The US has long been heralded as the global capital for new and emerging businesses. An ideal hub for expanding companies, burgeoning brands, and enterprises.
It boasts one of the largest and most diverse markets in the world, has strong connections for international trade and partnerships, and importantly, it’s home to a highly skilled, highly driven talent pool.
In more recent years, new territories have been steadily climbing up the country’s ranks and giving the big banner cities – NYC, LA and San Francisco, and Washington DC – a run for their money.
Florida’s Miami and Tampa, Austin and Dallas in Texas, and Raleigh, North Carolina are just a few US territories emerging as the new, key hubs for business growth and development. Migrating talent, tax rate advantages, and post-pandemic priorities are driving the shift – and companies are seeing the benefits.
Here’s why the US landscape is changing for businesses, and what it could mean for your own.
It might sound like low-hanging fruit, but the effects of the pandemic on talent have played a huge role in new territories carving out a place for themselves.
In 2020, big cities saw high numbers of COVID-19 cases, and New York City and Los Angeles in particular were badly impacted. Risk of infection, widespread redundancies, and other motivators combined to cause a mass migration of talent of all generations and seniorities.
Fast forward a few years, and sentiment has changed drastically.
Hybrid and remote working means that being in a sector hub is no longer a necessity for career progression or new opportunities. Talent can retain the salary rates they enjoyed in state capitals. And the likes of Raleigh or Austin and surrounding areas have all the benefits of city life, with more affordable living, more space, and usually, better weather.
This has incrementally caused a ripple effect. As businesses began to gravitate towards talent, the talent pool itself began to expand. And yes, it would be reductive to say that business-to-talent relations are solely responsible for regional shifts, but it’s certainly played a big part.
Much like employment laws in the US, tax rates can differ significantly state-by-state. As inflation rises and the economy has grown more unstable over the past 12 months, businesses around the US – and the world – have looked to territories with competitive tax rates to help protect their bottom line.
Take the Silicon Valley decline. California is a high tax rate state (it’s also highly regulated) and for all its many economic benefits, leaders are increasingly viewing the state as financially unsustainable. Tech has been moving out of the region at a steady rate for the better part of a year now, and Austin, TX has reaped the rewards.
Affectionately termed “Silicon Hills”, Austin has become the alternative for a number of startups and big tech corporations – and their leaders. The city recently surpassed NYC as the highest concentration for Fortune 500 companies in a single state. This has also supported business growth in neighbouring Dallas. In fact, in 2022, Texas overtook New York for the first time as the highest revenue generating state.
Florida’s lower tax rates are similarly incentivising. On average, the state has a 6% sales tax rate (unlike California’s 8.6% sales tax), and a 5.5% corporation tax. North Carolina also benefits from competitive figures, at around 4.75% sales tax, and 2.5% corporation tax at time of writing.
Combine this with other key attractors, and it’s no surprise that future-thinking businesses are moving.
Sometimes, it really is location, location, location.
The USA is the largest good importer in the world, and its trade relations are a dominant strength for the overall market. By expanding into territories such as Miami and Tampa in Florida, businesses are better positioned to import and export, particularly with key regions in South America, and have great connections with the east coast.
Austin and Dallas are also opportunistic territories for trade. For 21 years in a row, Texas has been the largest exporting state in the US, in part because of its vast road and rail infrastructure.
Even for brands that don’t directly import or export themselves, tapping into a territory with strong trade capabilities is a huge benefit for business growth, partnerships, and talent diversity.
There are certain US territories with historic strength and popularity for businesses.
If you’re a business leader in an agency or in finance, you might associate New York City as the place to set up. Washington DC is a common hub for policy and public affairs, and of course, San Francisco for tech and digital.
Despite obvious market shifts, there’s no indication that so-called sector HQs will become obsolete, at least not anytime soon. If you’re currently in these regions (or thinking of expanding your brand there), it could still well be the optimum market and landscape for your growth trajectory.
Having said that, it will become increasingly important to take stock of market and behavioural shifts over the coming years, and monitor how this could impact your business.
Between generational talent shifts, population demographics, economic landscapes and other motivators like regulations and legislation, business leaders will need to adapt a more agile approach to their operations to maintain momentum – particularly when it comes to where they operate.
If you’re looking to expand your business and want to know more about launching in a US territory, we can help.
Hanson Search specialises in sourcing high-calibre talent across North America, in a wide range of industries and sectors. We also partner with a number of expansion specialists, so if you have big picture questions, we can help with that too. Get in touch today.
Author: Ruth Edwards, Associate Partner: Head of North America
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