focus things about The Location
Location is important. If you really want to compete on a worldwide basis you better find out where the heart of the industry is that you are in. And if you can, you should locate your company in this heart of the industry. If you do not locate it there, you better make sure that there are good reasons why you should not be in the heart of the industry. Today almost every company is extremely dependent on partners in the same or related industries so that it has become crucial to be where these partners are located. Since you need to work with even more companies than before, it has become all the more important to be where your partners are, where the heart of your industry is.
You really should locate the business where the heart of your industry is, where other entrepreneurs are, where good universities are from where you can recruit people, where venture capital is, where potential members of your board are, where your first customers are and maybe even where your competitors are. These are the kind of questions you should ask yourself when you think about the location of your business. You really need to be plugged into a kind of industry, finance and academic environment and community which helps you to grow your business. A decision on the location of a business should therefore not be an emotional decision, but a business decision like any other, because the right location will put you at a competitive advantage. You should ask yourself, where – if free of all personal preferences and family ties – should I locate my business? Where do all the resources and other things come together to make it the optimal location to start my business? And then you work from there. And you better have good reasons why you should not be there.
The location of your business is an important business decision which you should make based on what the best place for your business is and not where the founders live or where you personally like to live.
Sometimes that can mean that you should move to another country. You have to ask yourself how much weight does the local industry in this sector really have. If the local industry has not enough weight and from a resource point of view you are at a disadvantage you should move to the country where the center of your industry is. If you have almost the same resources, it might make sense to move your sales and marketing office to the largest markets of your product, and leave your development office in your home country. Many European companies like Baan and Intershop have moved their sales and marketing office to Silicon Valley for instance. Even if you do not make the decision to move your company there, you should tie your company and product as closely as you can to the most important market for your product. That can mean for instance if you are a European internet startup you must tie your product and strategy to the much more developed US market. Many Israeli startups for example have done this. Besides, you have to think global really early on. The trend is towards getting startups global much earlier in their life. Therefore from the very beginning on you should begin to look for partnerships and distribution channels internationally.
Proposition: Tie your company and product to the most important market for your product wherever that maybe in the world and go global early.
In the long run the internet will change somehow the importance of location. It will become easier for every company, no matter where it is located, to be tied into a worldwide network of partners and customers, since the internet eliminates a lot of time and space issues that used to add enormously to the costs of communication. Thus the need for businesses to be in the center of an industry might decline, since the need for physical proximity will be different. You will probably be able to do it with an airplane flight every month as opposed to having to be there every day. However, you should keep in mind that the decision on the location of the business must be a business decision like any other.