Must-Try Cities

Time for a visit to D&B & Entrepreneur's best cities for entrepreneurship
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This story appears in the October 2002 issue of Entrepreneur. Subscribe »

Washington, DC, is famous for its monuments, its museums and--let's face it--scandals in the mayor's office. None of those are reasons why Rebecca Shambaugh, CEO of Shambaugh Leadership Group, located her 30-person consulting company in nearby McLean, Virginia.

"This area has access to multiple businesses: defense, government, nonprofit," says the 46-year-old entrepreneur. "It's also an extraordinary place for technology. And, quite frankly, there's a lot of power here. So you attract a lot of people who are very accomplished and goal-oriented."

Among the most accomplished of the area's residents are its entrepreneurs. Strong showings in three out of four categories allowed the DC area--which includes parts of Maryland, Virginia and West Virginia--to take top honors in D&B and Entrepreneur's 9th annual ranking of the best U.S. cities for entrepreneurship.

Shambaugh isn't surprised. "We've seen extraordinary growth," she says of the region; her own firm has expanded employment by 25 percent in the past year.

Michael Stevens, president of the DC Marketing Center, an economic development arm of the DC Chamber of Commerce, also professes lack of amazement. "Especially since 9/11, it's the most dynamic market in the country," says Stevens, who tracks and provides information for businesses expanding or relocating to the district. "We're the only large market that's still experiencing job growth."

Washington's job growth rating of 86 out of 100 was a key factor in the area's jumping three places from 2001's ranking, according to Nipa Basu, director of sales and marketing analytics for D&B in Murray Hill, New Jersey, and leader of the data collection and analysis effort. "Also, the risk score [of 91] is quite good," added Basu. The area's highest score, however, is in small-business growth, where Washington, DC, achieved a 94.

Looking at regions, large Sun Belt cities dominated the highest rankings, with Florida and Texas accounting for five of the top 10, Basu notes. Texas could boast three cities: Dallas at No. 2, Fort Worth-Arlington tied for No. 5 and Houston at No. 8. Conspicuously absent from the top was once--dominant California, now with just Sacramento (tied for 11th) and San Jose (tied for 19th) in the top 20.

"This year's surprise was New Jersey," says Basu. Along with Middlesex-Somerset-Hunterdon, which vaulted from 28th to fourth on the strength of a very balanced, moderately pro-entrepreneur environment with no obvious weaknesses, the Monmouth-Ocean region climbed from 33rd to ninth. Stability, however, was a general theme. Six of the top 10 cities were also in the top 10 last year, and Dallas, which led all cities in 2001, slipped only to second.

Many forces and factors affect a city's friendliness to entrepreneurs--DC marketer Stevens contends that the city's museums and monuments play a role in attracting businesses as well as tourists. Other attractions are increased government spending and growth in professional services such as lawyers and lobbyists seeking access to Congress and the White House. One negative: an increase in the cost of doing business, especially for office space suitable for entrepreneurs, he adds.

For those who can pay the freight, however, Washington, DC, could be on a long-term roll as an entrepreneurial place to be. The city ranked fourth on our list last year, third the year before that and may well be in or near the lead for many years. The key, says Stevens, is the area's combination of a rapidly expanding local economy and the stability of being the nation's capital. "They're projecting another million people in this region by 2020," he says, "so [expect] big population growth and steady opportunities with the federal government."

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