According to new research published by Challenger, Gray, and Christmas, 7.4% of job seekers in the United States started businesses in the quarter ending on December 31, 2016 – a significant rise from 4.8% in the fourth quarter of 2015.
However, running a successful startup is easier said than done. One of the major factors that can make or break the fate of your startup is its location. Though you can work remotely from anywhere in the world with a laptop and a reliable internet connection, opening an office in the right location can make a huge difference for a startup.
Here are four ways in which location can affect the success of your startup:
1. Better Access to Funding
Funding is the lifeline of a startup. In fact, you need a certain level of investment to begin the journey of your startup. Choosing the right location can significantly increase your chances of getting access to reliable investment sources. For example, establishing your tech startup in Silicon Valley gives you better access to investors as the venture capital firms in this vicinity are already familiar with the tech industry. So, a brilliant startup idea can secure seed capital quickly.
However, financial support can come from various resources other than private lenders. Most state and local governments also offer entrepreneurs help in the form of reduced business rates, grants, subsidies, and loan assistance. Startups can also get support from business incubation centers located nearby. They usually offer support in the form of mentorship, recruiting local talent, and even providing finance. You need to consider all these factors before zeroing in on the location for your startup.
2. Attract a talented workforce
Your business is only as good as the people behind it. That’s why your startup needs to secure the best talent in the industry. However, attracting talented workforce is a challenge, especially for a startup as few people would be willing to risk their careers for a company with an uncertain future.
But, you can still attract young and skilled workforce if you choose a business location that is already attracting them. For example, being the fashion capital of the United States, New York offers a high volume of talented designers, while a tech city such as San Francisco has a vast number of skilled technocrats.
The availability of local amenities such as restaurants, shopping malls, public transportation, and entertainment can bring an added advantage to your startup. The ideal location will have adequate parking space, uninterrupted power supply, reliable internet connectivity, and good transportation network.
3. Connect with the right customers
Though online marketing techniques can rapidly expand your customer base, most startups have to rely heavily on in-person networking or word-of-mouth publicity, at least in the beginning. The location is of utmost importance for B2C startups such as fast food chains and clothing brands as they require high customer engagement.
Most B2B startups, however, don’t need daily footfall of clients. However, cultivating long-term relationships with potential customers is the most crucial aspect of their marketing strategy. It becomes a lot easier to conduct face-to-face meetings and brainstorming sessions with your clients if they are just a few blocks away from your office. In short, whether your startup is a B2C or a B2B company, the closer it is to your customers, the faster your business will grow. So, make sure your ideal clients are based in the vicinity of your business location.
4. Exposure to healthy competition
Unfortunately, competition is rather looked down upon in the world of startups. In fact, most entrepreneurs try to explore uncontested niches to avoid competition. However, exposure to competition, particularly in the early stages of your startup can increase the chances of its long-term survival. So, do a competitor analysis before choosing your ideal location.
Competition helps your startup manage risks, create real-time action plans, and get a deeper understanding of the marketplace. As you compete for customers, your team tries to develop customer-oriented services and products at the most competitive rates. In fact, if your startup succeeds in offering the lowest price, you can easily tap into your competitors’ existing customer base. It also helps you identify the weaknesses in your overall business strategy. In other words, early exposure to competition has an immunisation effect on your startup.
An increasing number of young job seekers are venturing into entrepreneurial endeavours. However, managing a successful startup is no walk in the park. In the era of advanced communication technology, location is an important deciding factor that is often overlooked by most startups. The above four points will help you understand the potential impact of choosing the right location for your startup. Can you think of anything else that can impact the outcome of your business? Do share in the comments section below.
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