What Attracts New Businesses
A good industry can put a city or state on the map, and any municipality will look at quality of life issues such as keeping its citizens gainfully employed. Many municipalities put a great emphasis on economic development, often creating whole departments that do nothing but attract new businesses and keep old ones.
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Price
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It doesn't matter whether a company's assets are counted in the hundreds or billions, but cost is the overarching factor in deciding to move into a certain area. This may include land acquisition costs and the price of installing any needed infrastructure; the package is more attractive when the land is cheap and improvements already in place.
Infrastructure
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Depending on its needs, a company will look at highway access, available railroad and shipping lines, and nearby distribution centers when deciding where to set up shop. The more ready-made infrastructure for the company's use, the greater the attraction.
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Employee Pool
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An employer prefers to go where the workers are, and this usually means a well-educated work force that can minimize startup costs and hoops. Wage rates are also a factor, and an employer may look at whether there is a strong labor union in the area. When Boeing decided to build a Dreamliner plant in South Carolina in 2009, the state's right-to-work status was a determining factor.
Tax Structure
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A company will also look at an area's tax structure when looking at places to set up shop. A state like Georgia, which taxes a company's inventory, already has one huge strike against it in attracting new business.
Friendly Government
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Tying in with this, a business-friendly atmosphere will be a key factor in attracting business. If a business operator believes he has to jump through many governmental hoops before the first shovelful of dirt is turned for an industrial facility, he may decide to go someplace with a friendlier atmosphere. Additional governmental requests such as environmental impact reports or impact fees may cool his enthusiasm for a particular area.
Customer Base
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While this may be less of a factor with an industrial company or one that does most of its business online, having a good customer base is important. Many retail operations will look to the demographics before making a decision to move.
Incentives
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As a company is touring possible expansion areas, its representatives are likely to talk with local and state officials to see what kind of deal they can strike. Incentives may include tax exemptions and credits, or forgiveness of normally-enacted impact fees. With big-name companies that may employ many local workers, the competition by various states and municipalities could be particularly keen, and often it's the incentive package that swings the company executives' decision.
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References
- Photo Credit conference table image by Salem Alforaih from Fotolia.com
