Quick, where's home for entrepreneurs and startups?

Most Americans will likely say Silicon Valley or New York City. True, these are the two regions that house the most small businesses cum multi-million dollar companies. However, there's a shift happening as more small business owners recognize the truth: In a digital world, physical location doesn't matter much. In fact, starting up shop in a costly area saturated with competition might drag you down.

This is especially true of any business that can easily adopt a virtual environment. If you don't need employees in the same physical space--or don't even have any employees yet--why are you opting in to some of the most expensive commercial space in the country? There are exceptions to this rule (like if you want to open a thriving restaurant or boutique), but for the most part it's wasteful and not very savvy.

Start thinking outside the box, and outside the Valley, if you want an easier path to entrepreneurial success.

The Big Ticket Items

It's more expensive to rent office space in Silicon Valley than in Tacoma, Washington. Period. Not only is the real estate itself costlier, you're also doing business in a state with some of highest taxes in the country. Entrepreneurs should work with a CPA to figure out the best place to open a business based on taxes, then work with a commercial realtor to identify which regions are a good match for their business.

"Overhead" is easily the costliest part of opening a business. You're paying for every single square foot whether you use it or not. You'll be paying more in "startup hubs" like New York, Los Angeles, San Francisco, etc. If your company doesn't have a brick and mortar establishment for customers, you could drastically reduce your budget just by picking a different place for Headquarters.

The Virtual Appeal

Another option is hiring telecommuting workers. Virtual office environments are simple with today's cloud technology. In fact, many job descriptions are easily done from home offices--even big brands are going virtual. There are also multiple studies that suggest telecommuting employees are happier, healthier and more productive. You can even offer a lower base salary in exchange for telecommuting since a lot of top talent sees this as a fair trade. However, it's not all sunshine and rainbows.

Not everyone is cut out for telecommuting--even if they want to be. It'll be your job to figure out which applicants are truly great telecommuters and which are just looking for a way to not work as hard. Jobs with quantifiable deliverables (such as X amount of websites designed each week) are easier to manage virtually than jobs without them. To really hone in on the best virtual applicants, hire an HR consultant to do the dirty work for you.

You Won't Lose Your Credibility

Demanding to start your business in Manhattan, Silicon Valley or another hot region because "that's just how it's done" is foolish. It's the entrepreneurial version of keeping up with the Jones's. If it's not benefitting your business, it's a mistake. Where your business is located can make a huge difference, or it can make none at all. This is something entrepreneurs need to flesh out in their business plan and well before they put down a deposit.