A great idea, a solid business plan, and some investment dollars are a large part of the starting a business process – but a good location can be the critical and strategic factor that elevates your small business to optimal success.

With location in mind, some states and cities simply are better designed for accommodating entrepreneurs. When state money is allocated to economic development programming, flexible entrepreneurs can enjoy impressive savings on taxes, insurances and real estate.

So if you're able, you might consider relocating to a state that works within its yearly budget. Arizona, California, Florida and New York aren't great at this, but all the following are: Alaska, Kentucky, Missouri, Maryland, Iowa, Oregon, North and South Dakota, Washington and Virginia.

When Thomas and Patricia Hooper left California to open ASL Pewter in the little town of Louisiana Missouri, their goal was to save money and grow their business. By relocating, they’ve been able to do that tenfold.

"We moved for tax reasons, to lower workers compensation insurance, and corporate franchise fees, and because we felt a location in the middle of the country was best for quick deliveries and shipments," says Hooper. "It was all financial."

In California, the Hooper’s business was considered a corporation. They were confronted with minimum corporation fees of $800 a year. In Missouri that fee was significantly less at $45 a year. Workman’s compensation in California cost them roughly $8,000 a year and because of California law deeming them a corporation, the officers of the corporation (he and his wife) weren’t covered.

"In Missouri our costs for the same number of employees plus my wife and me went down to $1,200. Our first year we saved about $12,000," says Hooper.

That financial difference made the practical difference and they’ve never looked back. But it wasn’t quick and easy. Here’s what the Hoopers considered before packing it all up and moving out.

Do extensive research, on paper and in-person.

Take a step back, look at the entire country, and make a list of the states where your industry and business might thrive. The Hoopers paged through study after study on each state. Alamanac.com proved to be a valuable tool in detailing information on each state so the Hoopers could make a well-researched decision. "We took the time to really research,” says Hooper. “We used the Almanac to find out how each state ranked in education, in taxes and in cost of living."

 
The Hoopers then visited 15 states. They began by extending their time in convention cities, like Atlanta, and made it their policy to travel as tourists and not as business-owners looking into relocating.

"You get treated differently when they know you’re considering the move,” says Hooper. “We wanted to see what each place was really like to live in, and get a feel for which had good schools, tax breaks, tax regulations, and, if it was a place we could see ourselves retiring in."

Reach out to your own network.

The Hoopers reached out to family and friends across the country and asked them about their states. 

"I had family in upstate New York and they said how taxes and real estate taxes are too high," says Hooper. "That’s a state where all the money goes to the cities and state government, so we nixed that. We had an uncle in Minnesota and he said no because it is ‘The People’s Republic of Minnesota.’ Their taxes are too high for a small business and the same fees are issued to them as to large businesses."

Consider states where the cost of living balances with minimum wage.

Your staff needs to be able to make a living so you want to be located where they can have a good quality of life. "We wanted to pay as low as we could pay and still have employees buy their homes," says Hooper.

Target cities that operate within their budget and have reasonable rules.

The Hoopers were big fans of Oregon until they discovered that some small business rules and regulations were rather excessive.

"If you had more that two employees you had to have an engineer develop an ‘impact statement’ for your employees’ commute detailing how it impacted the infrastructure of the community because they were driving down on the roads. This is understandable for a large company, but not for a company of three full-time people and seven part-time workers."

"We looked for details on how each state spent its money in relation to the taxes it brings in." California and New York are "always broke," says Hooper. "They spend more money than they bring in so the burden is on the citizens. Missouri is a state that lives within its budget."

Look for states with economic development programs geared to small businesses.

Ultimately, the Hooper's decision was between Kentucky and Missouri. Kentucky had programs providing assistance to bigger companies, while Missouri fit a lot of their small biz requirements: it had an industrial park with lots available for small businesses to move into and develop.

"The economic development program was the kicker," says Hooper. "They also fully assisted with an SBA loan. We designed the building, and it was a small enough community where the local bank and construction office worked harmoniously with the paperwork. We moved in and basically turned the key and set up shop out there in less than ten days."

Save up and do your homework.

Moving and starting a business is a lot of change at once. Make sure you have enough capital to get you through the first few months. Talk to other new and relocated businesses about their experiences.

"You discover there are so many more little expenses than you can think of when you are re-establishing yourself somewhere new,” says Hooper. “Do those bids on insurance companies before you move. Make sure you know which states are zoning-friendly and which aren’t."