Cities Where Small Businesses Thrive

Would-be small-business owners like to believe that they can open a business anywhere, especially if they have a worthwhile product/service to sell and the drive to sell it. …

Would-be small-business owners like to believe that they can open a business anywhere, especially if they have a worthwhile product/service to sell and the drive to sell it. The real truth, however, is that some places are better to open small businesses than others. Experts note that there are some cities with progressive governments that want to clear the path for more business activity. Three cities that are attracting more attention from entrepreneurs thanks to their work in creating more favorable business environments include Kansas City, Atlanta and Omaha. For more on this continue reading the following article from TheStreet.

A battle cry can now be heard in small cities and towns across the U.S. Banners have been hoisted in a crusade vital to American success: Keeping America’s businesses both small and large from leaving for bigger metropolitan areas, or even worse, heading for another country.

For some cities, not fighting is not an option. Between the soft economy, persistent unemployment and global competition, it’s a matter of life or death for their local economies. The cities are even joining ranks to fight side by side.

"There’s been this slow awakening in the country among cities and MSA’s (metropolitan statistical areas) in particular. Cities that really used to fight tenaciously [over] city borders are much more open to regionalism," says Thom Ruhe, vice president of entrepreneurship for the Kauffman Foundation.

Ruhe says this trend is a byproduct of global competitive realities. "Kansas City can’t look like they’re competing against Des Moines when they’re struggling to be economically relevant on a global stage," he says.

Cities all across the U.S. must figure out ways to attract and retain big Fortune 500 companies, but equally as important, nurture and support the growth of their entrepreneurial ecosystem.

When it comes to local government support as well as resources for growth, small businesses have historically been the under-served market. That’s changing in cities from Cleveland to Louisville, Ky., and it’s a movement being led by progressive city governments that are thinking outside the box when it comes to economic longevity, Ruhe says.

The cities we’ve picked represent the first group we plan to highlight over the coming months for making their case to attract and retain entrepreneurs. 

1. Kansas City

Officials in the greater Kansas City area, which encompasses the two cities with the same name separated by a state line, are on a mission to make the city synonymous with entrepreneurism. They seem to be well on their way.

Large companies that have made Kansas City their home include Sprint(S), H&R Block(HRB) and Hallmark. It also is home to the Ewing Marion Kauffman Foundation, with assets of $2 billion devoted to entrepreneurism and education. The foundation was established in 1966 by pharmaceutical entrepreneur Ewing Kauffman. Kauffman wanted the foundation to help young people get a quality education and recognize enterprise and individual talent as a way to spur the economy.

As a result of the Kaufman history, "We feel like we have a particularly strong claim to that and we have the assets to make that a reality," says Greater Kansas City Chamber of Commerce president and CEO Jim Heeter. "This is a city that is built on entrepreneurism."

Two years ago, the Chamber of Commerce reached out to the community to solicit ideas on how to better the city’s community and create economic growth and jobs. After 182 ideas were submitted, the Chamber of Commerce announced in September 2011 the "Big 5 Ideas." Making Greater Kansas City the number one region in which to start and grow a business was third on the Big 5 list.

To expand its entrepreneurial roots, the first phase of the Big 5 initiative was to bring awareness to the community of the overall initiative and to survey the community on what assets it already had and what was needed. This phase was completed in June and commemorated by a 10-day celebration of entrepreneurs.

"We wanted to make a thorough inventory [of what the] small entrepreneurial ecosystem of Kansas City looked like," Heeter says. "It’s even stronger than we thought. There are an extraordinary number of assets for small businesses and for those who would like to start a business."

The next phase will gather those resources into a one-stop online shop for business owners. Heeter expects the website to be completed in the next few months.

One of the most exciting initiatives to come to Kansas City is the rollout of Google Fiber.

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in late July, Google(GOOG) announced that it had chosen the Kansas City area to launch its broadband Internet service, making Kansas City the first area where Google’s ultra-high speed Internet service would be available.

"Already we’re seeing entrepreneurs and small businesses locate in Kansas City or express interest in coming to Kansas City simply to take advantage" of the high bandwidth, Heeter says. "Kansas City is the first to have it and it starts now."

Still for all the public outreach and promotional events to boost the cities’ entrepreneurism, Heeter says there are also some very telling reasons why Kansas City and other cities must support startups and small companies.

"Entrepreneurs and small businesses, without a doubt, are the leading creators of new jobs and economic growth in America and in every community. That is simply a fact. So if a community wants to choose success and economic growth and job creation it absolutely has to — it is critically important — to do everything possible to foster successful entrepreneurial businesses and assist the growth of its small businesses," Heeter says.

He also emphasizes the need for cities like Kansas City to start competing on a global scale.

"Entrepreneurism and the growth of small business is occurring all over the world. As a country, as a community like Kansas City, it is imperative we compete internationally and that means competing in establishing and growing entrepreneurial businesses, particularly in technology and bioscience," he adds.

Besides tech and bioscience, Kansas City is also cultivating small manufacturers in the area.

2. Atlanta

Entrepreneurs are attracted to various cities and metropolitan areas for different reasons and to attain various goals. With its low-cost of living, family-friendly city, as well as strong local, state and federal tax incentives, among other benefits, Atlanta considers itself to rank among the cities with a strong offering for entrepreneurs looking for long-term success (as opposed to a short-term "build it and sell it" mentality in Silicon Valley, for instance.

But that doesn’t mean that the industries it considers sweet spots are slow-moving. Between health, technology, entertainment, mobile payments and mobile technology, logistics and strong research and development facilities at its many universities, business in Hot ‘Lanta certainly isn’t cooling off or slowing down soon.

Invest Atlanta, the city’s re-launched economic development authority was established in January to strengthen Atlanta’s economy and global competitiveness by creating increased opportunity for Atlanta citizens. The research-based organization focuses on residential, business and investment growth in the city.

According to its website, initiatives include developing partnerships between public entities and private companies to accelerate job creation, neighborhood revitalization and entrepreneurship through bond financing, revolving loan funds, housing financing, tax increment financing and tax credits.

It also offers several business financing options for small businesses and entrepreneurs, including; a business improvement loan fund, the Phoenix Fund and the Opportunity Fund.

"So what we really want is not only for people in Atlanta to be encouraged to start a business, but we also want people across the country [to know] entrepreneurship doesn’t just happen in places like Silicon Valley and Boston and New York. We think Atlanta has got probably more than most cities," says Brian McGowan, president and CEO of Invest Atlanta.

Atlanta is "one of those cities that really has a surprising base and advantage for small businesses and entrepreneurs," McGowan adds. "It really is a city that was built on innovation and entrepreneurism — everything from Coca Cola(KO) to Delta(DAL) to CNN and Turner Broadcasting to Tyler Perry to Spanx."

McGowan, who joined the agency earlier this year, comes with an impressive resume. He was previously the U.S. deputy assistant Secretary of Commerce and chief operating officer for the U.S. Economic Development Administration, among other positions.

Next week, Invest Atlanta will announce its Start Up Atlanta initiative, a web-based platform that visually maps out resources such as incubators, accelerators and service providers, as well as connections to a support network for entrepreneurs to succeed in building a business in Atlanta.

"Our first priority is how do we make it easy for an entrepreneurship to come here… and see all the things available," says Eloisa Klementich, Invest Atlanta’s director of business development and head of the Startup Atlanta initiative.

"Atlanta has a long history of being very friendly to business. This is really putting a bow around a lot of programs and initiatives that are already exciting, but to really try to tell the world Atlanta is a place where entrepreneurs are welcome," McGowan says. "We felt very strongly this is a way to create Atlanta’s next chapter." 

3. Omaha

"Omaha probably is not as well-known as a lot of the other large to mid-sized cities out there," says David Brown, executive director of the Greater Omaha Chamber of Commerce. "We have this really interesting mix of businesses that work together that have a common vision to make this a great place for businesses."

For instance, it is unusual to have a Fortune 500 CEO commiserate with a small print shop, but that’s exactly what goes on in the Omaha business community, Brown says.

"We realize we can be really successful creating big business as long as we pay attention now to the environment for creating small business. Our big businesses are some of our biggest supporters of the small business community," he says.

Another strong benefit to Omaha is its strong economy — one that surely helped it withstand the recession. "Our economy continued to grow during the recession. [Unemployment] never got above 5%. Right now we’re sitting at 4%. We’ve seen continued growth during this down cycle," Brown says.

Brown emphasizes that part of the reason the area was shielded from the recession was its diverse economic base — insurance and financial services, engineering, construction, health care, military, food services and transportation, to name a few — industries that were able to offset each other. He specifically highlighted engineering, telecommunications and medical specialties as industries that particularly thrived in the area.

Three years ago, the chamber began an aggressive effort to increase the number of successful startups in Omaha. The chamber had a goal of creating 60 successful companies over a period of five years. With two years left, it has already met three-quarters of that goal.

"What we’re trying to find here are companies that have a fit for the kinds of suppliers that we need here to grow our existing businesses and tap into the existing labor market," Brown says.

Brown cites Mutual of Omaha as one company’s supporting small businesses through its effort to purchase technology solutions from local companies. (Mutual of Omaha did not return a request for comment before publication.)

Two notable area conferences to help that mission along include the Midwest Franchise Seminar, held in November, and the Big Omaha tech conference, held this past May.

Omaha’s efforts are working.

Paul Lee, a partner at Lightbank, a Chicago-based venture capital firm (its claim to fame is its founders were also the brains behind Groupon(GRPN)), was an attendee at this year’s Big Omaha conference.

Lightbank plans to announce its first investment in an Omaha-based company next week. The company, which looks for early-stage tech companies, typically invests in California, New York and Illinois, but has been increasing its efforts combing the Midwest for companies.

"We spent a lot of time combing the Midwest for companies but we have an underlying thesis that great companies are being formed everywhere (due to lowered costs of technology and distributed learning)," Lightbank partner Paul Lee writes in an email.

"From my interactions with Omaha startup folks, they’re smart, authentic, hustling entrepreneurs who would rather lose their house than their investors’ money. We love that ethos and are bullish on the region," he says.

This article was republished with permission from TheStreet.


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