Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

10 Points on Where to Locate Your Startup 3

You’ve got your startup brewing, you love the idea, you’re gathering a team, and you want everything to be perfect. So do you move to Silicon Valley? Silicon Alley? Austin TX?

I know of people who’ve moved from where they were to where they thought they should be, before starting the company. Their assumption, when they do, is that the new place is better. It has better access to investment, management team, mentors, and sometimes even channels and such. New York

Does that make sense? Do you move first, then start? Here’s what I think:

  1. Business is to enhance life, not life to enhance business.
  2. I’ve posted here both home is where business is good, and business is where home is good. I don’t mind the contradiction. It’s another example of how almost everything in small business and entrepreneurship is basically case-by-case. There are no general rules.
  3. One of the great advantages of building your own business is that potentially you can decide where you want to live.
  4. And of course there are trade-offs. If I were independently wealthy I might live in Yosemite Valley, but I don’t think that would generally be a good place to start a business.
  5. We can deny that some locations have advantages. Having a startup community, investors, history, and potential team members can make a huge difference.
  6. But there are lots of ideal places to start businesses. Your preference really matters. For example, I’m biased towards the Silicon Valley because I grew up there and did business planning and consulting and startups there during the 1980s and early 1990s. But as I write this today I’m in New York looking at Silicon Alley, the New York startup world, and that has its advantages too. A lot of people in New York want to stay in New York, and here too they have community, investors, history, and potential team members.
  7. Let’s not forget that costs are different in different places. Office space, living space, housing costs, salaries … and of course these costs are higher in the more well-known locations.
  8. On the other hand, you know the ins and outs where you are. You have connections. You know the territory. That reduces costs.
  9. Moving before you start a business, just for the sake of a business, and not because you want to live there, is a bad idea. That increases your uncertainty and your degree of difficulty tremendously.
  10. On the other hand, moving to somewhere you’ve always wanted to live, just before you start a business, that’s not such a bad idea. You take advantage of the flexibility, you make the jump, and add it to the positives of doing your own thing. Yes it adds uncertainty and probably degree of difficulty, but it’s about living well, and choosing where you want to live can be part of that.

I like it that my wife once said that since we were putting up with the downside of owning our own business, then we should get the upside and move to where we wanted to live. I think that you should live where you want, but, if you’re building a business, within some reasonable framework of practicality. What do you think?

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  • http://www.incorporateoffshorecompany.com offshore incorporation

    It is also important to consider tax obligation and reporting requirements for a new startup in various states. One possibility is really to incorporate a company in some offshore jurisdiction or a low tax state while setting up shop in your ‘basement’. This is especially the case for tech and internet startups, where there is little face-to-face interaction with the customer. Start small, but then you can make a move to the actual physical location.

  • http://businessplanlocal.com Rob

    Tim, good points here! Also don’t forget a lot of us are starting home-based virtual businesses, so location becomes even more of personal–not business–decision where to move. While I run my business out of New York City now, I look forward to managing it somewhere with fresh country air and some outdoor activities.

  • http://campusentrepreneurship.wordpress.com Campus Entrepreneurship

    I spent a lot of time working with Richard Florida’s Creative Class Group researching the differences in location. And there are huge variations. BTW, I think cities/metros are the appropriates units, not states or countries.

    The real question is — do you intend to build a high impact firm that scales to regional or global markets, or do you want more of a lifestyle business.

    If you want the former then location matters in that some places have world class human capital, infrastructure, professional services etc. If you want a life style business then you better know that market inside and out as it relates to your product/service. (as guy kawasaki would say — your total addressable market)… Knowledge of your home base is then critical in either case.

    There are obviously variations and exceptions, but I think these are a few things to think about.

    BTW, I am going to offer this blog entry to my students when we do the lecture on location.

    Some rankings —

    Richard Florida’s Creative Class Index
    Bert Sperlings Best Places
    Inc. and Entrepreneur must offer some rankings
    Best states for business