Lang has taken a similar tack. Although she has moved her company's executive offices to Jacksonville, she's decided to leave TMG's factory operations in Canada. Given the volume of orders these days, she says, it would be far too risky to lose her experienced manufacturing workers and have to retrain new ones.
Relocating only part of a company can free up an entrepreneur to pursue new opportunities more easily. Take Tom Hursman of Spectrum MedSystems Corp. He wasn't even thinking about moving any of his medical- and safety-products business out of Irvine, Calif., where he had been based for five years. He just wanted funding to launch a new line of business: producing a new plastic insert for work boots. Then he found out that by relocating part of Spectrum's manufacturing operations to an economic-development zone in Syracuse, N.Y., the company could really save money. It would be able to qualify for low-interest loans from the state of New York, buy discounted electricity from Niagara Mohawk Power Corp., and even get free land for the factory from the city of Syracuse.
The move made sense from a logistics standpoint, too, since Syracuse was closer to Hursman's insert customers, mostly boot makers based on the East Coast. The rest of Spectrum, however, stayed in California, although Hursman has moved his remaining manufacturing operations to a smaller space in Pomona.
Relocating isn't for everyone, though, as Lori Northrup can tell you. For 20 years the CEO ran a tool manufacturer called Stride Tool in the village of Ellicottville, N.Y. Ellicottville, which is about 50 miles south of Buffalo, is a pretty Victorian ski town that Northrup had fallen in love with as a teenager. In that rural area, with its relatively high unemployment, she found inexpensive space and plenty of labor. By 1998 Stride Tool had revenues of $40 million and was growing so rapidly that it earned a spot on the Inc. 500 list.
But by then Northrup was at work on a new venture. As early as 1995 she had become interested in creating an online brochure and using the Internet as a marketing tool for the industry. Then she realized that she could actually sell products over the Internet. The result was ToolSource.com.
Northrup figured that an Internet start-up belonged in Silicon Valley, ground zero of the dot-com revolution. Then came the clincher: an almost-rock-solid promise of funding from a Silicon Valley venture-capital firm, on the condition that ToolSource relocate to San Francisco. In early 1999 Northrup hired an executive recruiter to put together a management team and started dividing her time between Ellicottville and San Francisco. "It was exciting there," Northrup says of the Bay Area. "It certainly felt like you were in the center of what was happening."
But the new company had to face the usual Silicon Valley hiring woes: skyrocketing salaries and rapid turnover. At the direction of the company's potential VC backers, Northrup and her team spent much of 1999 trying to refocus ToolSource on the ever more crowded consumer market. Then, at the end of the year, the promised VC investment failed to materialize -- just as the company's landlord announced that he was about to renovate the building ToolSource was in and triple the rent. "It just seemed like the crowning blow," says Northrup. "Everything out there was hostile."
So she went home again, and everything began to come together. There were no more landlord problems: Northrup owned a building that had once housed Stride Tool. And within a month of her return, she landed funding from Buffalo's Seed Capital Partners. As it happens, one of Seed Capital's partners has a second home in Ellicottville; he and Northrup meet regularly on Sunday mornings at a local deli.
Although she worried about whether she would find enough technical talent in Ellicottville, Northrup found she could attract IT workers willing to make the commute from Buffalo. The village itself became her "secret weapon" as job candidates were won over by some of the same small-town factors that she loved. Her executive vice-president, David Lokes, had reduced his role to the level of a consultant instead of relocating while ToolSource was still in San Francisco. He couldn't envision moving his family out from his home in Connecticut (from which he was commuting to San Francisco while still executive VP), he says. Once the company was back in Ellicottville, however, Lokes reconsidered. Now he lives in New York State, half a mile away from work. He can go home for lunch. He doesn't miss Connecticut at all.
The sojourn in San Francisco wasn't entirely wasted, Northrup says. It gave her firsthand experience in what running an Internet company was all about, from the accelerated pace to strategic partnerships to employee ownership -- the kind of exposure she could have gotten only by being there. "I'd grown up in very midwestern, traditional manufacturing," she says. "It was a whole different way of doing business."
Then there's Rosa, who decided to stick it out in Providence. In the end he has shown that sometimes an entrepreneur can make even an unpromising city work -- if at least some of the pieces are in place and if he or she has some luck, creativity, and patience.
Although Providence lacked some things that Rosa needed -- like customers -- it did offer other resources, such as a talent pool of creative professionals, thanks to the Rhode Island School of Design and Brown University.
When he first moved his company to Providence, Rosa shared space with some designers, photographers, and other ad people, and soon he figured out how to operate as a virtual ad agency, hiring freelancers on an as-needed basis. He relied on Providence's convenient airport to make frequent trips to Chicago, where trade journalists pointed him toward some potential clients, and he cold-called his way into landing work from them. By taking advantage of Providence's lower expenses, he could sell himself to New York clients as a low-cost alternative.
