Hot cities

Entrepreneur, Oct, 1998

No big apple. No City of Angels. No Windy City. Much like in years past, our 1998 annual ranking of the best cities in the nation for small business takes us off the beaten path and onto roads less traveled. Not that there aren't cities you'll recognize on our list - neither Atlanta nor Orlando, Florida, are obscure destinations by any stretch - but we're always surprised by the results of the survey we conduct with Dun & Bradstreet (D&B).

Then again, maybe we're not too surprised. Major metropolitan areas tend to be ultra-competitive as well as notoriously high in business failures. According to Steve Hess, D&B's director of analytical services, setting up shop in commercial behemoths like Los Angeles also runs on the costly side. "Certainly, there are a lot of customers in markets like these," says Hess, "but they are very expensive places to [do business]."

Which brings us back to the cities - or, for statistical purists, the Metropolitan Statistical Areas (MSAs) - that made it into our ranking this year. Notice the strong showing of the Carolinas. Look, too, at the stellar performances of both Florida and Texas. And, fittingly enough, the home of the Indianapolis 500 raced onto our list as well.

"Memphis is an up-and-coming city," adds Hess, referring to this year's 11th-best large MSA and a new addition to the list. "More and more big companies are moving into Memphis, which will add a lot of opportunities for small companies."

RALEIGH/DURHAM/CHAPEL HILL

There it grows again! For the fourth year in a row, the Raleigh/Durham/Chapel Hill, North Carolina, triangle ranks as one of Entrepreneur's top spots for small businesses. Since last year's ranking, a population influx - pushing the number from 995,256 to 1,025,253 - and economic growth have catapulted the region into the number-one large-city slot, and folks in the Tar Heel state expect the good times to keep rollin'.

Growth in this region is no flash in the pan; it's been going strong for the past 15 years. The area's bedrock sectors are either very stable (for example, state government and education), or on the economy's cutting edge, such as technology. There are also pro-business state and local governments as well as an abundance of highly skilled graduates from the region's powerhouse research universities and prestigious law and medical schools.

The telecommunications industry is making its presence known, while technology and biotechnology show no signs of slowing. Several new facilities, including a $232 million Environmental Protection Agency facility, are sure to increase demand for suppliers and service providers. Venture capital - both home-grown and imported - is also on the rise.

The bad news? Traffic is increasing, as is the demand for labor, a crippling factor in the current tight labor market. To combat the traffic problem, the Triangle J Council of Governments is looking at mass transit options. On the labor front, the Council for Entrepreneurial Development has initiated an internship program that places MBA students in local entrepreneurial firms to entice them to stay in the area after graduation.

The strong infrastructure, additional capital and quality work force, coupled with a high quality of life, have officials confident this region will continue to grow.

COLUMBIA

A cultivated spirit of cooperation has resulted in 87 consecutive months of economic growth in Columbia, South Carolina, and has propelled this Southern metropolis to the top of Entrepreneur's 1998 list of best midsized cities.

This attitude has even influenced local beliefs about business. Small and midsized firms are being encouraged to get involved in international commerce with help from entities like the University of South Carolina (USC). The university recently received two donations totaling $2 6 million, now earmarked for the school's Darla Moore School of Business and its top-rated Master of International Business Studies program. USC is also at the center of a push by five counties in the region to become a technology hub: The university has a new $5 million microelectronics lab with an educational chip manufacturing facility, and an incubator in the school of engineering that nurtures high-tech start-ups.

Downtown Columbia is becoming a high-tech haven, with a fledgling software industry growing by leaps and bounds. Other growth sectors include transportation, spurred by the proximity of the East Coast's second-largest containerized deep-water cargo port in Charleston, and tourism, due at least in part to a worldclass zoo.

Government is also a big contributor to Columbia's strong economy. A new Department of Justice training center for federal, state and local attorneys will host 10,000 trainees annually, and Army military base Fort Jackson, with its $735 million annual impact on the area, has become home to units from other closed Army bases. Service and retail companies have opened to support the influx.

Like most growing cities, Columbia has its problems - among them, an archaic transportation system and a tight employment market. Officials are aggressively promoting downtown redevelopment with tax incentives and plans to turn the area - located at the junction of three rivers - into an upscale pedestrian haven. Work-force readiness is being tackled jointly by school officials and business leaders. And as with growth, continued cooperation will be key to conquering Columbia's challenges.