Suburbs Scene Of More Small Firm Start-ups

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"It's been a common notion that central cities serve as incubators for new, small companies," says David Birch, author of a new study on small business start-ups. "But the truth is that more and more small firms are starting up in suburban areas, not growing out into them."

Jobs created by small companies are "one of the best measures of what small businesses are doing," Birch says. His study, done for the Massachusetts Institute of Technology's Program on Neighborhood and Regional Change, found that from 1972 to 1976, companies with 20 or fewer employees accounted for 47.1% of the jobs created in central cities, but more small business start-ups are now taking place in the suburbs.

Proximity to a city's marketing and supplier resources is still important to suburban companies, Birch says, but they are finding more of the necessary business support systems right next door. "A small firm nowadays can find a small advertising agency or distributor in the same suburb where it operates," Birch comments.