Large cities

Entrepreneur, Oct, 1997 by Janean Chun, Debra Phillips, Cynthia E. Griffin, Heather Page, Charlotte Mulhern

Portland, Oregon, rains. But never before has it reigned quite like this. With an economy as solid as an oak, it's hard to imagine that just over a decade ago, Portland's economy was falling faster than you could say "Timber!"

A high-tech sector now provides the roots the city has long needed. Twenty years ago, this industry wasn't even a blip on Portland's screen; today, it is the largest employer in the state. Local technology manufacturers such as Intel court a multitude of satellite suppliers, while a recent wellspring of investment capital has given birth to many cutting-edge companies, particularly in the software and multimedia segments. And the capital just keeps on coming, thanks to events like this year's first annual Venture Oregon, which attracted more than 50 out-or-state venture capitalists.

And yet the strength of Portland's economy lies in the fact that, no matter how successful the high-tech arena is, it is far from the city's only star player. Portland also benefits from having the largest export port on the West Coast, as well as a burgeoning food-processing industry. Meanwhile, opportunities continue to bloom in the electronics manufacturing industry.

Perhaps the best way to describe Portland is as a big city with a small-town attitude. The premium entrepreneurs place on quality of life also positions them on the leading edge of a nationwide trend - homebased businesses. And you'll find no cutthroat mentality here: The small-business community works together, creating a healthy environment for all. Businesses network, but without the edge. Meanwhile, the state's government, banks, corporations and nonprofit organizations add to this unique environment by providing entrepreneurs with the support they need to start and expand their businesses.

Some clouds loom on the horizon, though. The housing market, which used to lure out-of-state buyers with its unbelievably low prices, has seen a quick appreciation in the past two years. Recently, a legislative session failed to solve the city's chronic public-education funding problem and defeated a transportation package that would have done little more than maintain the quality of roads and bridges, some of which need improvement.

In the end, the only potential enemy this small-business powerhouse faces is itself. Some fear Portland's economic heyday has made legislators overly confident. Meanwhile, others are optimistic that small-business, the hero of the city's economy, will not be forsaken. Always on the lookout for entrepreneurs with the potential for rapid growth, Portland is, and will continue to be, a city that's coming up roses.

ST. LOUIS

St. Louis has been dubbed the "largest small town in the country." And that's no lie. While home to corporate giants like Anheuser-Busch and Enterprise Rent-A-Car, this conservative Midwestern town maintains a close-knit community, one where business is still done on a handshake.

The large corporate presence here ensures a steady flow of contracting work to small companies. Dominant industries are aerospace, biomedical and advanced manufacturing. Corporate downsizing in recent years has fueled the growth of small businesses, particularly in the high-tech arena.

Although access to capital presents a challenge for entrepreneurs in the St. Louis region, a new St. Louis Regional Commerce and Growth Association program called CAPCO (Certified Capital Co.) is improving the situation. The program raises venture capital funding for small companies by giving insurance companies tax credits for investing in certified CAPCO companies. Difficulty finding skilled workers and dealing with what's often perceived as a slow pace of change also plague the small-business community.

As for the future, it's expected the legislature will hold a special session this fall to consider a tax credit for historical renovation and restoration of older buildings in the downtown area, which should stimulate business. Plus, a $3 billion expansion of the Lambert-St. Louis International Airport scheduled to break ground next year could turn this not-so-small town into a major exporting and transportation center.

SEATTLE

With names like Microsoft, Starbucks, Nordstrom and McCaw Cellular on its list of homegrown companies, people wonder, is it something in the water? Actually, there's no secret to Seattle's business success. A generally supportive government, a diverse economic base, a renowned high-tech sector, and an abundance of ambitious entrepreneurs operating under the awesome idea that they could become the next Bill Gates are all this city needs to charge up a vibrant small-business environment. By all accounts - D&B's included - it's surprising the city didn't make last year's list. Nonetheless, there are many reasons for Seattle's inclusion this year.

The high-tech sector has proved it can add not only sizzle to this city's economy but also solidity. From Boeing to Microsoft, conglomerates are proving to be small-business friends, not foes. Boeing enlists the help of many small aerospace manufacturing-related companies, while ex-Microsoft employees who spin off new technology companies have become celebrities in their own right. With the buzz that Seattle will be the nation's information technology leader of the future, the number of start-up information technology companies has multiplied rapidly over the past two years.