Talking economic outlook on KKZZ radio in S. Calif.

California has become a tough place to do business. State government is a mess, pension funds are out of control, and worker's compensation costs are sky high.

It's true that those conditions may be a little more common given today's economy. The problem is California's been this way for 25 years. They simply can't seem to get their act together to run the state.

You start running the numbers and it does not take long for businesses to figure out they can save a lot of money by leaving California. I recently had a chance to discuss the challenges facing the state's business and opportunities they are finding elsewhere with Ron Tunick, a Southern California-based business coach and host of the radio program, "The Business of Life."

We talked about the benefits to small- or medium-sized businesses of looking out of state to escape the high cost of California and burden of its high-tax structure. Businesses considering relocation or expansion weigh many factors, looking for such things as:

• A stable, favorable tax structure, both business and personal, to minimize impacts on the company and the employees that follow


• Low-cost electrict utility rates


• Lower worker's compensation rates


• Low unemployment rate, such as what exists in Idaho

Tunick spoke favorably about Spokane, Wash. as a place for businesses to consider, calling the city "one of the hidden gems" and its airport "one of the best airports in the country." He is also a big booster of northern Idaho as a place to visit and work. You can access the complete podcast here.

Quality of life part of relocation decision

Companies looking at relocation or expansion consider the business case first. A clear understanding of real estate, labor, power and other costs of doing business are a must, especially in today’s economic environment. Communities without a business case that makes sense are excluded from consideration early in the process.

Once the numbers become enticing, evaluation typically turns to other factors. Quality of life is one of those hard-to-quantify, but important intangibles. Everyday influences such as housing costs, commute times and recreational opportunities all help set communities apart.

Titan Springs, an aerospace parts manufacturer founded in Southern California, moved to Hayden, Idaho. The ability of its employees to own a home without having to commute an hour and a half from Lancaster to Los Angeles was an important factor in that decision. Learn more about quality of life and its impact as a relocation consideration in this interview.

Talking about California's economy on "The Business of Life" radio show

Business consultant and radio personality Ron Tunick recently invited me on as a guest of his show, “The Business of Life” in Ventura, Calif. We discussed that state’s economic challenges and their impact on small business. Tunick offered several thoughts about California (“Our economy is in real trouble”), Idaho (“If I had to go to one place, it’d be Hayden Lake, Idaho. God lives there, am I wrong about that?), and Washington (On Spokane: “You talk about a sleeper city in this country where there’s great opportunity and a great workforce. And, for $250,000, you can buy all the home you want.”)

During the 30 minute interview, topics ranged from the disparity in tax structures and state budget troubles to commute times and air transportation. We touched on business considerations specific to small manufacturers. Tunick offered that California needs to get better business retention efforts, before concluding that under current economic conditions: “If you own a business get out of here get up there” to Washington and Idaho. You can listen to the interview here.

Follow careful process to evaluate relocation options

Relocating a company involves much more than finding affordable, available real estate for a new location. Companies considering relocation have a lot at stake and should take their time making a decision – whether they ultimately stay or move. Ongoing operating costs have to be considered as well as key employee retention. Following a carefully laid out process will produce the best results.

Get to know each other. Spend time getting to know a community and what it has to offer. Companies should expect to be visited a couple dozen times by community representatives as part of the information gathering and diligence process. This allows both sides to determine if it is a good match.

Compare costs. Communities should be upfront about the cost of doing business and willing to compare them against several other locations if necessary. Typical comparisons include basic bottom-line considerations, such as workers compensation, labor costs, utility rates and unemployment insurance.

Consider key employees. Small-to-medium-sized businesses, especially manufacturers, have key employees they need to be successful. Identifying those key employees and involving them in the relocation process is a big issue. Some companies bring key employees on community visits and site tours to gain their input and buy in.

Many issues affecting California businesses

In 20-plus years of recruiting companies in California, times have never been worse in that state. Workers compensation costs are skyrocketing again. The state pension fund is not sustainable and in serious trouble. Companies are struggling, especially in the aerospace industry. The situation is really out of control.

That kind of instability is difficult on companies in the best of times. Against the backdrop of broader economic struggles it can be devastating, which has companies considering their options. Watch this interview for more about the California business climate.

VIDEO: Bob Potter discusses Southern California’s business climate

Southern California companies concerned about the state business climate have taken a conservation approach with their capital until the economy improves. While businesses wait, they are watching the state wrestle with questions about how to fund its massive pension fund and balance the budget. The state’s tax structure, regulatory issues, and workers compensation remain ongoing concerns regardless of economic conditions. Learn more about what Southern California companies are saying in this interview.