Each year, we receive dozens of inquiries from foreign entrepreneurs who wish to launch a business in the United States. Most of the time these individuals know the type of business they intend to start and they know where they would like to live. But not always. Sometimes immigrants are open to new business experiences and are searching for the business that has the greatest market opportunity. For those entrepreneurs, we wrote an article back in 2017 suggesting that if you don’t know what type of business to start or invest in, think about buying a franchise.
We also have had inquiries from immigrants who tell us that they intend to invest in one business or another because that is the business they know best. But, they say, they do not know in what state or region of the United States they should locate. Deciding where to locate is a really big decision, and often, quite a challenge. There are countless considerations including business issues, social issues (schools, weather, friends, family, or someone you know), and of course, market issues. Let’s examine each of these three considerations and see if, in reading these ideas, it can help you make the best location decision for you, your family, and of course, your new business.
Success in business is always quite demanding, especially in a new country and culture. However, of the 50 states in the U.S., clearly, some are more business-friendly than others. Thankfully, each year, CNBC the business news network completes a rigorous study to determine the top states for business. In this study, all 50 states are measured on more than 85 different metrics in 10 key categories. Just some of the categories included are:
- Cost of doing business
- Business Friendliness
- Access to Capital
- Technology & Innovation
In the study published in July 2021, the best 3 states for business were 1)Virginia, 2) North Carolina, and 3) Utah. Two of the top 3 states are in the Southeast U.S. and one is in the Mountain West. Just in case you are interested, the 3 worst states are Maine, Hawaii, and coming in at number 50, Alaska.
According to Scott Cohn, the study’s author, “A strong workforce and a solid education system propelled Virginia to its second straight win in CNBC’s state competitiveness rankings.” North Carolina and Utah scored well in the study based on the availability of their workforce, business friendliness and the state’s economies. The table below illustrates how each state scored in the study:
America’s Top States for Business in 2021
Social issues include topics such as demographic characteristics and trends, norms, customs, and even the values of the people in the states you are considering. For example, if you were choosing a state to locate in mid-2021, you might consider COVID-19 vaccination rates or government mask mandates. Typical social issues would include age distribution, per capita income, and acceptance of minorities.
A very important factor that should be considered in choosing the best state for your business is the size of the diaspora that has immigrated from your country. Diaspora can be an extremely important social issue and also an important business issue. Being a member of a diaspora can make assimilation for you and your family much easier. In addition, diaspora can help with jobs, housing, education, and various cultural adjustment issues. And, living within a diaspora can be very good for business. We have a business plan client who sells property and casualty insurance almost exclusively within the Serbian community in Phoenix Arizona.
Second, diasporas attract new migrants through family reunion programs and other venues that lower legal migration barriers. We have some amazing diaspora in the U.S. Just some examples include:
- Minneapolis – Somalia
- Detroit – Nigeria
- Houston – India, Pakistan
- San Francisco – India
- Los Angeles – Iran
- Orange County – Vietnam
When deciding on the best state for you to locate your business, you should always consider what the market opportunity is by doing a market analysis. Even if your business will have a national footprint, an international footprint, or be online, you will want to know about the market for your product and services within your state. Boeing, the giant aerospace company moved its headquarters from Seattle to Chicago because it wanted to be closer to its two biggest customers, United Airlines and American Airlines. A number of companies formerly based in California have recently moved to Texas because of the lower cost of doing business.
One of the most effective ways to do detailed market research is to start with a PESTEL analysis. Ever done one? We have completed many PESTEL’s for clients but if you follow the instructions we have provided in the many articles we have written on the subject, you should be able to complete one on your own.
And finally, I will end this blog post by quoting from one of my earlier posts written in 2018. “I did some research and have come to learn that immigrants, for many years, have been very successful entrepreneurs. I was surprised to learn that 200 of the companies in the Fortune 500 were started by immigrants or children of immigrants. In fact, immigrants or children of immigrants launch 40% of all new businesses in the United States. That is a number that grabs your attention when you consider that only 13% of the American population was born outside of the U.S.”