We have to contradict Dr. Seuss. However, in the case of small
business, we believe it's not just the places you'll go,
but the place where you start, that adds spice to the journey.
Therefore, it's become our annual mission to determine which
cities in America best provide small businesses with springboards
to success.
Tapping into many different resources, and drawing on the
abilities of Dun & Bradstreet (D&B) to tie everything
together, our fourth annual ranking reveals several surprises, as
well as some of the usual suspects. For example, while some of this
year's top cities (or, more accurately, Metropolitan
Statistical Areas) are already well-established veterans of our
list, others are first-timers. And, sadly enough, a few stars from
years past seem to have fallen from the list.
Whatever their history, this year's top cities were scored
in five categories: government attitude toward business (taking
into consideration corporate tax rates and the 1997 State
Development Report Card Ratings by The Corporation for Enterprise
Development), business performance (company failure rates and
payment delinquencies), economic growth (employment growth and
growth in the average wage per job), risk (the chances of business
failure over the next 18 months, according to a company's
financial health, the amount of time it's been in business,
history of its principals, record of paying suppliers and so on),
and affordability (increases in the cost of living index, as well
as growth in wages).
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While D&B used this statistical information to compile the
list, we dug deeper to find the story behind the successes.
We've noticed some common factors--many top cities on our list,
for example, boast strong high-tech, biotech and telecommunications
sectors. Also, increases in venture capital indicate not only
potential future growth for the city but also a confidence in the
area's entrepreneurs. Large corporations seeking local
suppliers and services usually turn out to be small-business
allies. And innovative small-business programs, like the Milwaukee
(#13) Economic Development Corp.'s Capital Access Program, give
entrepreneurs a much-needed break.
While the factors listed above tend to be the building blocks of
a solid small-business foundation, a few unexpected advantages
showed up during our research of this year's list. We figured
the casino industry would be powering Las Vegas (#8) but found
it's also spurred small-business growth in unlikely areas such
as Kansas City, Missouri (#10). This year, certain cities also
scored big in the form of professional sports--Nashville, Tennessee
(#15) sports fans, for example, welcomed the Tennessee Oilers,
while Nashville entrepreneurs cheered the opportunities that
accompanied the transported team.
Speaking of sports, we found that we had a
"three-peat" champion of our own. Not only did Portland,
Oregon, win the number-one slot for the third year in a row, but it
seems to be pulling away from the pack. Portland ranked far higher
than any other city, says Steve Hess, D&B's director of
analytical services. "It has one of the lowest risks of
insolvency, one of the lowest failure rates, one of the lowest
delinquency rates and, at the same time, enjoys strong wage and job
growth," says Hess. "Most of the other cities did well in
a few categories and had problems in others. But Portland has
consistently proven to be a terrific place for small business. It
sticks out as the champion."
Meanwhile, Boston, one of 1996's notables, dropped off,
which means the Northeast is conspicuously absent from our list.
And even among this year's star performers, some problems
emerged-the labor shortage and infrastucture were common
examples.
Hess was perhaps more surprised by certain cities that were on
the list. Cities such as St. Louis (#2) aren't what you'd
typically consider booming, or even healthy, environments for small
business, but they continue to appear on our list, serving their
local entrepreneurs undeniably well.
Without further ado, we present our ranking of the best
entrepreneurial cities in the nation.