Starting a business in San Francisco is a dream for tech startups and restaurants. There’s a certain magic to the Golden City. Unfortunately, crazy living costs and rent prices mean it is more realistic for a successful business to expand there, once they’re ready to take their brand to the next level. Here are four crucial tips to bear in mind when expanding your business to San Francisco.
Calculate Your Costs
When making a move to the Bay Area, the deciding factor is usually cost. San Francisco and its neighboring cities are among the most expensive areas in the entire country to live and work. However, they’re also seen as the most creatively vibrant. This unique spirit is vital for some businesses to network, develop and pitch their products and services.
Consider very carefully whether your plans to move to the area are financially viable and cost effective, as San Francisco may have some surprises for you. For instance, bear in mind the city’s minimum wage of $14 an hour, a result of San Francisco’s high living expenses. Rent is also notoriously high, although it pales in comparison with some international destinations, particularly the average costs in London.
The cost of rent and wages may mean testing the water with a smaller footprint. As with most areas of business, expanding to San Francisco and the surrounding area is a risk-reward proposition. The potential rewards are enormous, but be realistic. Calculate your expenses based on the expected and worst-case scenarios, rather than the perfect ones.
Location, Location, Location Definitely Applies to San Francisco Businesses
San Francisco is well known for its expensive housing, and shop rentals are no different. However, the prices can still vary significantly depending on where you are in and around the city. Those businesses looking to trade on Silicon Valley’s highly-paid pool of talent may want to base themselves in Palo Alto or Mountain View. However, this won’t necessarily be where the people who work at those businesses live.
Think about whether your business is going to benefit more from lunchtime footfall or evening and weekend visits; is it better to be on a thoroughfare in plain sight, or simply to be within commutable distance from the city? From Sunnyvale to San Jose and Oakland to Fremont, the Bay Area has a wealth of residential and business quarters for all manner and scopes of business. Put the hours in, visit if you can, and make absolutely certain that your chosen location is right for you.
Customize Your San Francisco Business Plan
When it comes to getting a leg up in a competitive city like San Francisco, the trick is finding a niche. Ideally this should address one of the two biggest areas of business in the valley: tech and tourism. Whatever your business deals in, finding an angle on these two industries could be the key to establishing yourself in the Golden City.
As a new business, your business plan is the most important asset you have, and should be finalized before hunting for a new premises. As an established business expanding to San Francisco, your business plan should be both a guiding document and a malleable one. Your products or services are likely to remain static, but the way you present, pitch and sell them doesn’t have to be.
Carefully consider the audience you are targeting, based on the area you plan to move into, and act accordingly to make your business as appealing a prospect as possible. It may be that this process of honing your business to best fit the new environment leads you down new avenues, and towards providing entirely different kinds of products. In this scenario, you’ve either diversified your portfolio, or gained a new operation to spin off and hedge against your present interests.
Regulatory Burdens Will Weigh Heavily on Your San Francisco Business
If you’re expanding an existing business into San Francisco from outside or inside California, you might not be thinking about the regulatory hurdles. While city authorities are working hard to streamline the process of starting a business, San Francisco is still somewhat notorious for having a challenging regulatory environment, so doing your due diligence and exploring all the relevant requirements is a must.
Licences and permits can be slightly more difficult to acquire in San Francisco, and taxes may also be more complicated than you are used to. In 2014 for instance, the flat 1.5% payroll tax was replaced with a tax that takes your industry and gross receipts into consideration. Seek legal assistance, and ensure that you’re capable of complying with all of the requirements.
You will also need to register your business and its name in California to trade there; this shouldn’t be an issue, unless a business with the same name is already trading in the same industry. However, it is still recommended that you seek the help of professional formation services, to ensure that your new business venture opens without a hitch.
Your San Francisco Business Can Thrive by Embracing Local Values
San Francisco is as well known for its political and social leanings as its tech and business ecosystem. Any business moving to San Francisco needs to understand that people wear their politics on their sleeve, and it tends to only trend one way. It takes a brave business to take a bold political stance, and bravery can be expensive in business. But if you are feeling adventurous – especially if your politics are right-leaning – you may find it difficult to integrate.
As with anything, though, this can be an opportunity rather than an obstacle. San Francisco is famously LGBT friendly, has a substantial Asian-American population, and is extremely health conscious. Businesses should be careful not to be exploitative of or pandering to these demographics, but can benefit from being genuine in their acceptance, and catering to different tastes and needs. There are few better places to open a vegan restaurant, for example, or a bike rental service if you want to cater to eco-friendly, health-conscious consumers.
If these interests and viewpoints aren’t already compatible with your own, you may feel uneasy about capitalizing on them. In this case, the same principles apply in SF as in any major city. Do your best to ingratiate yourself, not just to tourists and high-flyers, but the people who live and work locally. The city is notoriously expensive, and increasingly difficult for younger and older people to live and work in, so community outreach and contributions to income-support or homeless programs could be a distinction that helps your business thrive.