primary category involves operational factors. Operational factors are
the variables that will enable you to physically conduct your
operations and ultimately create or produce your product or service.
Some of these factors may actually act as barriers to your success.
Often, several of these variables become filters for eliminating
What factors related to the business environment are "must-haves" for
my operation to be successful? Is close proximity to raw materials or
technical support functions mandatory? Will the company need
special-use facilities or equipment?
• Are there barriers to
success, such as factors that will hinder or perhaps even prevent a
successful operation? These factors can include the regulatory
environment for your product or service, your ability to recruit and
retain the work force needed, or airport accessibility to your
investors, your board members, or your research team.
• How important is utility infrastructure (availability, cost, and reliability) to your processes and operation?
Are there business environment factors that could support or hinder
your company's success, such as inventory, franchise, or business taxes?
• Does the threat of natural disasters create a barrier to your success or create a concern for your operation?
third category focuses on the quantitative side of the decision
equation. A number of these financial factors can actually overlap with
the strategic and operational categories as they relate to project
funding, operational costs, cost of living, and the cost of doing
Do you need to be located in a community or state with strong private
funding sources such as venture capital, angel funds, or low-interest
• How important is the availability of state and local
financial and economic incentives, including grants, forgivable loans,
tax credits, work force training, or tax abatements. Which of these
programs, if any, will most benefit your operation and company?
Will the cost of living in the considered cities have a positive or
negative impact on the ability to recruit scientists, researchers,
engineers, or other critical talent? This is especially important to
consider, as an imbalance between competitive salaries and cost of
living (housing, utilities, transportation, food) can create a barrier
to attracting and retaining talent, despite other positive factors.
In order to be cost-competitive or best utilize investment dollars,
where is the "cost of doing business" most favorable? How important is
the cost of doing business relative to the strategic and operational
Answering each of these questions is the first and most
important step in the location decision process. While this list of
questions is not all-encompassing, it provides the foundation for
understanding the basic factors driving a location decision. After
developing a comprehensive list of criteria, the project team should
determine and assign a level of importance to each variable. Individual
weightings should be based on the project type, the stage or phase of
the business operation, as well as the maturity of the business.
location selection process should be viewed as a process of
elimination. As communities are eliminated due to barriers to success
or the failure to "match" your critical success factors, the focus is
heightened on those communities that best fit the criteria determined
by your operation.
Whether your operation is a small team
focusing on research and development or a multimillion-dollar
investment in a manufacturing operation, you have one opportunity to
make a "best-fit" decision, as it is not easily reversible. By
following a structured process of identifying the success criteria and
then evaluating your company's options against the criteria, you
significantly enhance your company's chances of finding the optimal
location for long-term success.
So where should you locate your next "biotech" operation? It depends!
Sangster is a senior managing director with CBRE Consulting, a
strategic advisory consulting group within CBRE. He assists clients in
finding best-fit locations that align with their strategic business
objectives, addressing needs resulting from mergers and acquisitions,
business expansion, restructuring, and rationalization.