Key factors in selecting the best location for your company

Telemarketing, Feb 1994 by Cooper, Bob

With the nation's sluggish economy, companies are looking for better conditions to conduct business.

The reasons are plentiful. Some want to gain access to a specialized or lower-cost workforce. Others desire a better business climate or better quality of life for their employees. Some want to escape strict environmental and governmental regulations. And others simply need additional space or want to lower their rents.

Whatever the reason, companies nationwide are on the move. Don Stephan, a business consultant for California Business Intelligence Service in Palo Alto, California, forecasts that one out of five companies within the manufacturing, distribution or business services industries in major metropolitan areas nationwide will find a new site within the next two years.

According to Stephan, nearly 1,500 firms with 100 or more employees in those same industries in the urban coastal counties of California are likely to have major new sites within that same period. Of those firms, only 40 percent predicted where they will move, Stephan said, and the majority said their new sites will be away from their current regions where business can be conducted less expensively, and where the quality of the environment, labor force, schools and lifestyle are better for their families and employees.

Business owners and executives seriously considering relocation typically begin with a comprehensive market study. Next, they try to match their companies' long-range business plans with detailed information about potential markets. Finally, after a great deal of analysis and number crunching, they select a site.

While there are dozens of factors that will determine a business owner's decision for site selection, this 10-point list includes critical factors and questions to answer during the site selection process.

1. Community Characteristics: How is the weather? What is the local business climate? How do the public and private sectors operate? What is the crime rate? What is the average commute time? What is the availability of churches and synagogues, shopping centers and cultural activities?

2. Labor Force: What's the availability and average wage rate? What about work ethics and retention rates? How many and what educational institutions are in the area? What is the high-school graduation rate?

3. Transportation: Is the location accessible to transportation systems and manufacturing suppliers? How does it access rail, air and interstate highway systems? Are there suppliers available in the region? What technical assistance programs are available for international trading? Is air-cargo service available?

4. Operational Costs: What are the state, county and city tax structures and regulations? Is there personal income tax? How about business taxes? What are workers' compensation rates? Is land abundant for development? What is the permitting process and how long does it take? What are average electrical rates? Is natural gas available and affordable?

5. Environmental Factors: What are the environmental agencies and what processes and regulations do they require? What natural resources are available? How do the air quality and noise levels rate? Is there a presence of hazardous materials? Is the water clean and abundant?

6. Government Factors: What are the current tax rates and assessment methods? What about the availability of tax abatement and zoning sites? How about the cost and availability of building permits? Are there any other special regulations?

7. Telecommunications: What accessibility does the location have to state-of-the-art telecommunication systems? What about switching services and microwave transmission capabilities? Are there uninterrupted power sources? How about highspeed transmission for computer operations and fiber optic networks?

8. Quality of Life: What is the average home price? How much are property taxes? What recreational activities are available and within what proximity to your site? How does the school system rank? What hospitals and medical centers are located there?

9. Relocation Services: Are there relocation services available to you in making the move? If there are fees, how much? Will services be provided to assist spouses with employment and integration into a community?

10. Incentives: What incentives will the community offer your company? Does it offer community development block grants, industrial development bonds or urban development action grants? How about small business loans? Will it provide access to venture capital organizations? How about assistance with local government and business leader introductions? What other inducements will be offered?

Dozens of smaller cities nationwide are working to boost their local economies by actively recruiting the thousands of businesses looking to move. The decision isn't only up to companies deciding if a prospective city meets its needs. Many communities have established criteria and require companies considering relocation to meet their specifications. When they decide to work together, it becomes a win-win situation for everyone.