The careful selection of the location of your business is crucial, because the environment has a very strong impact on the performance of your firm. At the beginning you need to have favourable conditions to launch your startup and at a later stage you need to ensure a healthy growth of your business. To give you guidance, what has to be considered during the strategic evaluation of the location, we would like to present you the four most important factors:
The administrative hurdles that have to be overcome depend on the legal situation. Each additional legal constraint can slow you down and may cause you additional costs. Issues to consider include among others requirements for the employment of people, environmental regulations and licences that are needed before you can get started.
Startup Friendly Environment
Especially at the beginning of a business it is helpful to be in a city with a high level of entrepreneurial activity and supportive initiatives. You can acquire new skills in educational workshops, gain insights from peers in entrepreneurial get-togethers or boost your business by joining an incubator program.
The political situation of the city you choose is important because it influences future the development of the Environment and the Legal Framework. As soon as the government realizes that innovation through startups is an important source of economic growth, it starts to launch very favourable initiatives.
The last and probably most important factor for a successful business growth is the industry specificity. Some locations have attracted businesses from very specific industries, leading to so-called clusters or innovation hotspots. Examples in Europe are London & Berlin with powerful ICT startup clusters or Zurich & Basel with strong growing biotech/life science communities. If your startup is located at an innovation hub of its industry it can benefit in many ways:
- Value chain partners: Especially in innovation intense industries it is of high importance to find the right value chain partners. Proximity to customers, suppliers and service providers facilitates the collaboration and fosters innovation.
- Investments and Advisory: Innovation hubs attract business angels and investors that are specialized for its industry. In addition, there are a lot of industry experts that can be very helpful as advisors.
- Knowledge Sourcing: Industry specific clusters are often built around universities that are outstanding in that specific knowledge domain. It can be of high use to engage in a knowledge intense collaboration with research groups (eg. master thesis) or to recruit specialized graduates.
- Information gathering: Get-togethers are a great opportunity to learn about the newest market trends. Furthermore the exchange with other industry specialists can be very helpful to get new inputs to solve problems with a different approach.