The standouts on this year's list are the cities that know how to attract entrepreneurs.
Growing up as a "boat junkie" in his native Spokane, a city in far inland Washington state, Larry Weiber always dreamt of living and working on the coast. Today, he is not only living at coast, but he's building boats -- by the dozen -- along the scenic port of Bellingham.
"I decided I wanted to live her when I was 30," Weibel recalls. "It just took a couple of decades to get here."
A former headhunter and real-estate developer, Weibel came upon the idea of building virtually unsinkable aluminum boats six years ago. Raising $3 million in capital from friends, he has expanded his operation steadily from three people to more than 90, with another 30 scheduled to be added to the payrolls by the end of the year.
By traditional business logic, Bellingham may not seem the ideal place for a fast-growing manufacturing business like ACB, which produces aluminum boats for both military and civilian customers. The region of 160,000 is two hours from Seattle, which sometimes makes it difficult for Weibel to find enough skilled labor, particularly welders, for his growing operation.
Perhaps more daunting for a growing business, Weibel and other entrepreneurs fear the local business climate, which they say is increasingly anti-growth. Many recent retirees, who have moved up to the bucolic area, as well as some locals, fear that economic and population growth could threaten the area's cherished quality of life.
"It's a great place," Weibel explains from his office, which overlooks the cloud-shrouded harbor. "We have some great guys, but it's a place that you don't always feel welcomed. Still it's where I want to live."
The impact of such individual decisions -- and fast growth in smaller communities like Bellingham -- stands out as the biggest new trend emerging from Inc.'s annual Best Cities report. Perhaps nothing is more relevant to making economies grow today than the ability to attract entrepreneurs.
In the past, this was the role of cities -- until the late 20th Century, big cities like New York, Chicago, and later, Los Angeles, attracted entrepreneurs with their big ports, freeways, universities, and markets. By the 1970s, the fast-growth companies were heading to the urban periphery, to suburban rings around Boston, San Francisco, and other cities, creating the great tech boom that so transformed the nation's economic landscape.
Today, we are entering a new phase for growing places -- one driven by factors like affordability of housing, access to recreation, and the freedom of location made possible by the digital revolution. These are the factors that entrepreneurs like Larry Weibel most often cite as their reasons for locating and building their business.
This shift in the locale for fast growth parallels demographic trends which show more Americans moving to smaller cities and towns. As in Bellingham, the big attraction is usually tied to considerations of quality of life.
Fast-growth companies are only part of the equation, suggests Western Washington University economist Hart Hodges. Another big push comes from hundreds of smaller, service-oriented firms. Many of these firms are run by consultants and other entrepreneurs who have the skills and contacts to get work from the outside, but still reside where they want to live.