Deck: If you want your business to bloom where it’s planted, make sure you sink roots in the right place.
A lot goes into choosing a home for your company — or at least it should. Your location decision might not command as much media attention as Amazon’s HQ2 search, but that doesn’t make it any less important to your business.
The right location can help propel your business to new heights by helping you find ample customers, engaged employees, and a colorful community that supports your continued development. Choose wrong, though, and you’ll struggle to cope with costs, retain employees, and keep up with the competition.
When it comes to a location, most factors will require some form of trade-off. Opening your restaurant in a big city will give you a large customer base, for instance, but you’ll also have to contend with disadvantages such as higher rent. A small town might be cheaper, but you’ll have fewer customers and a much smaller pool of potential workers.
For manufacturing companies, it might make sense to evaluate a location based on the distance from key suppliers. That being said, you may someday change suppliers or begin manufacturing a completely different product, so you shouldn’t base your entire decision on it. Proximity to transportation hubs, such as the UPS Worldport in Kentucky, could also be an important consideration.
In addition to factoring in characteristics like size and industry that make your company unique, take the following steps during your location search.
1. Look for good sources of talent
An ideal area for locating your business will have robust technical programs or several local colleges and universities. Partnerships with educational institutions can be very productive, producing accelerator programs or simply providing ready-made talent pipelines that give you access to the best and brightest employees. Reach out to local schools and career training programs about career days, setting up internship opportunities, and other potential collaborative efforts. If they seem eager to engage, chances are your business would benefit from being located nearby.
2. Locate close to similar businesses
Moving next door to the competition may seem like a risky move, but it can be a great benefit for some. In St. Louis, for example, companies and organizations such as AgIdea, Bayer Crop Science, The Yield Lab, and many others are part of a growing agtech cluster. As a result, they enjoy access to perks like the largest density of agricultural Ph.D.s in the U.S., shared incubation spaces, and potential significant investments in agricultural innovation. A cluster of related businesses in one area means that companies could be more competitive for grants and may be inspired to collaborate more on research that advances an entire industry. Find an area known as a hub for your industry and consider it as a possible location for your company.
3. Seek local funding opportunities
Government grants are a great way to secure additional funding without relinquishing control of your company to an outside investor. Federal, state, and local governments offer various types of businesses grants and financial assistance ranging from hundreds of dollars up to a million or more. Besides grants, you can also save money by moving to a state that is actively trying to attract businesses. To find out what sorts of incentive programs are offered by each state, check out the State Business Incentives Database. Keep these local incentives and grant opportunities in mind when eyeing prospective locations.
4. Calculate the cost of doing business
Some cities are cheaper than others. Doing business in San Francisco, for instance, will be far more expensive than opening or moving a company to a rural area of the Midwest. While it depends on how much space you need, rent will likely be a major cost, so weigh the real estate prices in each area you’re considering for your business’s home. You’ll also need to pay employees competitive salaries. What constitutes a competitive salary will vary depending on the cost of living in each location, and the difference can add up quickly. Make sure the location you choose aligns with your budget.
When it’s time to choose a place to put down roots, these four steps will give you a head start. You’ll be glad you prioritized them when your growth has made moving that much more difficult.