Starting a business in a big, metro city versus small town - Pros and Cons?
When you haven't yet started your own business, any kind of worry can bog you down. One such big question in the minds of to-be entrepreneurs is whether to start their startup/business in the metro city or their small hometown? I guess the obvious tradeoff is between the HIGH operating cost in big cities versus lack of paying customers/opportunities/raw material availability in small towns.
On one hand, technology catches up fast in metro cities as there are many early adopters. And on the other, the small towns offer the possibility of introducing new things 'customized for the local'.
What do you think? What works the best for you?
Good topic to discuss, Ankita. The success of the business, IMHO is decided by the ecosystem in which it operates. The ecosystem comprises of the talent (human resource) available to the business, and whether the business operates locally.
These days, most of the businesses operate online - and geography doesn't matter. People sell products in USA from their shops located in India and the Internet makes it all possible.
For a startup that isn't funded; controlling the cash burn is very important. At the same time, it must find good talent to grow the company and manage systems. Plus, the nature of the work matters a lot. A company like Basecamp has majority of its employees sitting across small offices or homes throughout the world - and they are profitable.
I think in coming days, the concept of 'office' will die out. More engineers will want to start their companies out of their small towns. But that's my opinion. Let's see what our fellow engineers think.
I think an interesting book to read about this topic is "Remote: Office Not Required" a book by David Heinemeier Hansson and Jason Fried. A very small read that you can finish over the weekend.
The book states in simple words how in this day and age of connectivity, you can work from anywhere (a cafe, a bedroom) and still do productive work.
However, I'm always in two minds about this. When you are the one managing a company (which includes managing human resources remotely), it is a BIG task to get work done on time. Taking daily scrums, constant reporting and pinging.
The plus side is that a good developer or a marketing guy sitting in Gurgaon can be easily employed by someone sitting in a small town, but sometimes sitting face to face or side by side, gets sh*t done much more effectively and efficiently.
Wishing to hear more opinions on this.
The hype of metro startups will die out soon like the other bubbles. In a country like India, we are plagued with basic problems that need a solution than getting a AR app to try clothes on.
Smaller cities give you a taste of real problems also keeping your operational costs low. In a metro, the expenses are 2-4x - rentals, bills, food, salaries, travel times etc. As shared before, you can easily hire devs and marketing guys in a big cities, sitting in the comfort of small towns.
I have seen companies moving to the hills, just to have a peace of mind and adding financial benefits. Nothing better than working from a hill station right?
This is and has been the biggest challenge. However, give me a pad to crash on and access to good Chinese and Thai food and I am ready to work from the tiniest corner of the world if I can make money via the Internet. Hate road commute and huge crowds. Always been a loner.
@Abhijeet - Good points. However, for most of the businesses and startups in particular, the money comes from customers who're willing to open their wallets. That doesn't really happen in small towns.
@Ambarish - you've been selling interesting products online. Have you received orders from smaller towns or the metros? Would love to know your opinion.
With more and more businesses shifting online, I don't think demography of the business location matters all that much. The primary issue lies in sourcing unique goods that you want to trade. The benefit of operating from a metro is that you get many of the raw materials and labor quickly at your disposal, whereas in smaller cities I've faced a lot of struggle in getting something manufactured quickly, exactly to my design specifications and within budget. Infrastructure costs - office space and the works - are definitely much cheaper in smaller cities.
As for getting online orders from smaller cities - I've experienced that people in Tier-I and Tier-II cities have actually opened up to purchase premium products. Around 30% of our customer base belong to smaller cities, rest from Metro.
The biggest challenge is not location , its people! If you have good people you will have a good life if not you will struggle like anything.
When I had a chance to develop a website i had developers from Mumbai, Banglore etc. But the output was worst.
On the other hand I had an andriod developer from Pune and he did the job extremely well. So more lies with the people we are hiring.
All this is true if you are developing a online website or something which is used by the customers online.
If you are generating some products which people should buy, then working in towns will be a problem initially.
Interesting comments concerning starting a small business. I cannot really reply without being more specific. One point I would like to make though is that if the small business is located in a small town, and is either fast food or service sector-oriented, I think everyone realizes that oversaturation and low consumption is the main problem. And even if you are selling a product online after you use keywords anyone will realize that competition is fierce. But you will never know unless you try.