Best Cities for Small Business: Midsized Cities
Why are entrepreneurs so devoted to Salt Lake City? Perhaps because it's one of the key high-tech centers in the United States and benefits from a state economy considered to be the nation's strongest. It also boasts the lowest rate of unemployment and one of the lowest costs of living. And the tourism industry--which capitalizes on the state's numerous national parks, ideal setting for winter sports, and the upcoming 2002 Winter Olympics--is a hotbed for small businesses.
Government officials are starting to back small business with programs such as the Utah Business Resource Network, which pulls together state and federal agencies and programs that support small-business development. Meanwhile, the traditionally cash-poor city has witnessed a recent influx of venture capitalists and financial institutions. Numerous agencies, development corporations and counseling centers are geared toward supporting entrepreneurship.
Despite these advantages, the city faces some growing pains: An unemployment rate of 3.4 percent has created a squeeze on the labor market. Traffic has started to clog up. And housing costs, traditionally affordable, increased 50 percent between 1992 and 1995.
Most residents look forward to a brief period of more moderate growth so they can catch their breath, allow infrastructure issues to catch up to the city's rapid expansion, and continue flourishing in what economists predict to be five to seven years of unabated growth.
Raleigh, NC (1996)
"Downsizing" and "merger" are usually dreaded words, but in the Research Triangle region, the marriage of pharmaceutical giants Glaxo and Burroughs-Wellcome ignited an entrepreneurial fire that has drawn venture capital to an area previously devoid of this high-level financing.
But it's imported capital, aimed at sophisticated entrepreneurial efforts. Others will still find themselves short, although more financial advisors and lawyers are setting up shop to help.
Medical spinoffs are creating a strong clinical research industry. There are also telecommunications spinoffs that supply larger concerns like Northern Telecom, Bell Labs and MCI, or are exploring new areas such as Internet software.
While the region is experiencing typical growth-related infrastructure problems, there is a willingness by residents and politicians to address issues such as improving roads, transportation and schools via solutions like a $1.8 million bond on the upcoming November ballot.
Overlying everything is a growing awareness of the importance of small business, which has translated into mentoring programs, more incubators, and the realization that recruiting entrepreneurs to start small companies may be more beneficial in the long run than going after major corporations.
Greensboro, NC (1996)
Looking for a new movie location? Think the Piedmont Triad. The new film school at the University of North Carolina (the nation's first new film school in 20 years) is inspiring the region to position itself as a movie-making center, particularly for those using new media like virtual reality and interactive television.
Although venture capital is not abundant, it's improving, thanks to a new state-appointed venture capital developer working in the state's Department of Commerce. There is also a new microenterprise fund that, when leveraged, will seed more than $300,000 in small-business loans.
Growing industries include telecommunications and retail. Supplying the huge furniture manufacturing complex in High Point is an important growth area, and there is also a trend toward exporting, facilitated by a world trade center at the airport.
While a skilled labor shortage continues, officials hope a focus in the community colleges on strong technical training and apprenticeship programs will provide some relief.
Las Vegas, NV (1996)
Las Vegas is on a roll and shows no signs of slowing down. Buoyed by the twin forces of gaming and tourism, the desert community finds itself awash in small businesses springing up to serve the new casinos and resorts.
Retail is a particularly strong growth area because of the thousands of new residents, tourists and an exploding retiree population. Henderson, a Las Vegas suburb projected to surpass Reno in population by the year 2000, is helping provide diversification by bringing in manufacturing, and a foreign trade zone offering special incentives such as no taxes on manufactured products continues to grow.
The airport, which has three terminals and a fourth on the way, is slowly metamorphosing into a regional hub, fostering ease of travel to Las Vegas from anywhere in the country and facilitating international trade.
Lack of capital remains a problem, particularly for start-ups, but a statewide capital fund to finance firms that are beyond start-up but not quite bankable is being created to address part of this need. Embryonic efforts have also begun in high schools and community colleges to provide the technical training workers need to combat a skilled labor shortage.
Austin, TX (1996)
Although Dallas and Houston loom larger in the American psyche, Austin looks to be the shining star of the Lone Star State. No other Texas city, in fact, made this year's ranking.
What gives Austin its luster? The obvious answer is that, as the capital of Texas, Austin affords business owners a multitude of lucrative opportunities to service the government. And close proximity to state government makes it all the easier to monitor--and lobby for--pro-business legislation in a city that's been known to make entrepreneurs walk their boots through miles of bureaucratic red tape.
Of course, Austin is known for its powerful high-tech base; it produces the lion's share of the semiconductors made in Texas. From all indications, the 400-plus software companies in the region should only continue to plug into the growing demand for technology products.
The presence of institutions like the University of Texas and St. Edwards University ensures easy access to research and educated workers--good news for high-tech and low-tech firms alike. Also notable is the Austin-based Entrepreneurs' Association, which provides support and guidance.
Certainly, a lack of nonstop flights to the East Coast is an inconvenience for Austin small-business owners. But it's a small thorn in the side of a city that still manages to lasso business both locally and internationally.
Sarasota, FL (1996)
A city whose chief industry is tourism has to keep the house clean for company, so to speak. Sarasota does just that. Located on Florida's sunny southwestern shore, the city has a lot going for it aesthetically, and that makes it a residence of choice for retired corporate executives, as well as a hot spot for moneyed vacationers.
Sarasota has the second-highest per capita income of any county in the Sunshine State, right behind West Palm Beach. And those in the pension set often get bored with retirement and start their own dream businesses.
Make no mistake: Sarasota is a high-growth area. Small-business owners in search of a laid-back community are flocking to the city to open software development firms, medical supply and service companies, and upscale retail establishments.
Although Florida boasts a high number of start-ups, it's also known for its high number of closures. Nonetheless, there is good reason to take a chance here: The state has no personal income tax and relatively low corporate taxes, and Sarasota boasts low labor costs and minimal business license fees. All this makes for an environment that bends over backward to nurture entrepreneurial ventures.
Stamford, CT (1996)
Home to the nation's third-largest collection of Fortune 500 companies, including Xerox, Clairol, Pitney Bowes, GTE and Champion, you'd think the Stamford area would be adverse to small business. In fact, entrepreneurs have formed a synergy with the big guys. Downsizing here was not a curse to business but a blessing to entrepreneurship, creating the nation's highest proportion of consulting firms. Today, 95 percent of the community's 6,000 businesses are small.
The highly trained and talented entrepreneurs of Stamford thrive on competition and innovation. Technology and software publishing, maritime, telecommunications and nonbank financial industries are rising stars. The new North American headquarters of the Warburg Swiss Bank and the opening of a University of Connecticut campus in Stamford provide fresh opportunities.
Common side effects of rapid growth-transportation problems and a labor shortage--threaten the area. But state legislators have made pro-business changes to aid small and medium-sized businesses, including lowering workers' comp costs and subchapter S corporation taxes, and eliminating by the year 2000 the double taxation burden entrepreneurs formerly bore. On the local front, the chamber of commerce is trying to put together a microloan program. With such abundant support, small-business owners in Stamford seem poised for the big time.
Omaha, NE (1996)
You might be surprised to learn that financial wizard Warren Buffett hails from Omaha--but then, Omaha is a Midwestern city filled with surprises. Sure, the city's claim to insurance fame is widely known (only Hartford, Connecticut, boasts a stronger industry presence). And, yes, many telemarketing operations spring from Nebraska's most celebrated city. But if you think that's the extent of Omaha's riches, you're not looking past the cornfields.
Consider: As befitting the site of the Strategic Air Command (the largest division of the nation's Air Force), Omaha is home to a growing high-tech presence. What's more, the population of Omaha is more diverse than one might expect of Middle America: Significant numbers of blacks, Latinos and American Indians reside here.
Although Omaha's population is growing, there is concern among local business owners over the migration of highly educated workers to more glamorous big cities like Chicago. Will a strong work ethic and a network of small-business-friendly banks and resources be enough to keep Omaha's entrepreneurial energy flowing? The proprietors of the city's numerous high-tech, service-oriented and food-related businesses certainly hope so.
Richmond, VA (1996)
Think of Richmond and you think of history. But the capital city of the state that's produced eight American presidents isn't living in the past--not by a long shot. Home to Fortune 500 companies and small businesses alike, Richmond can justly lay claim to a thriving business community that's very much in the present tense.
From a distribution standpoint, it's a major plus that this Virginia city is the geographic midpoint between Boston and Atlanta. Factor in a bustling shipping seaport and an airport, and it's no wonder Richmond ranks in the nation's top 20 for export sales.
With the arrival of not one but two Motorola plants in the area, high-tech will undoubtedly maintain a high profile for years to come. In addition to jobs at the facilities themselves, the Motorola projects are expected to create 10,000 additional job opportunities in the region by the year 2000. This bodes well for Richmond entrepreneurs in high-tech and related fields. (Biotech firms are also encouraged by the Virginia Biotechnology Research Park.)
This high-tech surge comes at a time when Richmond's economy faces cuts in its public sector. That said, however, it would be nothing less than foolhardy to discount the importance of government contracts--both state and federal--to Richmond businesses.
Nashville, TN (1996)
Country music isn't the only thing making noise in Nashville these days. In fact, you might not have guessed which industries are hot and happening in the Volunteer State's capital: medical supplies and health plans, services and manufacturing.
A revitalized downtown complete with a brand-new sporting arena built to house the recently acquired Houston Oilers is sure to draw even more visitors--and consumers--than before. And, of course, The Music City also boasts plenty of opportunities for small businesses that serve the entertainment industry's promotional needs.
Nashville may have a shortage of skilled labor and its educational system could use some help, but with its affordable cost of living--not to mention its old-fashioned Southern hospitality--Nashville is a downright down-home place to grow a small business.