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CEOs

How Heading South Can Drive Profits North

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Growing up in Connecticut, I was well aware of the term “snowbird” — someone who moves to warmer weather during the harsh New England winter.

Now, it’s not just people following the birds — but entire corporations.

Recently, a 101-year-old manufacturing company wrote a heartfelt message to its home state. They titled the letter, “Goodbye Connecticut: It’s Just Too Expensive Here.” Wrote the company’s owners, “We have paid our fair share, but enough is enough. Connecticut’s high cost of doing business and its anti-employer attitude have finally driven us out.”

The announcement hit hard with a lot of businesses in the Nutmeg State and around the country.

This excerpt from the letter breaks down the reasoning behind their move, and their thoughts about leaving their family, friends, and memories behind.

“Consider these facts:

  • We sold our 50,000-square-foot building [in Connecticut] for enough money to buy a 100,000-square-foot building [in South Carolina] — and still had enough money left to pay for the transport of 100 trailer loads of machinery and equipment to our new site.
  • The property taxes on our big new facility in South Carolina are much less than those on our smaller former building in Connecticut.
  • Our utility costs in South Carolina, especially for electricity, will be about a third of what we paid here, though our space will more than double.
  • We are taking a third of our employees with us and paying them the same wages. With South Carolina’s lower cost of living, it is as if they are getting a big raise. And we pay our new employees in South Carolina competitive local wages. 

These savings could no longer be ignored.”

It isn’t just East Coat businesses that are moving south. A 103-year-old coffee company leaving California for the Lone Star State estimates the move will save $12-$15 million dollars per year.

According to Chief Executive, both Texas and South Carolina are in the top ten states to start a business (#1 and #10, respectively). Other popular states include Florida, North Carolina, Tennessee, and Georgia.

The survey reports that business owners “favor states that foster growth through progressive business development programs, low taxes, and a quality living environment.”

A CEO or CFO is always looking for ways to cut costs. Whether through downsizing, new technologies, or outsourcing, everyone is looking to make their P&L a bit more pleasing.

This also must take into account employees’ well-being. How much are you paying your employees, based upon cost-of-living in your area? Is it sustainable for them to pay the bills and put food on the table? Your company’s retention depends on paying them a wage that allows them to provide for their families.

In many southern states, cost of living is markedly lower. According to Salary.com, making $50,000 a year in Austin, Texas is the equivalent to making approximately $98,000 in New York City and just over $83,000 in Stamford, CT.

Statistics aside, leaving your home and your headquarters is a big decision — not something to be taken lightly. You may lose some of your best employees. You’ll have to create relationships with new vendors. Your kids will need to make new friends.

It might not be that has even crossed your mind, but for so businesses struggling with strict tax codes and harsh regulations, it’s something to keep in mind.

You may miss the comforts of home (pizza in Connecticut, beaches in California)—but you’ll save more than enough to fly back whenever you’d like — and cowboy boots aren’t so bad either.

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