When it comes to business expansion, being in the right place at the right time is no coincidence. It takes extensive market research, comprehensive analysis and data deep dives to find the best community for your company and employees. This data, combined with your growth plans, is the basis of a location strategy.
Although the global pandemic has given rise to remote work, location strategy remains crucial to your company’s success. This is because the principles of recruitment and business expansion have not changed – you can’t take advantage of an ecosystem if you’re remote.
Here are a couple of questions business leaders should consider when developing a location strategy.
What is location strategy?
Location strategy is the process companies use to determine where their offices and employees should be located. A comprehensive location strategy is informed by real-time market research and labour workforce data and takes several factors into consideration, such as talent, the surrounding ecosystem and quality of life.
If you’re planning to move your company or expand your offices to another community, you’ll need to develop a location strategy.
What factors and metrics should you consider?
For almost every business leader, finding, attracting and retaining top talent is one of the biggest challenges and most daunting tasks in our current economy. It is also every company’s largest expense and most important asset.
Therefore, when it comes to building a location strategy, talent should be top of mind. Here are some metrics you should consider.
- Talent quality – Which community will offer the best value when it comes to talent quality? Are there top-ranking academic institutions located in the community? For example, the University of Waterloo, one of the world’s top technology schools, plays a large role in filling Waterloo’s high-quality tech talent pipeline.
- Talent availability – Does the community boast a labour force that can meet your company’s needs? Is there projected population growth that could bolster the community’s talent pipeline? Think about adding communities in Canada to your list, which was just named the fastest-growing country in the G7 by Statistics Canada.
- Talent demand – In a particular market, how in-demand is the talent you’re looking for? Are there other companies recruiting for the same talent you are? One way to evaluate this metric is by examining job postings in each community or looking at retention data.
Expanding to a thriving ecosystem can be a huge business asset. Over time, expanding your business to the right community can bolster your R&D capacity, make your company more competitive and accelerate your growth.
But how do you evaluate an ecosystem? We’ve talked about it at length on our blog, but here are a few factors to analyze when putting together your location strategy.
- Local business community – What kinds of companies and business leaders make up the local business community? If your industry makes up a large percentage of the local economy, your business is more likely to thrive. This is called the clustering effect, which suggests that industry clusters increase productivity, access to talent, access to research capacity and more. Check out our “Mapped” series to find out where the top clusters are located in North America.
- Size of community – What is the ideal community size for your business? Big cities offer greater access to capital and talent, but come with a higher price tag, while small communities offer lower costs, but less access to capital resources and support organizations. There are also mid-sized cities like Waterloo to consider, which boast a welcoming business culture, proximity to major markets like Toronto, premier talent sources and cost advantages.
- Related community assets – Does the community have support organizations relevant to your business? A network of support organizations committed to helping your company grow often bolsters the performance of high achieving business environments. For example, Waterloo’s exceptional business ecosystem is strengthened by our high density of research centres, incubators, accelerators and innovation hubs.
Every community has a different cost profile. With remote work, talent costs might level out a bit across talent markets, but some variation is expected. Likewise, the cost of space – industrial or commercial – will differ significantly between communities. For example, office space in Toronto or New York is far, far more expensive than similar space in Pittsburgh, Columbus or Waterloo.
Additionally, costs will vary based on your industry. Business leaders at manufacturing companies will need to consider talent, energy and tax costs, as well as the cost of industrial space. On the other hand, business leaders in the tech sector might focus mostly on the cost of talent and commercial real estate when building a location strategy.
Quality of Life
There’s more to life than work. More than ever before, people want to live in vibrant communities with green space, walkable trails, an arts and culture scene, sports teams to root for and diverse neighbourhoods. Quality of life also refers to affordable housing and the overall safety of a community. This is about talent retention and attraction.
For many companies, quality of life is a major factor in the site selection process. Some companies that chose Waterloo as their expansion location cited our diversity, dynamic lifestyle and short commute times as influential factors in their decision, as well as Waterloo’s lower cost of living in comparison to larger cities like Toronto, New York or San Francisco.
When analyzing prospective locations, consider which communities will not only be the best places to work, but also the best places to live and play. These factors affect more than just employee happiness – they also have a role to play in retention, culture and more.
A good location strategy takes guesswork, coincidence and luck out of the equation and allows your company to expand and grow with purpose.
Are you looking to expand your business? Waterloo EDC can help your company develop a custom expansion plan for joining our community. Contact our team – we’re here to help.