Texas as a prime state for corporate relocation is a familiar story, and as they say in the Lone Star State, it ain’t bragging if you can do it. Over the past decade, Texas has created more than 1.4 million jobs, owing in part to its perception as being business friendly, having a favorable regulatory environment and being a lower cost place to live and work.
It regularly appears at the top of the list of best states for jobs, best states for business and best states for corporate relocation and investment. Chief Executive, for example, named Texas Best State for Business in 2013, the ninth consecutive year it has received the recognition. And Texas was the runaway winner of Site Selection’s 2012 Governor’s Cup based on the 761 capital investment projects in the state for that year that resulted in an investment of at least $1 million, created 50 or more new jobs or involved construction of new space of at least 20,000 square feet.
But it is not just the large companies and large projects that have found the state inviting for corporate relocation. Software Advice relocated to Austin from California in 2009.
Software Advice provides free telephone consultations to help software buyers identify systems that best fit their needs and connect software buyers and sellers, generating high-quality opportunities for software vendors. Founded in 2005, the company has assisted more than 130,000 software buyers. It has grown to a 70-person operation and has been recognized as one of the fastest-growing companies in the United States by Inc. magazine.
About five years ago, Software Advice co-founder and CEO Don Fornes decided that for cost reasons and talent recruitment reasons he needed to relocate the company from California. He shares his story on what weighed into the corporate relocation decision and why he ended up in Texas.
What made you consider a relocation in the first place and what was the tipping point for deciding? Was it an organic decision that you arrived at or were you actively recruited?
Don Fornes: Our move was definitely our own decision. We didn’t take any financial incentives to move to Texas nor did we talk to anyone down here about our move.
Hiring was also an issue. In Silicon Valley, we were competing for talent against Google, Facebook and every other start-up. We were finding it extremely difficult to recruit and retain top talent. In the end, it was the combination of lower taxes and access to more and better talent that made us move.
How many other locations were under consideration? What did you find attractive about Texas and what in the final analysis made you choose it over other states?
Don Fornes: Once we decided to move, we considered Raleigh, Salt Lake City, Seattle and, of course, Austin. We chose Austin for several reasons, but what made Austin rise above the rest was access to talent. We saw Austin turning into the next Silicon Valley, so for a tech startup it was a great fit.
The University of Texas at Austin alone graduates 12,000 students each year. Then there are other colleges and universities (in the state) that offered great talent including Texas State University, St. Edward’s University, Texas A&M University and Texas Christian University. There are also just a lot of educated people moving to Austin and looking for jobs.
In addition to hiring, the cost of doing business was much lower, especially for an online business where employee salaries and office space were our largest expenses. We’re now able to have our office located in the cool SoCo district in Austin, and we’re still paying two-thirds of what we were in California.
Austin was also a great culture fit. We loved the healthy and outdoor nature of the city, and the lively surroundings made it a desirable city live in. We wanted a place where people would want to live, so that we could recruit people who are fulfilled in and outside of work.
What advice would you give other small business owners looking to make a relocation decision in general and a move to Texas in particular?
Don Fornes: Do your research. When we decided to move, we built a spreadsheet to compare our short-listed locations. Our line items included access to talent, taxes, rent, average salaries, population growth and more subjective items like, vibrancy and quality of living measures.
I’d also suggest having a hiring strategy in place prior to relocation. While there is a large talent pool in Texas, and Austin in particular, you need to know how to find great talent. Depending on your industry, there can be a lot of competition due to the fact that many companies are migrating to Texas. Don’t think that just moving here will make it easy.
In your opinion, what is Texas doing right in terms of creating a favorable business climate and what do you think would be areas of opportunity to improve?
Don Fornes: Keeping the taxes and cost of living low makes Texas very attractive, especially to those trying to start a business. There is a big political debate over tax increases, and I can’t say I go too far on either side of the aisle. But in our situation, taxes did influence our decision substantially. The money that we’ve been able to keep in the company has allowed us to invest in hiring more people.
Austin, in particular, is doing a great job at making the city very desirable for young adults, which is crucial when trying to recruit and retain employees. This not only brings more talent from other states, but Texas graduates will stay and work in Texas.
However, all of these things are causing a flood of people and businesses to move here. Texas needs to figure out how to handle the population growth. If we don’t have a solid strategy, we’ll be dealing with some big issues around education, traffic and access to water, which is a big fear of mine.