Choosing the right location for your business is critical to the long-term sustainability and success of your organization. What’s the cost of doing business in this market? What are the availability and cost of the local workforce? What state and local tax incentives are available? How do various markets stack up against one another? Once you have this information, how do you make an informed decision?
Whether you’re starting a new business, moving to a new location, expanding to new markets, considering acquisitions, or entering the U.S. from another country, partnering with the CFO Advisory team for site selection services will allow you to make educated, confident decisions. Here are five key factors we analyze when consulting clients that are considering a new location for their organization:
1. Net Tax/Cost
A net tax/cost approach is based on the unique cost effects of each specific location. This is far more complex than calculating the cost of labor, savings from tax incentives, and other factors and doing some basic math. In today’s market, for example, we have to look at inflation and the difficulty many organizations are having with building and retaining a workforce.
We perform a data-driven analysis to ensure that cost and tax structures are optimized and provide you with a full and clear picture of what your true cost will be if you move into a specific location.
2. Workforce Analysis
In a business location that requires people to be physically present, like a manufacturing plant or distribution center, you need to understand the availability and cost of labor. For example, a distribution center requires personnel ranging from forklift drivers and pickers/packers to administrative staff and warehouse management. Will you need temporary workers or offer overtime to account for peak demand? How will you scale your workforce as the business grows? What are the wages for various positions? Can this market meet your labor needs now and in the future? A rural market will probably allow for lower wages but may not have the available workforce in close proximity to the site you’re considering.
For a software development company, should you be in an established California market where talent is overflowing or a new hotspot like Austin, TX? Is there an emerging market that could be the next Austin with available talent at a lower cost? Remote working certainly expands the talent pool for certain types of businesses, but there is also more competition from companies across the country and around the world.
Workforce availability and cost vary dramatically from place to place. We provide deep labor force analytics to identify optimal locations for profitable, sustainable operations.
3. Competitive Gap Analysis
Prager Metis is a top international advisory and accounting firm with over 100 partners and principals, more than 600 team members, and twenty-four offices worldwide. This level of expertise can allow you to broaden the scope of your search instead of focusing on a particular state or region to find the right location.
For example, a distribution center next to major highways connecting large markets is probably more appealing than a more remote location with much lower taxes and operational costs. If you’re looking for location to mine bitcoin, you don’t need much manpower. You need inexpensive electric, low rent, and reliable computers and software to run 24/7.
Objective analysis of various markets enables you to better understand the pros and cons of each so you can make the best choice based not only on cost, but how your business functions.
4. Incentive Procurement
To attract and retain businesses, state and local governments often provide valuable economic incentives, including tax abatements, payroll tax credits, infrastructure grants, low-or no-interest loans, training grants, tax increment financing, and more. These incentives can bring capital into projects, reduce operating costs, and mitigate taxes over an extended period.
Billion-dollar corporations have large, dedicated departments to research and identify these opportunities and negotiate with state and local officials. Most companies do not. We can help you find incentives based on the needs of your organization and lead negotiations to reach the best possible terms and secure the most advantageous cost structure and tax position.
5. Reporting and Compliance
We don’t disappear after you get the keys to your new location. After all, you have to live up to your end of the agreement in order to receive and keep valuable incentives. For example, suppose you’ve committed to purchasing equipment from a local company and hiring a certain number of people each year for the next five years. In exchange, you’re receiving a real estate tax and sales tax reduction.
Prager Metis CFO Advisory Services will provide reports that verify compliance with the terms of your agreement. In addition to preserving and maximizing your incentives, compliance shows you’re a trustworthy member of the business community.
Keep in mind that none of our services exists in a vacuum. Prager Metis CFO Advisory Services are designed to provide a trusted resource and valuable expertise, whether you need to tighten up financial reporting, file tax returns on time, complete a merger, or find a new location for your business. If you’d like to discuss how CFO Advisory Services can add value to your organization, please contact me at firstname.lastname@example.org.