Quality of life and local incentives can lend a competitive advantage to entrepreneurs when they need it most
Bigger isn't always better when it comes to selecting a place to start
a company. ZoomProspector.com's heat map shows startups per capita.
Philip Eggers has started six medical device companies in his Dublin,
Ohio, hometown. His last five followed a pattern: Eggers would develop
the product in his Ohio lab, fly frequently to the Bay Area or Boston
to raise money, then relocate the company to one of the coasts when
ready to commercialize the product. But Eggers has a different plan in
mind for his latest startup, Cardiox, founded in 2006 to develop a
noninvasive way to detect heart shunts: He wants to find funding locally and keep his five-employee business in Dublin.
As the economy reels, Eggers is one of many entrepreneurs quick to tout
the ease of doing business in small or midsize cities. Plenty of
factors make the city of 38,000 outside Columbus attractive for
starting up: Abundant, inexpensive office and lab space; a major
university, Ohio State, nearby; a growing population; and good local
schools to attract workers with families. "It draws the highly skilled
and educated people you need to bring in, especially to a high-tech
startup company," Eggers says.
In high-growth and more conventional businesses, many entrepreneurs
find that bigger isn't always better when it comes to selecting a place
to start a company. "People are being drawn by lower cost of living and
better quality of life," says Jack Schultz, founder and CEO of
industrial developer Agracel of Effingham, Ill., and author of Boomtown USA: The 7½ Keys to Big Success in Small Towns.
He also says states and cities are beginning to recognize entrepreneurs
as a "third leg" of economic development, as important as retaining
existing jobs and attracting large corporations. While startup meccas
like the Bay Area offer concentrations of talent and investors, new
companies there face plenty of competition for those resources, and the
cost of doing business is high. In smaller cities, new businesses enjoy
lower costs and a higher profile to attract workers, and may be able to get government to create jobs.
Fifty Cities
GIS Planning used this criteria to identify the best small cities
(with populations between 20,000 and 200,000) for startups in each
state. With that data in hand, BusinessWeek
asked entrepreneurs in each city what people should know about starting
a business there. Many said factors such as affordability, availability
of talent, existence of a thriving business community, and quality of
life helped them choose where to open shop. What emerged is a picture
of 50 dynamic cities, each with its own draw for new businesses.
In many small or midsize cities, universities provided the resources
of talent and infrastructure that helped them compete with metropolitan
centers. Besides providing a steady stream of potential hires, big
schools are often connected to startup incubators or programs to commercialize technology developed in academic research.
Entrepreneurs said incentives from local governments eager to attract
growth industries helped make their cities attractive. In Edmond,
Okla., Charles Seeney has tapped half a million in economic development
grants for his five-employee nanomedicine company, BioNanoMimetics.
"When you start a small business, economy is key to everything you
do—getting the most bang for your dollar," he says. The incentives,
combined with the low cost of doing business there, made the city of
83,000 attractive.
Startups also found skilled workers—especially younger ones—drawn to
the perception of a higher quality of life. "A lot of people say, in
rural areas, sometimes people are concerned they can't find employees,
but my experience is that the quality of life and amenities actually
draw people to the area, and they tend to be underemployed," says Bill
Moseley, president of GL Suite, a Bend, Ore., 40-employee firm that
makes software for regulatory agencies. "You have a really strong
talent pool that's not nearly as expensive as in a big city."
All these factors can add up to significant competitive advantages
for entrepreneurs launching new companies in small or midsize cities
that are sometimes overlooked, says Anatalio Ubalde, co-founder and
co-CEO of GIS Planning. "Location in many ways is a gift, because it's
not something that a CEO has to work so hard at," he says. "You don't
have to start from neutral. You can start from an advantage."
For a look at the top small city in your state, visit http://www.businessweek.com/smallbiz/content/mar2009/sb20090327_385972.htm?chan=smallbiz_smallbiz+index+page_getting+started.