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Location, location, location. The well-known real estate slogan is equally applicable when you are searching for a location for your business. What makes a great business location? What are key factors to consider? Every year many “Top Ten” lists surface that attempt to answer those questions. And, while the metrics are slightly different from survey to survey, there are many common themes and insights to consider when opening or expanding your business.
Forbes evaluated 12 different factors to determine its 2014 listing of the "Best Places for Business and Careers," including:
Of the 200 metropolitan areas analyzed, Raleigh, North Carolina topped the list. Several other mid-sized cities, such Nashville, Tennessee and Oklahoma City, Oklahoma, joined Raleigh in the top 10; notably absent were the largest metropolitan areas. Business located near the top of the list have more favorable prospects that those started in cities that rank near the bottom.
While the Forbes list focused on where businesses (and careers) can best thrive, NerdWallet ranked cities based on the factors that bode well for start-up success. In their 2014 listing of “Best Cities to Start a Business” NerdWallet considered five factors—three of which were a blend of those considered by Forbes:
NerdWallet also zeroed in on two factors that are particularly vital in the start of phase of any business: access to funding, which they defined as small business loans, and business-friendliness. Although the factors analyzed varied, the overlap on the two lists was significant. Again, Nashville, Raleigh and Oklahoma City cracked the Top Ten, although they were joined by larger cities than those that made the Forbes list.
NerdWallet defined “business-friendliness” by assigning number values to Thumbtack’s "2013 Survey of Small Business Owners". Thumbtack partners with the Kaufmann Foundation to survey small business owners and compile annual ratings of both cities and states on a wide variety of factors, such as the ease of starting a business, licensing requirements, and the tax code. Although Thumbtack does not provide a top ten list, the results of the survey track closely to those found at Forbes and NerdWallet.
Although most "top ten" lists focus on generic factors, such as the labor market and business climate, certain areas become hubs for different types of business. This can be an important criteria for making a location decision. Silicon Valley for technology ventures is the best known example of this phenomenon. However, many of the top 10 cities are magnets for certain types of business. For instance, most of us equate Nashville with the music industry, but over the past several years it has developed into a center for the healthcare, automotive and finance industries. It often makes sense to locate your business where you can benefit from a trained labor pool and where financing institutions and governments are familiar with your particular industry.
Another factor that’s baked into many of the broad measures, but which should be factored into any location decision is the amount and types of support that are available for start-ups. For instance, the Raleigh area boasts both the Small Business and Technology Center and the North Carolina State University Technology Incubator. Another example of this area’s commitment to entrepreneurs is the Triangle Startup Weekend, coming up October 10, 2014. A savvy entrepreneur will investigate whether a local university has an entrepreneurship program, such as the Jake Jabs Center for Entrepreneurship at the University of Colorado Denver, or an incubator program, such as the one mentioned above or the Miami Entrepreneurship Center.
So, in business as in real estate, the key to success is often the location. And, a great business location is defined by the availability of a educated work force, a favorable government and regulatory environment, access to financing and a good quality of life. Many business owners and founders will opt for establishing their business in their home town, regardless of the business climate. However, those who are looking to expand into a new area of the country —or relocate— would do well to spend some time digging into the business climate of the communities they are considering.