Finding the ideal location for growing your business: Dos and don’ts
Got a business development project? When you’re ready to grow, choosing the right location is critical.
Many companies try to expand into international markets but fail when they choose the wrong location.
Even small hurdles in the site selection process can result in complications, delays and additional costs. In the short term, making the wrong choice can threaten the success of your project. Over the medium term, it can threaten the survival of your company.
After up new ventures, we’ve distilled our experience into a list of dos and don’ts to make your project a success.
Best practices for setting up a successful venture
Be prepared—and be methodical
Assemble your project team
Choosing the right people for your team can make or break your business development project.
Keep your team small—ideally 2 or 3 people—to reduce disagreements and obstacles in the process of finding your ideal site.
Choose complementary skillsets to get a big-picture view of the challenges facing your project.
Finally, make sure you have a team of professionals who are very familiar your target country or region.
Map out a preliminary timeline
Setting up a reverse timeline can prevent (or minimize) delays.
For example, you can start from your site’s target start-up date and work backwards through each step of the project.
- On arrival: prepare to open your site, find your place in the local business ecosystem, recruit employees and handle administrative formalities
- Visit the sites on your short list and make a selection
- Evaluate candidate sites and make a short list of possible destinations
- Pre-select candidate sites and start working with local players
- Define the selection criteria for your future site and start exploring options. A preliminary timeline can be extremely useful as you work with your local contacts. An economic development agency can help you accelerate administrative procedures and identify the contacts you need more quickly.
Assemble your toolkit
To choose the best site for your new venture, you need to focus on objective criteria—both quantitative and qualitative.
To benchmark your candidate destinations, you need tools that allow apples-to-apples comparisons: you need comparable criteria to evaluate them all.
At Nord France Invest, we’ve created exactly that: two “turnkey” tools to help you find your site.
Our decision matrix contains all the selection criteria that we believe you should consider, based on our extensive business development expertise. You can also weight the criteria based on your own goals and expectations.
Using our model specifications will also help you define your needs, making your project much faster and far more efficient. With detailed specifications, you’re in a better position to identify target sites with your local partners—and quickly eliminate anything that doesn’t meet your needs.
Be skeptical of big promises
As regions compete with each other to attract investors, they can fall into a war of big promises and competing statistics.
Avoid costly mistakes with rigorous data analysis.
For example, a comparison of corporate tax rates is meaningless if you don’t consider the rules that define taxable income.
Similarly, promises of government assistance must be scrupulously verified. Many assistance programs are limited by ceilings or maximum percentages, and local authorities can be so eager to attract you that they forget to check the fine print.
Bottom line: you may end up with less support than you were promised—or expected.
Evaluate quantitative and qualitative criteria for each site
Investors often focus on quantitative criteria such as:
- Wage levels
- Real estate costs
- Cost of utilities
- Cost of logistics
- Assistance programs
Because it’s so easy to attach hard numbers to these criteria, they create the illusion of an objective, infallible analysis.
But quantitative criteria alone don’t guarantee that your business development project will be a success. Your need qualitative criteria, too, such as:
- Overall environment
- Business ecosystem & innovation
- Quality of life
“We chose Bierne for 2 reasons. First, France is our No. 1 market in Europe. Second, the nearby Port of Dunkerque is ideal for importing and exporting our products.”
Mampei Yamamoto, President of Kubota Farm Machinery Europe SAS
Of course, these parameters are more subjective, and that makes them harder to evaluate. But the key to making an informed decision is to consider both quantitative and qualitative criteria.
Find competent advisers
To choose your site intelligently, you need a thorough understanding of your candidate regions.
But it isn’t easy to gather qualitative information about a region if you don’t have local connections. You also need sound advice on the finer points of the administrative and regulatory requirements for your target region.
Local partners can provide support:
- Economic development agencies are at your service, ready to coordinate your search and save you precious time.
- Real estate consultants and site selection specialists can bring additional expertise to complex problems
- Accountants and lawyers can advise you on local financial and legal matters
“We worked closely with Nord France Invest. They were an excellent source of information and supported us 100%.”
Wu Liping, President of MG-Valdunes
Want to keep your search under wraps for now?
Don’t hesitate to ask for a confidentiality agreement from all of your local partners.
Plan for several site visits
Even with detailed specifications and support from an economic development agency, the perfect site may not always be available. In that case, make a short list of the locations that come closest and compare them.
Be sure to visit several sites to get an accurate impression—and if there should be a health crisis, you can always take a virtual tour.
Finding the ideal site: Pitfalls to avoid
Don’t limit yourself to a few quantitative criteria
Choosing the site for your new venture is a sensitive decision that can shape the medium- and long-term growth of your business. It’s essential to take a big-picture view that includes all the keys to success and all the risk factors.
Quantitative criteria can be reassuring, but it’s a mistake to stop there.
Corporate tax rates, cursory wage data, promised subsidies, and preconceptions about the flexibility of labor laws don’t guarantee that your new venture will succeed.
If you don’t have a solid familiarity with your future environment, you can easily make the wrong choice.
Don’t overlook risk factors
When you’re looking for the ideal site, it’s easy to focus on the keys to success. But it’s important to keep an eye on risk factors too.
For example: did all of the companies that located in the UK consider the threat that Brexit posed to their business?
Common risk factors include:
- Political or social instability in the host country
- Changes in European, national or local regulations
- Inadequate supply of qualified employees
- Logistics risks
- Unexpected financial costs
Don’t get too many people involved in the decision
If your team is too big, you risk slowing down the process and making decisions more complex.
Without agility, your project can easily get bogged down.
It’s better to rely on 2 or 3 deeply involved people who know how to work with your local partners.
Don’t rush into any decisions
You can’t afford to let your project get bogged down—but don’t go overboard in the other direction either. Choosing the site for your new venture demands careful consideration, grounded in qualitative and quantitative data.
Take the time to gather all the information you need to make a decision on all of your potential destinations.
Then enter the data into your decision matrix to give each candidate site a score. By following this rigorous methodology, you minimize the risks of failure.
To find the ideal site, follow a carefully defined methodology. The goals you set, the project team you assemble, and the selection criteria you define at the beginning of the project can make the difference between success and failure.
Drafting solid specifications and partnering with economic development agencies and other local players are invaluable steps in documenting your decision and accelerating your process.
Still have questions about choosing the ideal site?