Midsized cities

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

This year's top-rated midsized metropolitan area is no stranger to our ranking - and it's no surprise why. A hotbed of high-tech activity, the Richmond/Petersburg, Virginia, area boasts the kind of pro-business climate that draws Fortune 500 companies and entrepreneurial enterprises alike. Circuit City Stores, Reynolds Metals and Eskimo Pie Corp. all have headquarters here, a stone's throw away from our nation's capitol.

Cited in a recent national study as the second most cost-effective metropolitan area in which to do business, Richmond also affords entrepreneurs the advantage of being no more than a two-day drive from 40 percent of U.S. markets. And, as far as educational resources go, the Virginia Biotechnology Research Park complements four-year academic institutions such as the Virginia Commonwealth University and the University of Richmond.

Speaking of resources, an active Capitol Area Small Business Development Center as well as the Greater Richmond Partnership - a regional economic development organization - assists and encourages businesses to bloom in Richmond just as surely as the state's flowering dogwoods grow.

If there's a downside for the area's small businesses - many of which are concentrated in the service sector - it is that such a boom in companies and workers places greater demand on Richmond's infrastructure. The local airport, in particular, could use some upgrading. That said, however, this area's entrepreneurs are generally optimistic - and rightly so.

TACOMA

On lower Puget Sound, you'll find Tacoma, Washington, a city bound for success from the start. Its "City of Destiny" moniker was acquired in 1873, when the transcontinental railroad selected the city for its Western terminus. More than a century later, it's clear Tacoma's still on the right track - its economy is strong, and unemployment has reached a 31-year low.

Tacoma's proximity to the Pacific Rim offers a prime setting for international business; in fact, the Port of Tacoma is one of North America's largest. Two local military bases have brought thousands of consumers into the area, and Intel recently announced expansion plans for a new research and development facility in the community. Leading industries include financial services, manufacturing and high-tech.

Venture capital abounds, and a new SBA One-Stop Capital Shop opened last year. Taxation is not much of a problem for local entrepreneurs - there's no state income tax, and the state recently eliminated sales tax on manufacturing equipment. Currently in discussion: a proposal to give tax benefits to financial services companies that relocate to the area.

All this activity has led to congestion in the city, but Tacoma is working to relieve that - plans have been approved for a light rail system, which should be completed by 2001.

RALEIGH-DURHAM

The Research Triangle area, composed of Raleigh, Durham, and Chapel Hill, North Carolina, is setting its sights on 1999. That's when a new arena will begin to host the North Carolina State University basketball team and the transplanted Hartford Whalers (now the Carolina Hurricanes) NHL team. Two museums and a performing arts center will come to life, and the World Special Olympics and the United States Golf Association Open tournament will arrive in nearby Pinehurst.

But small businesses aren't waiting until then to cash in on this area's explosive opportunities. Clinical research, telecommunications, biomedicine and software are perennial growth industries that make this one of the country's most active business communities.

Although venture capital investment has picked up, there's room for improvement, and local officials have taken the mountain to Mohammed by venturing into Boston and the Silicon Valley to woo investors. The state government has also gotten into the act by increasing pension investments in venture capital from $30 million to $100 million.

A number of employment initiatives, including the Durham Work Force Partnership and Marriott Pathways to Independence, may provide needed relief for the employee shortage in nonskilled jobs. And bonds have been approved to finance new schools and road improvements. But change will not happen overnight. Consequently, some economic developers are looking into the future and encouraging new businesses to locate in nearby communities - rather than directly in the Triangle - to alleviate congestion.

ROCKFORD

A peek into the Rockford files reveals a city best known for its manufacturing base - but increasingly focused on a wave of service-oriented businesses. Internet providers, temporary employment agencies and cleaning companies are just a few examples of service opportunities in Illinois' second-largest metropolitan area.

Even if nearby Chicago garners more attention, Rockford has become the kind of city that affords its small businesses wide distribution for their products, thanks in large part to the local UPS hub. (It doesn't hurt that Rockford is centrally located in the country.) Other advantages include a network of city support services that ranges from an acclaimed chapter of the Service Corps of Retired Executives (SCORE) to a progressive chamber of commerce that recently put together an amnesty program to educate local businesses on environmental regulations compliance. Additionally, entrepreneurs in Rockford have good access to financial assistance.