6 Factors for Determining Where to Start Your Ecommerce Business

August 22, 2016

11:06 am

An eCommerce business is often little more than a dream, a network of laptops, and a virtual product or service. Yet no matter how internet-based a startup may be, it will still need to be based somewhere in the real world. Thus, in a sense, all companies are still “brick and mortar.”

While many original eCommerce business “home bases” are determined by where the founders happen to live at the time, it’s not uncommon for these companies to pick up and move once sales and profits pickup. Determining where to relocate an e-business is a decision which ought to be based on a variety of variables. The primary factors for picking a city to base an e-business are as follows:

Internet Service

It’s a commonly overlooked aspect of relocating to a new city, yet for eCommerce business, the list of available internet service providers is of utmost importance for deciding where to move. While startups looking to establish themselves in a major metropolis have a wide array of options, those seeking smaller cities need to shop smart. Dependable ISPs like Suddenlink can be found in Tulsa, Austin, and other midsize urban cores, but not every smaller city is so lucky. Always make sure to check; it only takes a few minutes, but can prevent a business catastrophe from unfolding after it’s too late to change.

Talent Pool

It’s worth looking into the professional demographics of cities on the shortlist, especially if companies are expecting to grow after relocating. While eCommerce business startup leaders are certainly no strangers to utilizing the internet to find resources, hiring local talent ought to be preferential when possible. Even if operations run on a mostly remote network of staff, it still helps make things run smoother when staff can meet in person on occasion. Furthermore, a large talent pool helps startups acquire staff at competitive salaries, whereas convincing professionals to move typically requires offering a juicy paycheck.

Cost-Effective Workspace

A certain city may carry with it a status beneficial to businesses with addresses there (see below.) However, these urban cores tend to be world famous and therefore pricey. Opting for rented coworking space, or keeping a remote workforce slightly tethered to a small office, are ways to move to San Francisco, Chicago, or New York on the relative cheap. Startup e-business interested in maintaining traditional work environments may consider less expensive cities instead.

Local Incentives

Many Rust Belt cities and similarly struggling urban environments are actively trying to attract business investment with tax incentives and other perks. While most eCommerce businesses are far from the factories and corporate parks these cities seek the most, they stand to benefit from tax breaks nonetheless. These perks – or lack thereof, ought to factor into the decision whether or not to relocate to a particular city.

City Brand

As previously mentioned, certain cities give off certain vibes which can be harnessed by businesses located there. This “city brand” is a factor to consider for soon to be moving eCommerce business enterprise. If city brand matters but money is tight, consider an urban core in the “Goldilocks” zone: reputable but also affordable. Austin, Kansas City, and Oklahoma City come to mind.

City Management

A city can have sufficient infrastructure, available talent, affordable space, great incentives, and a globally recognized brand – but local government prone to cronyism, corruption, and complicated wheeling and dealing will make life uncomfortable for recently arrived businesses. The day to day politics don’t need to be investigated for every potential place an eCommerce business wishes to relocate, but a general grasp of a city government’s propensity for graft is worth exploring prior to making a move.

City Outlook

Where will a city be in five, 10, or 20 years? It’s not always easy to tell, but certain signs can provide clues. In fact, according to journalist James Fallows at the Atlantic, there are 11 signs a city will succeed. Chief among them: easy to spot “local patriots” and several successful examples of public-private partnerships. While certainly not prerequisites for e-business to base the entirety of their relocation plans on, these factors are worth considering. If a city lacks any evidence of government and business working together or passionate leadership, it might be a sign to look elsewhere.

Call your startup “cloud-based” as much as you want; eventually, there will be a brick and mortar element. It could be thousands of feet of office space or just a few cubicles – deciding where this environment will exist rests on a variety of important factors. Calculating them into the relocation process is key to making sure a startup is making the most of a move.

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Ryan Kh is an experienced blogger, digital content & social marketer. Founder of Catalyst For Business and contributor to search giants like Yahoo Finance, MSN. He is passionate on covering topics like big data, business intelligence, startups & entrepreneurship. Follow his latest posts on Clear World Finance and Forumsmix.com. 

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