It’s no secret. It’s estimated that approximately 70 percent of startups will eventually fail. About two-thirds of businesses survive two years in business, half of all businesses will survive five years, and one-third will survive 10. The longer a company has been in business, the more likely it is to stay in business—it’s those first few years that are the hardest.
And yet, venture capitalists pumped over $100 Billion into the U.S. Market last year alone.
With so much funding, why is there still such a large failure rate? Because cash flow isn’t the only factor in growing a company. There are critical, non-monetary resources to consider. And, picking the right location could mean the difference in solid growth or stagnation.
I recently sat down and visited with Bob Farley, Director of Economic Development for the City of Grapevine, Texas. Bob has had a long, and successful career in Real Estate Development.
Early in his career, Bob served in the public sector for the State of Texas as Senior Staff in charge of economic development for Texas Governor Bill Clements. He has also served as Chief Development Officer for the Fort Worth Chamber of Commerce.
Bob then moved into the private sector and spent the next 25+ years working with large corporations conducting site selections and leading strategic plans for evaluating and entering new markets. He has served as partner and in leadership positions in the respected firms of Greyhill Advisors and Hillwood Development Group.
Bob has spent the last 5 years as the first Economic Director for the city. Under his leadership, Bob and the team at the City of Grapevine have brought in over 1 Billion dollars of new development – and this does not include the indigenous growth in Grapevine.
Bob has been helping businesses find the right location for almost 40 years. I asked Bob for his advice on how a company should go about selecting the best place to set up a business. Location, location, location applies to businesses too. Here’s Farley’s Fast 5 Tips on choosing a location for your business.
1. Labor Pool
Talent might be the most critical non-capital resource for businesses, and location will dictate whether you get access to key people to scale your business.
Seek out those places where local universities create, support and partner with companies in your sector. Also, consider access to experienced managerial and executive talent. There needs to be a critical pool of talent available for an enterprise to grow successfully.
Consider: What skills do you need, and are people with those talents available?
2. Local Infrastructure
When considering location, infrastructure is also a key factor. The infrastructure must work for your employees. Does the community have the resources to serve their needs?
Also, consider the transport systems in the area. A good roadway system improves businesses ability to provide goods and services, and people’s ability to access education, employment and services, and it can reduce transportation costs including travel time and vehicle operating costs.
Are there public transportation options available? Is there easy access to parking?
Also, consider the stability and diversification of the economic base. Look for a healthy environment for your business. If you are in retail, consider how important the proximity of your customer base is to your location. If you are in manufacturing, consider access and options to shipping your product.
Consider: Is there sufficient housing in the appropriate price range? Will your employees find the schools, recreational opportunities, culture, and other aspects of the community satisfactory?
3. Community Support
Policymakers in a number of cities and states are eager to attract small business owners and entrepreneurs and have programs designed to underwrite office and manufacturing space. A city that is making space more affordable can be a huge plus in the early stages of business.
Spend time in the city you are considering locating your business. Go talk to government leaders and the local Chamber of Commerce to see what type of support there is for business. Visit with other business owners. Also, arrange to meet local bankers. A strong relationship with a local banker is a huge asset for a growing business.
Consider: Is there clear government and local leadership commitment? Is there a local banker who understands the needs and is willing to support small businesses?
4. Proximity to Other Businesses
When choosing a location, consider access to suppliers and complementary businesses. Synergy with complementary businesses allows networking and collaboration on business growth. Proximity to suppliers not only keeps transit costs down, access can also create quick turnaround when needed and opens opportunities to build joint customer relations.
Also, look for a network of other business owners. As a business owner, there are common issues that only another business owner is going to understand.
Consider: Are there other businesses and business owners with which you can connect and collaborate to support and enhance your business growth?
5. Flexible and Available Space
Your office needs may change over the next several years. Locating your business in a city and an area that can scale as you grow is important. It’s difficult to move employees and expensive to move a business. Finding a location that can accommodate growth is a key factor.
As a startup, incubators, and accelerators offer space and mentorship. Flex type spaces are excellent options while a business concept launches and stabilizes.
Coworking and flex office spaces are typically walk-in-ready. This type of office allows businesses to set up shop, focus on business and grow without having to deal with the issues and expenses of building maintenance, cleaning services, internet, printers, coffee, and other operational needs. It also provides a more professional space to meet clients which can improve brand image.
If you are in manufacturing, consider if the location can scale as your business grows. Is there additional space in the complex that allows easy expansion?
As businesses grow, access to innovation and technology increases. This too can be enhanced by the right business environment.
Consider: Is there a location that can scale as your business grows? Is the location consistent with your brand image? Does the space provide access to innovation and technology?
Cash flow is key to any business, but so is the right location and business environment. Taking time to do your due diligence will be worth it in the long run.
About LIFT Office
The LIFT Office is a coworking/flex office/meeting space in the center of DFW in Grapevine, Texas just 3 miles from the DFW Airport. The LIFT Office is a dynamic community of influencers, entrepreneurs, independent professionals, consultants, and freelancers. Learn more at https://theliftoffice.com/