Hot cities

Entrepreneur, Oct, 1998

Appreciation for entrepreneurs is backed by business-friendly tort reform, a strong university system, moderate taxes and diversification of the economy, a necessity after the oil bust of the 1980s. Growth industries cultivated since that time vary by region. In Austin, high tech is strong, with some 500 software firms calling the city home. It's also a music mecca, evidenced by eight blocks of night clubs where folks like Lyle Lovett ply their trade.

While NAFTA has impacted the entire state, the Laredo/McAllen/Edinburg/Mission area near the Mexican border has experienced changes up close and personal. On the negative side, some firms have laid off workers and moved south of the border. However, Mexican companies are opening plants in Texas to take advantage of skilled workers, and export service businesses like freight forwarding are opening to facilitate U.S. firms exporting to Latin America via the Port of Brownsville.

Another city benefiting from NAFTA is San Antonio, home to a growing number of trade-related businesses such as warehousing. Biotech research and development has also found a home here. Houston is an old oil town, and that wildcatter spirit still thrives, as does the importance of black gold. But now entrepreneurs there are involved in oil-related chemical exporting.

Aerospace has always had a strong presence in Dallas and Fort Worth/Arlington, and that continues. Tourism, Texas' number-three industry, is still growing strong statewide, thanks to destinations like Six Flags' Fiesta Texas, the Alamo and Sea World.

Like other areas on this year's list, the good news in Texas is tempered by obstacles, including a high-school dropout rate approaching 30 percent, the perception in some areas that the work force is not well-educated, and the fear that as the economy grows, politicians will begin to impose burdensome regulations on business. Efforts to tackle the work-force problem include revamping regional private industry councils into local work-force boards, and integrating education and job preparedness from early grades through college.

If Texans can attack their challenges with the same verve they use to support entrepreneurs, it will be only a matter of time before their problems are defeated.

FLORIDA

For years, folks have flocked to Florida to have fun in the sun - and then never left. Many of these transplants are affluent retirees and ex-military personnel who find themselves starting second careers and businesses, adding to the vibrancy of the Sunshine State's economy. They've also helped put five Florida dries on Entrepreneur's list of the top regions for small business. What distinguishes Florida's dries from the rest of the cities on the list is that megacorporations and the resulting outsourcing activities have not been the primary reason for growth. Florida's economy is built on small business - 98 percent of companies there have less than 100 employees.

Many of these firms are involved in tourism, which has long been and remains the state's number-one industry. International trade is also strong because of Florida's coastal location, diverse population, and sophisticated air and port operations. Interest in aerospace in this capital of space aviation is bound to grow, thanks to newly enacted tax incentives and sales exemptions for aviation supply companies.