In the first six months of 2014, Silicon Valley companies raised over $11 billion through more than 800 different investment deals, according to CB Insights.
As the primary hub for tech startups, aspiring entrepreneurs all dream of making the move out West to rub elbows with angel investors, venture capitalists and future Mark Zuckerbergs. Although the ecosystem is one of the best places to be for tech companies, it is not the only area worth starting a business in. Cities including Denver, Washington, D.C., Austin, Chicago, Salt Lake City and Boston are emerging hubs for startups. Internationally, Berlin, London, Paris and Vancouver are also noteworthy examples. Here in Phoenix, AZ, businesses flourish too.
Despite the fact that most unicorn companies thrive in the Valley, success is possible anywhere. To grow a business outside of Silicon Valley that helps thousands of other businesses or millions of individual consumers, here are four important tips to remember.
Prioritize developing people.
In Silicon Valley, startup employees have extremely competitive resumes. An internship at Google can land a recent graduate an excellent job at a company of their choosing before they formally enter the full-time workforce. A diploma from Stanford, too, puts a job candidate at the top of any consideration pile.
While the local market you operate in might not have job applicants with the same experiences or pedigree as an entry-level employee at Facebook, you would be surprised what people can accomplish with the right guidance, resources and support.
To build a successful business anywhere in the world, you must prioritize developing the abilities and skills of your workers. The ambitious college dropout you hired to work in client services may actually be fit to lead the whole department one day, if you invest in providing tools and knowledge that help him do his job better.
Take advantage of the lower cost of living.
Employees at Silicon Valley startups receive generous compensation packages, in part due to the absurdly high cost of living in San Francisco. Some spend upwards to $1,800 a month for a bunk bed in a shared room in a communal house. For a one-bedroom in the city, the median price of rent is $3,460. Elsewhere around the States, $1,500 a month can get you a 3-bedroom house.
That means people can live happily with a lot less, allowing you to save money on salaries. According to Glassdoor, software developers in San Francisco earn an average salary of $94,482, which is 8.7 percent higher than the national average of $86,226. In Austin, TX, individuals with the same title earn $76,552 each year, which is 11.2 percent lower than the national average. With the difference, you can stow away money for a rainy day or invest in perks that will keep your team members happy, healthy and productive.
Be the big fish in a small pond.
Big businesses in small towns have an almost monopoly-like advantage in developing partnerships with local vendors, sourcing talent and currying favor with local government.
By supporting the local economy with jobs, entrepreneurs in quiet towns can build brands that every resident admires. Firms that call small cities their home tend to play an integral role in bettering their local community and, in return, have an easier time hiring exceptional employees, obtaining business permits and selling their wares.
Stay cash flow positive and profitable.
One of the traps that new startups fall into is relying on investors to fund operations. For startups outside of Silicon Valley, money is a lot harder to come by. Entrepreneurs, instead, should focus on building businesses that are not cash-intensive. Most new companies should operate on a shoestring budget for a few months until they are cash flow positive. Afterwards, they can use the small profits they generate to reinvest in growth.
A new business can thrive anywhere. With enough grit, persistence and know-how, entrepreneurs can strategically leverage local resources to win.