Augusta Business Daily

Tue, November 28, 2023

Georgia vs. California: The case for doing business

Last week, CNBC released the 2023 edition of its annual “America’s Top States for Business.” As Georgians, we should be proud that our state ranked fourth, behind only North Carolina, Virginia, and Tennessee (South Carolinians, you are a respectable #27). CNBC’s methodology utilizes a variety of quantitative measures to evaluate each state in the following areas:  Workforce; Infrastructure; Economy; Life, Health, & Inclusion; Cost of Doing Business; Technology and Innovation; Business Friendliness; Education; Access to Capital; and Cost of Living.

Georgia particularly distinguishes itself in Infrastructure (#1 in the country due to its proximity to ports, interstates, railroads, and airports), Economy (#4), and Workforce (#8).  We do our worst (#39) in Life, Health, & Inclusion, as much of the measures have to do with things like voting and reproductive rights. Having lived in Georgia for the last twenty-one years, I can attest to my experiences confirming Georgia as a great state for business.

According to the annual edition of CNBC “America’s Top States for Business,” Georgia ranks #4.

As I write this column, I am sitting in a bed and breakfast in California’s “Wine Country,” about an hour east of San Francisco, in an area that is very strong in agriculture. Besides wine, this area is plentiful for food crops such as olives, garlic, and almonds, to name a few, and also very close to the technology and innovation center known as “Silicon Valley.”

In addition, this area has thriving tourism due to its wineries, golf courses (e.g., Pebble Beach), and scenic vistas such as Carmel and Monterey. During my time here in Northern California, I have been fortunate enough to visit several wineries and other hospitality-oriented businesses, along with interacting with business leaders, business owners, and employees to gain enough insight to make a reasonable comparison between doing business in California and Georgia.

During Rick Franza’s trip to California, he visited Carmel by the Sea.

In the 2023 CNBC rankings, California ranks as the 25th best state in America for business; smack dab in the middle of the rankings. In the rankings, California distinguishes itself in Technology and Innovation (#1 in the nation; driven primarily by Silicon Valley), Education (#9; driven by two strong university systems), and Access to Capital (#1; great news for start-ups).  However, these strong rankings are offset by being in the bottom six in the country in Cost of Doing Business (#45; driven by high taxes and costs of wages, utilities, and facilities), Business Friendliness (#47; driven by an onerous legal and regulatory environment), and Cost of Living (#49; driven by many things, but in particular, housing costs).

There are clearly a number of things that make California an attractive place to live. Even though the weather can vary significantly throughout the state, it is generally terrific year-round. Temperatures tend to be very comfortable and unlike Georgia, the humidity is typically low. The state is beautiful, particularly its coastal vistas, and there is an extensive state park system to enjoy the excellent climate. Higher education is relatively inexpensive and accessible.  Unfortunately, all of these attractive traits come at a high cost, and much of that cost is financial. High taxes and the high cost of living, particularly for housing, can make living in California difficult for the average person, as well as those trying to run a business.

The view behind the bed and breakfast where the Franzas stayed was lush with olive gardens.

As I talked to people at various businesses in California, I found out that their experiences backed up many of its rankings presented by CNBC. For instance, the owner of the bed and breakfast where I am staying told me about his relative ease in finding financial partners when he wanted to purchase it when the previous owner was failing. So, while we typically think of venture capitalists investing in technology-based companies, there is significant capital available in California for many types of businesses. Therefore, California is a great place to launch your dream/great idea. However, one recurring complaint I heard from just about all business owners and leaders was the difficulty and cost of dealing with the regulatory environment in California. No matter their political persuasion, all the businesspeople I spoke to in California felt that the regulatory environment went too far.

One thing that has struck me about California business is that employees seem to be treated better there than in most other places. More so than in Georgia or in any other state I have lived, California companies seem most concerned with their corporate cultures. Business owners and leaders in California, at least in the small and medium-sized businesses that I observed, make their people a priority. I found that employees at these businesses were extremely well motivated because of that positive company culture. I think that is critically and particularly important in California, where the cost of living is so high. Work must provide more satisfaction given the difficulty of financial success due to high costs. If it just came down to finances, I think many would leave the state. However, the prevalence of workers feeling valued probably keeps them in California when they might otherwise leave.

Workers in the olive gardens and wineries in California are motivated by positive company cultures.

So, which is the better state for business: Georgia or California? The quantitative analysis by CNBC tells us it is Georgia, and I would say my long-term experience in Georgia and my recent observation of California confirms this. However, we can definitely learn some things from California and the most important thing is that good company culture drives employee retention. So, to retain Georgia’s great workforce, improving company culture would be a great start for all of us!

I am enjoying my time in California but look forward to returning to Georgia as we continue our ascent to the top of CNBC’s rankings!

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