If you’re thinking about starting a small business, you’ll want to do everything you can to give it the best shot at not only surviving, but thriving. However, there are many factors that contribute to the success or failure of your endeavor.
As you consider where to locate your new company, it can sometimes be smart to look to successful entrepreneurs who have come before you, and analyze the choices they made when selecting a home base for their operations. Here are five elements to think about as you decide on the best place to start your startup.
1. Most popular
When you’re first starting out, finding and connecting with other entrepreneurs who are either in the same boat as you, or have been through the trials and tribulations you’re currently experiencing with your business can be a valuable asset. Built-in networking opportunities and a sense of community can be vital to an overworked entrepreneur, so you might want to choose a location that’s popular for startups.
According to The Kauffman Index, California has the highest “startup density,” the greatest number of startups per 1,000 companies; Nevada boasts the highest startup density overall, with 108.4 startups for every 1,000 firms in the state. But don’t just consider the obvious: Many smaller Midwest cities are known for their entrepreneurial spirit.
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2. Lowest cost of running a business
Starting a small business can be easier in a city or metropolitan area. There you will have the built-in resources, talent pool, and potential clients to pull from in a way that you won’t in a rural area. But cities can be expensive places to live, and even more expensive places to establish a company. There’s the cost of office space, utilities, legal costs, and filing fees to take into account.
SmartAsset created a list of the cities with the lowest and highest startup costs. California may be the most popular state for startups, but San Jose and San Francisco are the two most expensive places to set up shop. If overhead costs are a concern, you might want to consider a city in Chattanooga, Tennessee, or Wichita, Kansas, numbers one and two on the list.
3. Highest revenue
While it’s important to take into consideration the cost of running your business, equally–if not more–important is the ability to generate revenue. According to Fundera’s analysis of the startups featured on the latest Entrepreneur 360 List, Boston; Scottsdale, Arizona; and Austin, Texas were the home cities of the startups that generated the highest average annual revenue.
It’s worth mentioning that Austin was the only city that found itself on both the most popular and highest revenue-generating list, based on the Entrepreneur 360 analysis.
4. Most lenient government policies
For small business owners, red tape can be a major distraction and drain on finances and resources. Selecting a location that is friendly to small businesses will make it easier to obtain licenses, hire employees, understand tax codes, and navigate building permits.
According to Thumbtack’s assessment of regulations in some of the largest American cities, Austin and Atlanta are very small-business friendly, Boston and Minneapolis are fairly friendly, while San Francisco is challenging—earning it an “F” from skilled professionals who ranked the ease of dealing with policies in their given locations.
5. Highest survival rates
If you’re looking to give your small business the best chance at long-term survival, you may want to consider a city that has a history of housing startups that make it to the five-year mark. The Kauffman Index has looked at trends in metropolitan areas and analyzed the survival rate of companies, looking at which cities have the greatest number of companies that have stayed in business for five or more years.
According to the research, Pittsburgh, Pennsylvania, and the Boston Metro area have the best track record for startup survival. More than 53% of companies that have been founded in those areas have gone on to celebrate their five-year anniversaries.
As an entrepreneur, your number one priority is creating a business that you’re passionate about and that has a real shot at long-term growth and survival. Taking these five factors into consideration can help you find a location that’s business-friendly, cost-effective, and provides the community and support you need to keep your company running well into the future.
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The post Finding the Best Location for Your Small Business: 5 Factors to Consider appeared first on AllBusiness.com
The post Finding the Best Location for Your Small Business: 5 Factors to Consider appeared first on AllBusiness.com. Click for more information about Meredith Wood.
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