How specific of a location can a Pokemon Lure be?

Solution 1:

A lure must be used at a PokeStop and it's area is well defined on the in-game map by a pinkish-purply ring that is maybe 2/3 the radius of your player's effect range to gyms and stops.

Solution 2:

Lure's cannot be placed at random locations. Lure's can only be placed on existing Pokestops*.

* Pokestops are based off of Portal locations from Niantic's game called Ingress; they are not accepting new portals.

So your best bet is to locate a pokestop that can accommodate your business.

For example, If you run a mobile eatery like a hot dog or coffee stand, just locate a nearby pokefarm (collection of pokestops) and setup your stand there and add a Lure to the pokestop as you see fit.