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Out-Of-Towners

You can start a business anywhere. Just make sure you know what you're getting into when you go there.

The heady economy and Internet speed of the new millennium are giving rise to the belief that you can start a high-tech company in a low-tech farmland; start a hot catalog house in cool and remote Maine; or launch a global cable television network far from the canyons of New York City or Los Angeles. In fact, it's been done more than once (see "Hall of Fame," on page 180C). But if you hope to succeed at launching your business in an unlikely place, be prepared to scale obstacles--and don't try to go it alone.

"If you take the broadest examples of entrepreneurship, you can start a business anywhere," says Andrew Zacharakis, professor of entrepreneurship at Babson College in Wellesley, Massachusetts. "Landscaping, housecleaning and restaurants are all businesses you can start practically wherever you choose. But most specialized businesses are more likely to succeed in places where there's infrastructure to support them." He points out that Gateway Computers is a great example because the company started in a Midwestern cow pasture.

Still, the success of such businesses is not an accident. To set up a sophisticated and high-potential business in an unlikely place, you should follow eight basic rules:

1. Visit the area before making the move and starting your business. This is especially true for those who move to places they consider paradise. If it's far away and you've long dreamed of going there, the experts say you should overcome fantasy with at least one scouting trip. Iris Hallaran, a SCORE counselor in Honolulu, says she recently dealt with a couple mainland entrepreneurs who dreamed of starting a restaurant in Hawaii. They purchased the property from the mainland without doing due diligence. Turns out it was on the wrong side of the street for traffic flow. Visitors would have to drive around a block to get to the restaurant. "They thought they could build a reputation, but that's not easy to do," Hallaran says. "Customers don't usually like going to a business that's out of their way. We helped them as they struggled. They put in a lot of work, but eventually failed because they hadn't done their homework."

2. As you leave your old job, make strong connections with talented people whose skills you may need in your new business. While you're still working, find marketing, sales, human resources, IT and other executives who could become your mentors after you leave. Talk to them about your dream business before you make the move. If you do go to an unusual location, you'll probably have to rely on these colleagues for business advice. "If you've started networking with them before you move, they'll likely return your phone calls when you're at a distance," says William Bygrave, a Babson College professor and author of The Portable MBA in Entrepreneurship (Wiley).

3. Examine your business dream in the context of your personal financial system. Bygrave says there are four specific stages of life during which you must consider issues besides the business itself (see "Anywhere, Yes. But When?" on page 180B). Understanding which stage applies to you can keep you from stumbling.

4. If your business requires traffic, research and find as specific a location as possible before you move. Consider the situation with the Hawaiian restaurant on the wrong side of the street. "Even if you ignore broader geographical questions, you can never be too cavalier about location," says Bygrave, who has a house in Biddeford, Maine, near a crossroads where several bookstores are located. "There's no reason for any one of them to be in that spot. But they found each other, and that has created a good business environment for all of them."

The bookstores sell a variety of used books and new bestsellers, and their proximity to one another creates a center where book lovers are drawn from miles around. They compete with one another, but they also form a big draw much like the myriad auto dealerships along the business strips of many small towns.

5. Write a business plan that addresses all the things that can go wrong in the new location. Submit your plan to bankers familiar with the area where you plan to launch the business; they can help you estimate the risk. Typical "go wrong" points include: zoning problems, lack of street access, environmental rules and unadvertised telephone-company problems (such as poor connections that interfere with computer links).

6. Examine the network of people and resources available in the new location. Peter Adler and his wife, Cathy, have run a property-evaluation business in upstate New York for 14 years, and Peter says the couple's business dried up suddenly when the small network of banks that fed them customers started to turn elsewhere for business. "Your customer pool can dry up quickly in a remote region," he says. "You really have to understand what's feeding business into the market." The Adlers had to scurry in search of new sources, including banks from outside the local community.

7. Understand how long you will have to go without income before your new business starts to generate cash flow. "A restaurant typically starts to bring in cash within three to six months," says Zacharakis. "But it might take a year before you can open the doors of a large networking company." This also involves understanding the future of taxes, shipping costs and other charges that might rise in a particular geographic area while you're trying to get your business up and running.

8. Practice using small-business technology. If you're used to having an IT department at work, set up and use your new office before you actually go it alone. Web access in your corporate office is probably based on a high-speed network. Move to a home office or a remote office and such speed may not be available. Telephone services available in populated areas--such as caller ID or call tracing--may also be unavailable in rural areas.

Surprisingly, few remote-living entrepreneurs have access to great technology. U.S. Department of Agriculture demographer Calvin Beale, who has been watching a move by urban professionals to remote rural locations since the 1970s, believes few of them find the best technology in their chosen paradise. "A recent Washington University study indicated that about 3 percent of those who migrate to rural areas are in computer-related fields," Beale says.

Other anecdotal evidence indicates that a large number of those who decide to go back to their urban roots do so because they can't handle the intricacies of communications from a remote location. "Many of them are unprepared for the difficulties they encounter simply in networking--finding the people and the technology services it takes to run a business," Beale explains.

But what if you decide to throw caution to the wind and move to your personal paradise before figuring out how you'll make your living? While experts don't recommend it, sometimes it does work.

Nancy and Anthony Costa, 34 and 38, respectively, lived in New York City and took frequent trips north through the Hudson Valley and across the Harlem Valley of New York into the Berkshire Mountains of Massachusetts. As their three children got older, the Costas decided they wanted out of the rat race and they headed to Union Vale, New York, in 1993. "We wanted better schools for our kids and woods for them to play in," Nancy recalls. "Anthony commuted to work in New York City and I raised the children."

Just two years ago, in the midst of a series of snowstorms, Anthony was unable to get into the city several times, and the couple found themselves skidding across the countryside in the family car almost daily. "We practically lived in the car wash in town, because the car was always salty and dirty," Nancy says.

That gave the couple the idea of building a car wash in their new neighborhood. They searched for land and found a perfect parcel that belonged to the town. "It was available at a great price," Nancy says. "But the town had to hold a referendum to sell it."

The vote was 764 to 200 in favor of the land deal. The Costas purchased the land and built a car wash with an adjoining oil and lube center.

"I'm glad we didn't start the business right away. "We couldn't have found the right location or the right business if we hadn't experienced life in the country first. You really can start a business anywhere, but you'd better be there first when you do."


Dennis Eskow is a writer who lives in his own paradise in Hopewell Junction, New York

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: Out-Of-Towners.

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