When it comes to big decisions like opening up a new location, it often helps to sweat the small stuff. Here’s a quick list of questions I ended up having to ask myself when my company made the move from New York to St. Louis.
What do Google, Facebook and Apple have in common? They’re all Silicon Valley giants, innovators who transformed the tech space forever — and they all picked terrible headquarters for their business. Each of these companies is located more than three miles away from the nearest regional rail station, and that’s a problem that may hurt their bottom lines sooner rather than later.
A study released by San Francisco-based research organization SPUR found that the problem of inconvenient location is widespread in Silicon Valley, making it more expensive, time-consuming and frustrating for Silicon Valley startup workers to get to and from their jobs. If you think something as minor as a bad commute isn’t enough to hurt a giant Silicon Valley company, consider the ouster of Reddit’s CEOin 2014 after attempting to move the company’s headquarters to an inconvenient area.
These examples just go to show how even the finer details about your location that seem inconsequential can quickly grow into vexing problems. When my New York-based content marketing startup Longneck & Thunderfoot (L&T) opened up an office in St. Louis, we quickly learned how important it is to consider not just the big picture of what expansion into the Midwest would mean for our business, but the smaller logistical details that would influence our ability to succeed there. Here are six questions I recommend you answer before moving to a new location.
1. Can you build a list of potential clients in the region that moving would enable you to serve better?
For B2C companies, this essentially comes down to a question of market research — how certain are you that there will be a strong demand for your products or services in this new location? Conducting market research is an elementary step in any new business venture, but some companies expand primarily so they can market themselves as national brands, leading them to create new branches without thoroughly considering how to support them.
A B2B company like L&T shouldn’t even consider opening a new location before developing a strong list of clients they’d be able to serve there. It wasn’t until we’d compiled a list of around 100 strong leads in the local area that we saw St. Louis as a viable option for our next location.
2. Is the local business community welcoming of new entrants to the market?
First off, it’s always good to check the state and city tax codes to determine if your potential new location can offer your business any tax benefits. Is there a state income tax? Do you have to pay some percentage state tax for commercial leases? Will out-of-state online orders force you to jack up shipping costs? Failure to account for factors like these could doom your new operation before it ever launches.
L&T’s move to St. Louis was made possible in large part due to a generous subsidy from Arch Grants, a non-profit dedicated to incentivizing new businesses to move into the city. Research opportunities either provided by the government or by non-profits and incubators at the city’s Chamber of Commerce, and you could end up getting just the financial boost you need to effectively grow your business.
3. Is there a vibrant ecosystem of companies doing interesting things?
Unless you have very good reasons for doing so, it’s always best to avoid moving somewhere where there aren’t many startups around — it usually indicates that the business climate isn’t very favorable to new and small businesses seeking to innovate. A great business city will host a good mix of new disruptors and a solid roster of larger, traditional businesses to support, partner with and patronize them.
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