A few years ago, when I was running a small web and graphic design company, my team created a simple software tool to help speed up our production. It was intended only for our staff’s use, but we realized almost immediately it would be useful to lots of other businesses.
Minutes after having an "Aha!" moment like that, plenty of developers would have packed up, moved to Silicon Valley, and gone looking for funding. I decided to not do that, partly because I had a young family and didn’t want to relocate, but also because it wasn’t a viable option. The cost of starting a business, hell, the cost of everything down there was just too much.
Creating a startup is hard enough without the additional expense and stress of moving, of not having friends and family around, and of not knowing where the best restaurants are. So I decided I had to make my new venture work in the place where I was already established.
My point is that while there are benefits to planting yourself in a hub, there are plenty of advantages to setting up shop in a more isolated place. For starters, when I started ShortStack three years ago, I already knew where the best brew pub in Reno, Nevada was—so I haven’t wasted any time or money on bad beer!
Here’s how to start a business wherever you are:
1. Work your existing connections.
There’s a good chance that you know people who can give you useful advice. The neighbor who runs a landscaping service? Maybe she uses accounting software that she swears will save you hours of time and a hundred headaches. Or that guy who owns a manufacturing company, and who knows all about the small-business regulations in your county? He might prevent you from getting sideways with the law. Or you might be friendly with a local bakery owner who has an amazing social media presence, and be willing to teach you everything you need to know about Facebook contests.
Even if these people aren’t in the same industry you’re in, they still might have valuable insights to offer. It’s easier to leverage what you already have versus starting from scratch.
2. Use virtual assistance.
The beauty of our connected world is that mentors and other resources are just a quick search away. And you don’t necessarily have to have a two-way conversation with anyone in order to learn from them. Just digesting what they have to say can be super helpful. For example, I pay really close attention to Jason Fried of 37Signals and Ben Chestnut of MailChimp. I subscribe to their blogs and I check in to see what they’re doing with their websites all the time. During the last two or three years, I’ve managed to find the answers to almost every question I have about running a small business on the blogs of CEOs like these two guys.
3. Recognize the value of low overhead.
Going to Silicon Valley to try to make it as a tech startup is like going to Hollywood to try to make it as an actress. Sorry, but the odds aren’t in your favor. It just takes so much more of everything to make a go in a big city. Take rent. Rent is number 18—eighteen!—on my list of monthly expenditures. For some businesses rent is on par with payroll; we usually spend more per month at Costco for snacks and drinks than we do on rent.
You have to consider whether or not a different zip code is worth the price tag. Talent also costs way more in a big city. If you need a developer and you’re in Silicon Valley or Chicago or New York, you’re competing with Google and Facebook. But if you’re in anytown, Nevada, you can find people who would love the opportunity to be part of a startup. Plus, if you’re a tech startup in a non-tech community, you might find that you have tons of incentives and resources at your disposal, including super low-interest loans and special relationships with local universities.
4. Take advantage of regional opportunities.
I read all the time about community leaders who want to be part of the tech boom and are asking themselves "How can we do that?" In Nevada we have the Nevada Center for Entrepreneurship and Technology and the Economic Authority of Western Nevada, two organizations that are courting startup ventures all the time. And I always remind people that Austin, Texas came out of nowhere (at least as far as tech hubs go). All the city had to offer was an Internet connection and enthusiasm. Who’s to say that Reno or Cheyenne or Wichita can’t be the next Austin?
5. Focus on the product.
Technically this should be tip #1, because, duh, if you don’t have a good product, your odds of success aren’t great no matter where you are, but it’s a good wrap-up, too.
If you are fanatically focused on your product and have an idea for something that is really good and useful and people like the product, your customers/users won’t care where the company is located. You also have to have reliable customer service, consistent up time, fair pricing, and so on.
Being in a less well-known area also, ideally, forces you to keep a global market in mind. If you’re on the coasts, you might not realize that people in, say, Rockport (Illinois or Indiana) or Reykjavik aren’t as tech savvy as your neighbors. Being an outsider forces you to keep the needs of every potential market in mind.
Finally, here’s one big advantage to staying put: You can follow your own vision. In the tech hubs, there are lots of startup guys who love to offer advice, and some of what you hear might not square with your vision. If one respected person tells you one thing, and someone else advises something else, before you know it you’re spinning. Staying away from all that lets you do what you feel is right.
—Jim Belosic is the cofounder and CEO of Pancake Labs, a software company based in Reno, Nev. The company is best known for its flagship product, ShortStack, which helps small businesses create custom apps.
The Young Entrepreneur Council (YEC) is an invite-only organization composed of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library, and email lessons.
[Image: Flickr user Dave Bleasdale]