Location, location, location. In real estate, we can all agree that location is king. But what about for entrepreneurship? Where should you start your company? Where are you most likely to find new employees, access to capital, and the right entrepreneurial environment? Unfortunately, most budding entrepreneurs are so hyper-focused on building their businesses that they rarely stop to think about this important question.
Since there are obvious advantages, the overwhelming majority of start-ups flock to Silicon Valley. The leading causes of this ever-growing trend are clear. The entrepreneurial culture in and around the San Jose area is beyond compare. Nowhere else in the world will you find the same abundant combination of venture capitalists, start-up veterans, angel groups, high net worth individuals, developers, and whatever else you may need to bring your concept to reality. Recently, the East Coast has begun to attract its fair share of start-ups but the coastal balance is far from even. Regardless, the die is never cast at the immediate outset, so consider these issues when deciding your company's locale:
1)Capital: One would assume that the "follow the money" theory applies to entrepreneurship. When you're raising capital, it is certainly nice to be near and have easy access to potential investors. Plane rides aren't cheap and when you're trying to conserve resources, it helps to be able to take a cab or public transportation to land any and all suitors. But what happens after you raise the necessary amount to start your business? At the end of the day, locating your company to be physically near your investors, potential or otherwise, rarely makes long-term sense. Unless your company is consistently raising capital or demands continued access to it, there are more important components to focus on.
2)Resources: Be it physical, manual or technical, resource requirements are the backbone of your company. If your needs are talent heavy, be mindful of the educational surroundings of various locales. A plethora of undergraduate and graduate institutions usually bodes well for hungry, talented, and most of all, cheap labor to help you build your product. Personally, I have found that Philadelphia and Boston, with their abundance of strong regional and national brand educational institutions (Penn, Harvard, Temple, Boston University, the list goes on) can lend immense amount of early stage talent and expertise to any start up eager to set up shop. If your needs are physical, shipping perhaps, then make a point to find yourself at the intersection of crossroads, airports, rail and even ports.
3)Entrepreneurial environment: For many, this comes down to fish in a sea/fish in a pond. Should you choose to locate in Silicon Valley, you will likely be fed often and well. Or you can easily borrow food. Will you be noticed though? Doubtful. Boston, New York, Philadelphia? Probably won't be fed as often but the resources exist for you to tap into. Elsewhere, being the big fish in a small pond brings you a spotlight and all the advantages and major trappings that come with that. It seems to have worked out for WalMart.
4)Quality of life/Cost of living: Bizarrely overlooked but easily the most important. You will live, eat, and sleep in your company's world. If you don't like where you live, eat, and sleep, you will make a miserable boss and create a miserable culture. Further, should you find time to start a family, your family and your employees' families must somewhat enjoy where they live, eat and sleep. We live in a hyper connected world; talent can be found anywhere. Happiness and quality of life cannot. When it comes to cost of living, expenses such as rent, salaries, benefits, and housing costs should all be weighed. If the bulk of your potential staff requires a six figure salary just to afford rent, think long and hard about the value being added by them and the surrounding community. If the average salary of where you're looking to start your company is, in layman's terms, ridiculous, take a deep breath and rethink the value. Make sure it's worth it.
There are more than enough options to go around when thinking of where to locate your next big company. Should you choose to join the masses in Silicon Valley, do it for the right reasons. Should you choose elsewhere, do likewise but ultimately it's imperative that you focus on quality of life and cost of living. It will save you time, money and peace of mind in the short and long term.