Where Startups Are Matters More Than What They Pay

The cliché that "location, location, location" determines whether a business lives or dies applies to more than just retail stores and restaurants. It's also a factor for office-based startups and newly hatched manufacturers. That's because the one thing they have in common is people. Whether you're looking to lure the most customers or attract the best employees, where you set up shop is a critical decision that should not be based solely on the cheapest lease available.

"Successful companies are going to go where the best people for their enterprise want to live and work," says Mark Arend, editor in chief of Site Selection, a magazine that covers corporate real estate and economic development. "Consider a creative company, like an ad agency or electronic game developer. If that labor demographic wants to live in a trendy, downtown part of the city, then that's where the company will want to locate, because those workers typically won't want to commute to the suburbs, where workspace may be more affordable. It's a cost of doing business."