Where Start-ups Are Matters More Than What They Pay

Where Start-ups Are Matters More Than What They Pay


Whether you’re looking to lure the most customers or attract the best employees, where you set up shop is a critical decision that should not be based solely on the cheapest lease available.

Be where your employees are

“Successful companies are going to go where the best people for their enterprise want to live and work,” says Mark Arend, editor in chief of Site Selection, a magazine that covers corporate real estate and economic development. “Consider a creative company, like an ad agency or electronic game developer.

If that labour demographic wants to live in a trendy, downtown part of the city, then that’s where the company will want to locate, because those workers typically won’t want to commute to the suburbs, where workspace may be more affordable. It’s a cost of doing business.”

Case in point: Silicon Valley, where housing costs and rents are some of the highest in the nation. Yet technology start-ups continue to flock to the region to tap into the labour pool of talented software engineers. The same scenario explains why the entertainment industry congregates in Hollywood, or why Miami is a popular home base for US companies seeking a multilingual work force to help them tap into Latin American markets.

Depending on the nature of a business, other variables come into play, such as easy access to raw materials and proximity to logistics centres in the case of manufacturers (think Memphis, Tennessee, and its role as a hub for FedEx).

But in the end, determining where to set up shop should be a matter of finding a qualified work force for the job and knowing there’s enough extra labour available for growth. As Arend notes: “I keep hearing from companies that they would expand tomorrow if they could only find the work force they needed.”

Richard Branson On Deciding Where To Setup Shop.

Grant Davis
Grant Davis is the Tech and Money Editor for Entrepreneur Magazine and is always on the lookout for new ways that technology allows an entrepreneur to do more with less and the creative ways that startups find funding today.
  • Yet another “insightful” post on Entrepreneur Magazine SOUTH AFRICA citing foreign ways of doing businesses. This is completely untrue in South Africa.

    As much as 87% of people living in Soweto work in the CBD and Northern suburbs. ALL my friends work in the North; some as far as Midrand and Pretoria. I agree to some extent that being based where your employees live is ideal but it is not the case in South Africa. Same can be said with education, retail and many other businesses activities in general. Most people who work in Sandton City obviously do not live there. Be realistic!

    • While SA in many cases faces unique labour challenges,
      particularly in terms of distances travelled by employees, this article is
      focused on management level employees that you would have to compete with
      other businesses to hire. In this case, positioning of the business can play a
      critical role in gaining an edge over a competitor who is looking to hire the
      same A list talent as you.