3 Questions to Ask Before Picking a Location for Headquarters

You might be in love with a certain city -- but is it practical for the central hub of your business?

learn more about Elliot Tomaeno

By Elliot Tomaeno

Andrew Zarivny | Shutterstock

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When dreaming about launching a startup, most founders find themselves faced with a common dilemma: Should they find great markets and move to the cities that support it, or should they move to cities they love and create opportunities once they arrive? I chose to move to my favorite city, plant my roots and start making things happen.

I quickly learned that the city and neighborhood you select speaks volumes about your startup. My company was initially based in the Lower East Side of Manhattan, a gritty, up-and-coming area. But over time, we realized this was hindering us from positioning ourselves as a more fashion-focused, later-stage company.

Related: 9 Hot Startup U.S. Cities That Aren't San Francisco or New York

So, we decided to make a bold -- and expensive -- move to the fashion-forward neighborhood of SoHo, and the results were almost instantaneous. Just by changing our address, we became a more legit and established agency in the eyes of journalists, our clients and the fashion industry as a whole.

Bigger isn't always better.

A founder's personal happiness and mental well-being are paramount to his or her startup's success. It's crucial to feel inspired by your surroundings and have access to things you like to do outside of work. So, if big cities only make you anxious, simply don't plant your flag in one.

There could be countless benefits to launching in a place that isn't considered a startup mecca. My company works with an eyeglasses startup called Frameri that's based in Cincinnati, and due to the city's low cost of living, the company has about 20 times the warehouse space it would have had in a place like New York. Even though the headquarters is humbly located in the Midwest, company leaders still travel to major markets for meetings with investors and press.

With such dramatically lower overhead costs, Frameri has been able to establish itself as a major player in its industry.

Related: 10 Things to Consider When Choosing a Location for Your Business

Ask the right questions.

While the location of your startup is undeniably important, how can you know if a certain city would be a great headquartes for your budding business?

Here are three big questions to ask yourself:

1. What can I afford?

Places like New York and San Francisco are great for founders who are looking to raise funds from venture capitalists, but they're also two of the most expensive cities in America. When vetting potential locations, consider everything from the cost of office space to the cost of personal accommodations to the cost of top-talent in the area (and the pay that talent expects). Ask yourself what you can truly afford before committing to what's popular.

2. Where is my industry?

It's important to live somewhere you love, but the location you pick should also make sense from a business standpoint. For example, if you're a fashion company, your headquarters should at least be somewhat close to the global leader in wholesale buying: New York. Even if you do most of your selling online, it's still important to establish a physical presence in your biggest markets. Having face-to-face interaction with key clients and journalists could prove to be invaluable.

3. What are the limitations of each potential city?

Long commutes and crazy traffic are a way of life in some cities. If sitting in a car (or train) for several hours a day will make your blood boil, don't launch in those places. Also, consider how much space your startup will require. If warehouses full of inventory are in your future, you should probably avoid densely populated and high-rent areas.

Further, perhaps the most important resource for early-stage startups is the talent pool. Be sure to launch in a growing area where fresh, high-quality talent is constantly available.

Asking the right questions is the only way to get the right answers. It can be tempting to follow the crowd, but making a strategically bold move to a city you love is in the best, long-term interests of your company.

You're an entrepreneur -- you're not known for following the crowd anyway.

Related: 25 Cities Worth Moving to If You Want to Launch a Business

Elliot Tomaeno

Founder of ASTRSK

Elliot Tomaeno is the founder of Astrsk, a New York PR firm that works with both emerging and established technology companies. Tomaeno has worked with companies such as Squarespace, Frank & Oak, Trello, QuizUp, ClassPass, PHHHOTO, Zola and many more. Since launching in 2012, Astrsk has helped launch more than 150 startups and tech products and has been part of seven exits.

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