The other one decides to locate in a community that is well regarded for many reasons, but manufacturing product distribution is not one of them. There is also a shortage of trained salespeople and very few advertising and promotion agencies of national caliber. The first business will be regarded as being less risky. It will attract more favorable terms. The lower the business risk, the more favorable the terms.
Companies lower on the business risk scale have better bargaining power.
Whatever business one is in, it is perceived to be part of a larger market. The ups and downs of the overall market influence that of every component business. The influence of the overall market is said to be about 80 percent of the total variation in the price of a going concern. One can reduce the BRF by carrying out long-range planning from the start. All vital factors, including location, technology or idea protection, and management selection, need to be addressed as close to the start of the business as possible.