesses in the suburbs have their own issues to face.

Getting around in the suburbs often involves driving — sometimes a lot of driving. It’s inefficient and it’s not ideal for the environment. Businesses in the suburbs need to find ways to not only streamline their own transportation efforts, but to also make it easy for customers to get to them. That’s why many owners choose locations where other businesses are clustered, such as shopping centres, office parks, and strip malls.

There is a recent movement toward making suburbs more efficient with sidewalks and walkable areas, creating new, denser retail spaces that don’t depend so heavily on cars or parking lots. Urban Land magazine cites Berkeley’s Fourth Street as a “new urbanist” project that attracted other developers and companies, leading to the creation of a thriving pedestrian shopping district. But real, nationwide progress in that direction remains years away.

Sustainability Surprises

From a sustainability standpoint, operating a business in a city is a much greener experience than you might think. Cities may seem like a tangled and dirty mess, but city residents and workers tend to have a smaller personal carbon footprint owing to their use of public transportation.

Smaller urban spaces require less heating and electricity. Environmentally focused programs such as recycling solutions and green-space reclamation are on the rise, making cities even more efficient. Still, any large-scale movement toward advancements like solar panels and “green roofs” may take time, as environmentally sensitive changes can be expensive in cities.

On the other hand, the next wave of innovation in sustainability could take place in the suburbs. A group of New Zealand scientists recently proposed installing solar panels in suburbia — where rooftops are lower than in cities — saying this could generate enough electricity to transform a suburb’s energy needs. Scott Sklar, president of the Stella Group, told E&E that commercial buildings like restaurants and home improvement stores would be prime candidates for solar panels, given the larger roof spaces and lack of tree shading.

Changes to the ways businesses use energy may be easier to implement in the suburbs, too. “You don’t have to replace big infrastructure to get the benefits of new technology,” Anthony Townsend, director of the Institute For the Future and author of the book “Smart Cities,” told the Financial Times. “You can roll out smart-grid technology in the suburbs, for example, because you can do it in units of 1,000 rather than a million.”

Looking To The Future

The Brookings Institute estimates that by 2050, 75% of the world’s population is expected to live in a city. Companies that put down roots in urban areas gain proximity to more people, but have to contend with high costs, crowds, conflicting interests, and often ageing infrastructure (the 2013 “Report Card For America’s Infrastructure” gave the U.S. a grade of D+ … ouch).

While it’s clear that there are discrete logistical challenges faced by business owners in the city and those in the suburbs, in the future those lines may start to blur. As the Boston Globe reports, younger workers are increasingly moving to cities, drawn by some of the perks and conveniences of urban life.

Companies located in the suburbs need to think about better ways to retain employees, whether it’s offering more conveniences or allowing for greater commuting or telecommuting flexibility. And though cities are improving in their sustainability efforts, more urban businesses should be looking at how sustainability can be embraced in ways that are both innovative and cost-effective.

In the end, business owners choosing where to locate their businesses have a multitude of factors to consider, from personal preference to communities ties. But once they’ve made their decision, it’s important to know what logistics challenges they may be facing — whether they involve customer access, delivery service, or sustainable processes — and how to solve for them.

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