According to Forbes, 90% of startups will fail. While this scary statistic may be shocking, smart entrepreneurs need not be afraid. Instead, this should only encourage those striking out on their own to do their homework and learn from the mistakes of those who came before them.
One important factor to take into consideration when planning your startup is finding the right location for your business. So what factors go into finding the right location? First, you have to know if there is a need for your product in your area. According to a recent article in Fortune Magazine, a survey of failed startups determined that 42% of them identified the “lack of a market need for their product” as the biggest reason for their failure.
In addition, things like access to qualified employees, small business loans and willing investors, the success of other startups in the area, cost of living and business tax rates all come into account when determining if your startup can make a successful go in your chosen location. It is also important to consider if you will have access to mentors and others who can help you navigate the choppy waters of business ownership. Here are some questions to ask yourself when choosing your startup’s location.
Is There a Market?
Take the time to investigate the need for your product in each area you are considering. Also look into access to affordable shipping and ease of room for expansion if and when the time comes. If you are producing a service instead of product, are there simple ways for you to offer your service in a larger area if your base area does not provide the clientele you are after. Having a plan in place to seek additional areas to sell your product/service is key.
Are There Available Qualified Employees?
Depending on the number of employees you will need now – and as your business grows – there are some important things to look for in an ideal start-up location. First of all look for universities, community colleges and tech schools in the area that can provide access to a talent pool of qualified candidates in your area. Also being aware of other similar businesses that have already cultivated a large talent pool of qualified employees who may be interested in making a switch can prove to be useful.
Are There Mentors?
Along the lines of being near other businesses is the idea that you will be wise to look for mentors and allies in the world of entrepreneurship. Having someone you can discuss strategies, successes, and failures with is key to avoiding having to learn all of your lessons the hard way. For example, Entrepreneurship Review discusses how Atlanta is not a startup friendly city. Entrepreneurs who find success in Atlanta have made it on their own and often do not feel any sense of community. Those successful business owners had little to no help, and so it is less likely that they will feel inclined to offer assistance to the new comers.
Is There Access To Startup Money?
It is smart to investigate the availability of small business loans in all potential areas. For instance, CBS News reports states like California has the fifth-highest rate of small business loans, 80.6 per 1,000 small business employees, and Oregon with 80.2 loans per 1,000 small business employees would be good potential locations for startups. On the other hand, according to Entrepreneurship Review, a city like London may be tough to secure funding for startups because investors are looking for short term investments with high reward, not to mention it can be very hard to access those investors in the first place.
What Is The Cost of Doing Business?
When getting your business off the ground, the last thing you need to add to your list of overhead expenses is high tax rates. Look for small business friendly locations with low business tax rates and low property taxes. You can also look for areas that offer incentives to small businesses. If you need a space for your business, many areas may offer lower rent or other incentives on properties in areas that the cities are trying to revitalize.
In addition to business taxes you also have to consider the cost of living in the area while you are trying to get your business onto solid ground. CBS News offers Texas and Missouri as examples of states with business friendly taxes and low costs of living, both of which make it easier to focus your money in ways that will benefit your business directly.
Tackling the mountain of obstacles that come with creating your own startup business can be overwhelming. Taking the time to do as much research as possible is key to getting off to a great start. Part of that research has to include finding the best location, or if you are location bound, understanding both the benefits and obstacles you face. Understanding how location can impact the potential success of your startup business enables you to have some sound back up plans in place and to get one step closer to being in that 10% of successful business owners!