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What factors go into making a decision to move your company to another state?


Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Labor market is key input from an HR perspective both supply and cost of labor. Other secondary factors are labor laws in the state as well as any tax breaks the localities may offer for business willing to relocate to their area. ERI Economic Research Institutes provide provides geographic cost of labor differentials and many clients use this to manage multiple operating units' compensation costs. Hope this helps.

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

Are you moving the company, or just the legal entity?

Malak points out some great items, especially from the tax/HR perspective.
I would add to his list:
-Access to resources (bandwidth, water, inputs, whatever it is you consume)
-Access to your customers
-Access to investors in that space (especially for startups)
-Presence of competitors (which means a lively place to be in your type of business)

If you are just moving the legal entity...then it is "whatever state supports your type of entity". The answer might be DE, CA, VA, FL, NV....your tax attorney may surprise you with how differently each state will treat different types of entities/products. Offshore is also a great answer if you have an international presence (keeps everything very clean).

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

In cases where I have had to do this: labor supply (especially availability of highly trained, technical staff, proximate to training universities), tax jurisdiction and benefits, local government relo inducements, environment for litigation and tort reform were guiding influences.

Topic Expert
Stephen Roulac
Title: CEO
Company: Roulac Global LLC
(CEO, Roulac Global LLC) |

Supplementing the good counsel offered by Malak, Keith and Linda, decision to move from one place to another should be made by process embracing:

Clarity re WHY moving: should follow from a explicit PLACE STRATEGY
Explicit criteria/parameters for assessing place options
High level plus detailed articulation of all the ways move will enhance/diminish business, including assessing move options in terms of each discipline/department /function
Connection to business strategy
Recognition that move means new social/business culture, legal system, place brand messages, costs of doing business, employees' real earnings: compensation less living costs

While intangible factors loom large...and such decisions ultimately are based on intuition... a rigorous/structured/formal decision process is a necessary condition. The complexity, sensitivity, and diversity of issues argue for involving third party professional in the process, who can bring objectivity, expertise, and resources to the task, which are very seldom to be present in the company itself.


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