Hot Zones

A look at the best cities in America for starting and growing a business. Plus: CEOs discuss their reasons for locating their business where they did.

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The best cities in America for starting and growing a business

In this Internet, wireless, telecommuting world, shouldn't you be able to start a company anywhere? Don't entrepreneurs found companies to take control of their lives -- which means being free to live and work anywhere they choose? In the end, does location really matter to a growing business? You bet it does. With a start-up or a growth company, success depends on the CEO's ability to marshal resources -- and a lot of key resources are available only if you're in the right place. Universities, a skilled workforce, good access to airports, inexpensive real estate, a local culture and infrastructure that support new businesses -- those all help form fertile ground for young companies. Are you a manufacturer? You have to be near reliable supplies and have access to good shipping systems. Starting a high-tech company? You'll need an area with high-speed Internet access and a stable electrical grid. How do you find the right place for your business? Start with our rankings of the best American cities, large and small, in which to start and grow a business.

Intense, compact, wiry, Peter Metcalf is a natural-born climber. He's one of those guys that look the part: a real mountain rock jock, right at home on the faces of cliffs so sheer, they would have most of us gibbering with vertigo. When he was just 17, Metcalf set a record as the youngest person ever to ascend the Kain Face of Mount Robson, the highest mountain in the Canadian Rockies. He's 44 now, and climbing is still his life. It's also his business. Metcalf is the CEO of Black Diamond Equipment Ltd., which makes gear for hard-core rock climbers and back-country skiers.

Metcalf started Black Diamond in 1989, leading a group that bought the assets of a bankrupt equipment company that he had worked for since 1982. That company was in Ventura, Calif., a beachside city halfway between Los Angeles and Santa Barbara -- not too close to any mountains. If Metcalf wanted to run out on his lunch hour and test some new climbing equipment, the closest he could get to the genuine article was the support structure of a highway overpass. Second choice was a 10-foot seawall at the beach. Real mountains were four hours away through killer traffic.

"If we were a company designing innovative surfboards, maybe being on the beach in Ventura would have made a lot of sense," says Metcalf. But he couldn't have cared less about surfboards. So eight years ago Metcalf moved his life and his company to Salt Lake City (the #2 large metro area for starting and growing a company -- see page below). Now Black Diamond's headquarters is nestled under a vista of Utah's Wasatch Mountains. Whenever Metcalf feels like checking out some new gear or taking a visiting manufacturer's rep for a climb, he can drive 20 minutes from the office to Little Cottonwood Canyon. Even closer is Mill Creek Canyon, where he sometimes spends his lunch hour on cross-country skis. Once in a while, he starts his day with the "Dawn Patrol," a bunch of his employees who like to "get up at 2 a.m., drink massive amounts of espresso, and ski one of the peaks near Black Diamond." There's plenty of time to get in a few runs and still be at work by 9, bleary-eyed and elated.

You can do those things in Utah. You can't do them in Ventura. The move was good for Metcalf and good for the business. Being located near the mountains puts Metcalf's company in touch with its customer base, facilitates product design and testing, and goes a long way toward aiding recruitment and retention. In Utah it's a lot easier to find employees who are passionate, knowledgeable climbers and skiers -- not the people you'd find living by the beach.

The mountains are crucial to Black Diamond's identity. You could even get a little spiritual about it and say that being close to the rocks has been good for the company's soul, not to mention its numbers. From 48 employees and $7 million in revenues in 1991, Black Diamond has grown to 250 employees and $30 million in revenues, says Metcalf. So when it comes to the question, Does location matter? for Metcalf and Black Diamond the answer is definitely yes.

But does location matter for every growing business? In this Internet-everywhere, global-community world, where you can do all kinds of business from anywhere on the planet, does location matter at all?

The answer is, it depends. Some companies really can operate anywhere the founder hangs his or her hat. But location is often more important than you might think, according to consultant David Birch, founder of Cognetics Inc., in Cambridge, Mass., and creator of the report from which our city rankings are drawn. Birch has been tracking fast-growth businesses for 17 years. He says that even if location doesn't matter when you first start a business, it probably will later. "Up to a point, you can choose to be anywhere you want to be, anywhere you'd like to live," he says. "But if you grow and develop a client base all over the country or the world, you start to pay a very heavy price for that choice. A start-up will never become a Fortune 500 company unless it can reach its customers and ship products efficiently. So there comes a time, from a business point of view, at which location cuts in and makes a big difference."

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