Why Are Small Companies Leaving California? 22 Reasons

It’s all we see in the headlines lately, ‘Companies leaving California’. They’re leaving for many reasons. We made a list and answer some of the top questions we’ve been asking while considering moving.


Why Are Companies Leaving California? Here’s 22:

  • California is too expensive
  • Taxes are too high
  • There are too many regulations
  • It’s getting harder to provide a nice lifestyle for your family
  • Many business owners don’t own a home
  • It’s tempting to see the no income tax states
  • YouTube keeps suggesting moving videos
  • You used your personal savings to keep your business afloat last year
  • You are tired of working so hard and not enjoying the fruit of your labor
  • Mask mandate, there are counties that don’t have them
  • Fines, like the $2,500 one if you don’t have an updated website privacy policy page
  • Friends and family moved
  • Conservative people with Biblical values decrease every year
  • The family keeps asking you to move closer to them
  • You want to hire more employees
  • You want to grow your business
  • You want your employees to have a better quality of life
  • My team and I can work anywhere
  • That big earthquake will come anytime
  • Air pollution is getting worse
  • Brownouts and Blackouts
  • Frustrated with the government

California is too expensive

A 2019 article from SouthStarCommunities mentions the following:

“A record number of companies are leaving California for states with a better business climate, and a new report shows that Texas remains their No. 1 destination. See why they are being urged to leave the state, and what is bringing them to Texas.”

It’s true, California is an expensive place to live and work. Not to mention the traffic. It’s a forever game of figuring out how to offset costs, and that is no kind of life quality!


Taxes are too high

Need we say more? Taxes are too high! In addition, it’s difficult to sit back and watch while our tax dollars are being allocated to things we don’t necessarily agree with. So, what to do?

Well, first, know that there will always be a ‘cost-off-setting’ game you’ll need to play no matter where you are. While it’s true that you’ll be more likely to have a better quality of life somewhere else and more room to move around, there will be different costs to consider in different places. A state that doesn’t have sales tax needs to find the money elsewhere.

Do your research about different states and taxes before you decide to take a giant leap.

Here’s some helpful tax information for different states listed in a recent article from WalletHub

There are too many regulations

Yes! I couldn’t agree more with this statement! California has had an over-regulation problem for years and it doesn’t seem to be getting any better. One of the problems, I think, is the way we vote. This starts with how our propositions are worded. Manipulative propositions are carefully crafted to appeal to our feelings by those seeking new ways to grab money straight from our pockets.

City-Journal.org mentions A Sacramento Bee headline from late October, “How liberal politics, COVID-19 and a high cost of living are fueling a new California exodus,” and goes on to say that this headline could have been written, without the virus reference, a year ago. Or ten years ago, stating his flight from California kicked off long before this year’s pandemic.


It’s getting harder to provide a nice lifestyle for your family

Can I get an AMEN! If it’s just you and your spouse, it’s a little more doable. But, these days, with rising costs in every area in addition to having to pay for child care, can be completely overwhelming. Who wants to work in order to keep working?

Since we’re on the topic of family, let’s talk about the Paid Family Leave Program. If you’re an employer, do you have to pay employees’ salaries while they’re on leave? The answer is no.

The PFL program is 100% funded entirely through worker contributions to the State Disability Insurance program. Employers do not have to pay employees’ salaries while they are on leave. Many small businesses that cannot afford to offer paid leave to their employees can offer the benefit through the PFL program. This helps small businesses compete for the best employees, and gives employers peace of mind that they are doing what’s best for their workers. smallbusinessmajority.org

If you’re able to do this, that’s great. You’ll be able to keep your best people and that’s always good for business.

Many business owners don’t own a home

I mean, this is tough to swallow. How can we possibly keep up with the constantly rising housing costs? I was sure the market would tank over the past year while we were in full pandemic mode. What I saw was just the opposite.

During the time I was going on several walks per day, just to get out, I would see different homes going on the market. They’d be gone within 30 days. I didn’t understand how this was happening. Where was all this money coming from? Who are these high-risk people? I’m much too risk-averse to be taking on a new mortgage when things are so uncertain, so I can tell you, it wasn’t me.

I still don’t have an answer to how this was happening, other than to mention the lowest interest rates in years. Still, it doesn’t make much sense. I think we can all understand wanting our own house to make into our home and it’s hard when the cost of living is so high.

It’s tempting to see the no income tax states

Isn’t this the most tempting thing? I agree! I’ve known several people with companies and businesses who have moved from California to states with no income tax. Here’s a recently updated article from Investopedia that lists 9 states with no income tax, but that warns us about the other kinds of taxes generally used by these states to help make up for the lost revenue.

It has to be made up for somewhere, right? So, before you pack your boxes and get rid of your storage unit, do your homework.


YouTube keeps suggesting moving videos

Let’s just call a spade a spade. As humans, we are highly suggestible. Sheep-like, even. This is why you probably ran to the store last March to make sure you had enough two-ply to last through the apocalypse. You know you did. Unless you didn’t, in which case, good for you!

Here’s the thing. It’s difficult and expensive to live in California. I have never actually gone surfing and snowboarding on the same day, but it’s still on my bucket list. The point is… it’s a beautiful place to live, and as long as I’m here, it’s still possible. Remember this… suggested videos are algorithms, not ‘signs’.

You used your personal savings to keep your business afloat last year

My husband and I certainly dipped into our personal savings to stay afloat. Fortunately, we actually had savings to help us through. I know that’s not the case with many people and I’m so thankful that we were able to do this.

Generally speaking, if you own a corporation, you should be putting away 10% of your gross for taxes. Our personal practice has always been 10/10/10. We tithe10% put away the 10% for taxes, and save 10%.  This is why it was there when it was needed.

Of course, it’s disturbing to see your personal savings dwindle. We have definitely thought about moving to another state for the purpose of raising our quality of life and can certainly understand anyone who has been thinking about doing the same. But again, we have to take everything into consideration. How are costs going to be offset and made up for?

You are tired of working so hard and not enjoying the fruit of your labor

Here’s the quality of life issue rearing its pretty and tempting head again. It really is so difficult to see the carrot dangled in front of you. I’d love a newer better car in addition to the ability to have my own home and investment properties. I think about it often. And, as I mentioned earlier… nobody wants to work just to work more.

Mask mandate, there are counties that don’t have them (Henderson, Tennessee)

Many people are very tired of being told to wear masks everywhere. It’s especially difficult to respect these ‘mandates’ when the CDC has been so back-and-forth with their ‘science’ and recommendations. So, I can’t blame anyone for no longer wanting to be made to do anything that takes away their freedom.

Of course, if you’re in California, you’ll be stared up and down with nasty looks if you go into a store without a mask. I did this in the Home Depot several months ago and didn’t have any issues, which frankly surprised me. It was actually an accident. I had forgotten my mask and didn’t realize until I left the store that I hadn’t had any run-ins with fear-filled customers. But, this is not the norm here. In fact, I’ve gotten nasty looks even on hikes when I happened to have my mask down even for a moment.

This makes it completely understandable to want to flee to a place, like Henderson, TN., when they don’t mandate masks. Here’s an article from the Tennessean that talks about different counties without the mask mandate.



companies leaving california

Fines, like the $2,500 one if you don’t have an updated website privacy policy page

That’s right! That’s a heavy fine to pay and you better believe it’s not a one-time thing. This fine will be per incident. That’s just one of the propositions that was voted for during this last election cycle. It’s one of those tricky worded and manipulative props. So, what now? How can anyone keep up with fines like this? You better be sure your website has all the components it needs to be legal. We can help you with this!

Check out more about this newest attack on small businesses in California at RebelFishLocal.

The most important thing right now is to be as informed as possible. That will allow you to make better decisions which will, in turn, be better for your bottom line.

Friends and family moved

As I mentioned before, we’ve known several people who have fled the state within the last few years. These people have moved to Texas, Idaho, Montana, and North Carolina. It’s even more tempting to make the move when your loved ones have preceded you in exodus.

It may just be worth the risk of other kinds of taxation if you have a mother-in-law who is willing and able to watch your kids while you work. Or if you can share costs in a large multi-family house, which is starting to ‘trend hard’ across the country. If this is something that will work for you, then it may just be the right thing.


Conservative people with Biblical values decrease every year

I think for people who have conservative and biblical values, this seems to be more and more true by the day. With the past year’s challenges, it’s become even more apparent to many that it’s important to be surrounded by those who have the same kinds of beliefs. I’ve had these thoughts too.

However, I don’t feel necessarily released from California as of yet. I am waiting with ears as open as they can be for the very first indication. But, I also think that it might just be important to stay on a while. We are called to be salt and light. This means there will be darkness and challenges. The bible says nothing about being salt and light where it’s easy and when it’s comfortable. I know, it’s not an easy pill, but hide it in a spoonful of strawberry jelly if you must and swallow, because it’s true.

The family keeps asking you to move closer to them

Again, if you have family that can and are able to make it easier for you to make the transition, then why not? If you can share costs in some way that will help you to offset things, it can be an excellent opportunity to get ahead. If you do own a home in California, consider the possibility of renting your Cali home for some income. The rental market is still strong and you’ll be able to come back if it doesn’t work out the way you had hoped.


You want to hire more employees

Generally speaking, if you are thinking in this direction, you’ve been in business a while and are wanting to expand. You must do your homework for each state you’re looking into. This will take some time to break it up into tasks that won’t overwhelm you.

I don’t know about you, but I love spreadsheets. I’m visual and usually need to see something with my eyes when I’m comparing and contrasting different ideas. Figure out the key areas you need to focus on for your business and start researching state by state.

How many more employees do you want or need to hire? Different states will have their own policies for different size companies, so be sure to be specific and targeted in your research.


You want to grow your business

This will be much of the same work as listed in the section above for hiring more employees. I’ll say it again though, I love spreadsheets. It will be a good idea to add anything from your P&L and balance sheets for the most specified research. You’ll have different costs in different states throughout different industries, so you need to know what you’re getting into depending on the specific needs of your business.


You want your employees to have a better quality of life

I happen to know someone who started a tech company in the Los Angeles area several years ago. With costs rising exponentially, he decided to move his company and his employees to Washington state. I’m sure the no income tax carrot was a factor, but I also know that he wanted his employees to have a better quality of life. This is so honorable. Who wouldn’t want to work for a guy like that? Well, it turns out, not everyone wants to leave their home. Not everyone is amiable to change.

Some of his employees ended up suing him. They didn’t want anything to do with the move. This is unfortunate for the owner of any company. No good deed goes unpunished, right? I’m sure it felt this way to the owner of this particular company, and while I don’t know how it ended (or if it’s come to an end yet), it leaves us an important lesson and consideration.

If you have a company that you are considering moving to another state, you should consult with a lawyer prior to making that decision. Of course, people still may be upset, but you’ll have a better blueprint and plan to walk you through.


My team and I can work anywhere

This is becoming more and more possible for many people throughout many industries. In fact, I’d say it may be the best thing to come out of this past year. That we’ve learned this is more possible than ever before and were made to bend in this direction may not be the worst thing.

Still, you’re going to want to take time to consider the same issues as in the last two sections. You don’t want to be blindsided by things you couldn’t see because you were focused on the dreamy things.


That big earthquake will come anytime

This has always been true. It’s no more or less true than it’s always been. I’m originally from Canada and experienced my very first earthquake (Whittier Narrows 1987), within just two months of arriving. It’s a little embarrassing, but as a result, I’ve always had a hypersensitivity to this ever-looming reality. I’m as prepared as I can be and that is all any of us can do.

The ‘Big One’ will hit eventually. We can only be as prepared as possible. Remember, disasters can and do happen everywhere. You will have to deal with the challenges of a wicked winter, tornadoes, hurricanes, and even worse still, heavy never-ending humidity, depending on where you decide to relocate. So, make your pros and cons list and be ready to handle yourself.


Air pollution is getting worse

Frankly, I’m surprised we’re even talking about this with rising costs reaching exorbitant levels. I don’t think I remember the last time I heard someone mention anything about the air quality – save for the quality of air recirculating into their lungs because their usual airways are blocked due to mask mandates.

I think that about covers things here.


Brownouts and Blackouts

I’m with you. There’s not much worse than a seemingly never-ending rolling blackout during a hot California day; at least in that moment. It’s difficult to keep from being too dramatic when you can’t cool down. Being asked to run your major appliances at specific times can be very annoying; especially if you have a mountain of stinky laundry calling for your attention. But remember, this isn’t exactly a foreign issue for other states.

During the winter of 2021, this was an issue in Texas, a state with a recent major influx in population from other states, like California. This is a very real possibility anywhere now, especially with such population spikes. Many states will have some challenges when it comes to accomodating the sudden inflow as they won’t necessarily have the infrastructure to keep up.

Of course, if all of this is happening during your workday, this is going to be a problem. If a problem starts infringing on your ability to make an income, it’s only natural to start thinking about options.

Frustrated with the government

A 2018 article from ChiefExecutive talks about the business exodus from California being more troubling than sanctuary policies.

“Sacramento, California was once friendly to business, but it has now become overtly hostile. Manufacturing and online retailing are heading for the exits.”

The article goes on to mention that the larger companies that are leaving or have already left did so because they believe they are over-taxed and over-regulated, and they are not valued by elected officials. Who wants to stay where they’re not valued? Not me!

Companies have power and they’re using their ability to relocate to other states to flex their muscles. Let us help you flex yours. Schedule a call today!

If you still are in California and you’re wondering how you can increase your revenue while you’re still here, Download our FREE Daily Activities PDF and find out how “You’re Losing Money By Not Doing These 3 Daily Activities”