Where to go when you want to start a business in a remote location.
Are your tired of the rat race? Hankering for the pastoral? Ever consider tossing in your urban job and heading for some remote locale to start up your own company and lead a simpler life? Perhaps you have in mind a summer place you once lived in or a resort area you've visited. Or perhaps there's a place you've only dreamed about. Whatever. Maybe this column can help.
With modern telecommunications facilities, far-reaching parcel delivery services, an almost-completed interstate highway system, and a U.S. Post Office that is willing to expand its services if you demonstrate a need for them, the possibilities for growing a successful company in the boondocks are quite real. L. L. Bean, in Freeport, Maine, and Lands' End, in Dodgeville, Wis., are two examples that come to many people's minds. But they represent just one specific type of business (mail order) that flourishes in remote places. Think about all the magazines published within a few miles of Peterborough, N.H. (currently there are more than two dozen), or the numerous free-lance consultants who offer their services around the world. Or consider the countless merchants and innkeepers cashing in on a travel boom being fueled by mobile businesspeople and vacationers alike.
At Cognetics, we decided to hang some real numbers on the company-building activity of those who have "gotten away from it all" (or who were never near it all in the first place). To begin, we defined remoteness to mean not just rural, but to be any location at least 60 miles away from the nearest metropolitan area. It turns out there are 53 such areas in the United States, distributed across all regions of the country -- from Vermont to Georgia to Texas to northern California. And those places, from 1978 to 1987, gave birth to more than 281,000 businesses.
We know that starting a company is tough anywhere. Last month's column showed that even if you could pick any kind of enterprise to open, none would offer ease of entry and security and growth. Starting in a remote place is -- despite technology's capacity to shrink distances -- even tougher. You won't find all the support typically found in a larger metropolitan area; no diversity of accountants, bankers, travel agents, copy shops, computer repair services, and so forth.
Remote start-ups and success stories thus tend to be a little different from the mix found in metropolitan America. Generally, they fall into four groups, tending to be businesses that: 1) satisfy fundamental needs, 2) revolve around natural resources, 3) are needed because of an area's remoteness, or 4) would be practical no matter how remotely situated.
Everyone has to eat, get haircuts, and have cars fixed. People start businesses meet these needs in remote places as often as they do in metropolitan areas.
Many remote locations offer great natural resources -- farmland, mines, national forests, lakes, oceans -- and a particular set of businesses springs up in response: agricultural supply stores, tourist facilities, oil-drilling suppliers, boat builders.
Remoteness encourages certain kinds of businesses, such as trucking, telecommunications, air travel, and warehousing. More important, though, it also supports a set of businesses for which distance makes no difference -- mail order, for instance, or specialty manufacturing (Ben & Jerry's ice cream, wooden toys).
Figure 1 lists the 10 (out of a field of 158) most commonly started businesses in remote areas from 1982 to 1987. Virtually all of the top-tanked businesses fall into one or more of the four groups just described. Most fit the first category -- fundamental needs. But consulting (in miscellaneous business services) and mail order (in miscellaneous shopping goods) are right up there at the top. Slightly farther down on the list are tourist facilities, trucking, oil and gas field services, and computer and data-processing services -- each representing one or another of the general classes of businesses that often tend to crop up away from it all.
BUSINESSES MOST FREQUENTLY
STARTED IN REMOTE PLACES
Type of Survival Growth
Rank industry rank rank
1 Misc. business services 91 48
2 Eating & drinking places 123 78
3 Misc. shopping goods 119 129
4 Automotive repair shops 63 123
5 Misc. repair shops 52 108
6 Grocery stores 71 77
7 Misc. retail stores 87 116
8 Residential construction 104 100
9 Women's clothing stores 154 112
10 Retail furniture & furnishings 142 105
Many hinterland start-ups try to make it by meeting neighbors' basic needs. (Total field for rankings is 158 businesses.)
Of course, as we learned last month, frequency and ease of entry do no guarantee success. For each of the 158 types of businesses with 100 or more start-ups from 1978 to 1982, we computer their odds of survival and their odds of achieving significant growth. Figure 1 shows how the most frequent started businesses fare by these measures (on a scale of 1 to 158). It's not too encouraging.
So let's look at the survival rankings, instead. After all, you didn't head for the hills just to be like everyone else. You went there to relax a little more, and worry a little less about getting by. Unfortunately, as figure 2 demonstrates, the businesses most likely to survive are tough to get into, or may not be your natural first choice. Not everyone, for example, dreams of becoming a funeral director. And it isn't easy to become a veterinarian, lawyer, or dentist -- as their start-up frequency rankings suggest. Hotels and motels, on the other hand, look like a pretty good bet for getting started and staying alive -- but not for growing very much.
BUSINESSES MOST LIKELY TO
SURVIVE IN REMOTE PLACES
Type of Start-up Growth
Rank industry rank rank
1 Veterinary services 95 137
2 Legal services 103 100
3 Funeral services 105 126
4 Dentists' offices 153 143
5 Public warehousing 129 64
6 Cash grain crops 112 150
7 Fuel & ice retailers 136 97
8 Hotels & motels 11 72
9 Commercial savings banks 88 1
10 Bowling & billiards places 67 123
The lodgings business is among the easiest to enter and most likely to survive, but hotels and motels don't grow much.
If it is growth you're after, then make something. Figure 3 shows that 8 of the 10 fastest-growing kinds of businesses are in manufacturing. Manufacturing facilities are not all that easy to start, however -- they require relatively large amounts of capital. But several types survive quite well once they get going.
BUSINESSES MOST LIKELY TO GROW
SIGNIFICANTLY IN REMOTE PLACES
Type of Start-up Survival
Rank industry rank rank
1 Commercial savings banks 88 9
2 Misc. plastic products mfr. 94 127
3 Floor coverings mfr. 146 152
4 Metalworking machinery mfr. 111 11
5 Nursing & personal care facilities 85 14
6 Misc. fabricated metals mfr. 152 47
7 Motor vehicles & parts mfr. 134 146
8 Misc. wood products mfr. 124 43
9 Mill work & structural material mfr. 82 131
10 Ship & boat mfr. 157 148
Boondocks banking: commercial banks aren't started very often, but they usually survive -- and they almost always grow.
Now for the brass-ring question: are there any kinds of remotely based businesses that look good by all three measures? The answer, sadly, is not many. Only 3 rank in the top 50 for frequency of entry, survival, and growth. They are: manufacturing of miscellaneous machinery, electrical contracting, and petroleum wholesaling.
If none of these is your thing, you are going to have to choose among ease of entry, security, and growth.
Would you like some entrepreneurial companionship in your bucolic new home? The remote places that gave birth to the most new businesses between 1982 and 1987 are as diverse as rural Georgia and south central Wisconsin (see figure 4). If growth is your goal, then the state of Vermont -- at least statistically -- offers the best environment in which to grow a new business.
Remote places with Remote places where
highest start-up start-ups have greatest
frequency chance of growth
1 Rural Georgia 1 Vermont
2 Northwestern rural Ohio 2 North Georgia mountains
3 South central Wisconsin 3 Eastern Maryland
4 North central Texas 4 Rural Maine
5 Southern rural Missouri 5 Alaska
The most fertile start-up seedbed is in rural Georgia, but Vermont is where new businesses are most likely to grow.
It's safe to say, I think, that remoteness isn't nearly the disadvantage it was as recently as 10 or 15 years ago. It still makes company building tougher, but literally hundreds of thousands of people are starting successful businesses in out-of-the-way places. It can be done.