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STRATEGY

Cities that Have Soared or Sunk as a Place to Start a Business
 

A look at the big and small cities that have shown the greatest rise or fall on Inc.'s list of the best cities in which to start a business, from 1993 to 2000.
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Big cities that blasted up the list

Since 1993 these large metro areas have shown the most improvement in their business climate.

City 1993-1994 rank 1999-2000 rank Change
Phoenix, AZ 26 1 +25
Dallas-Fort Worth, TX 29 6 +23
Memphis, TN-AR-MS 25 7 +18
Detroit, MI 46 32 +14
Kansas City, MO-KS 33 21 +12
Baltimore, MD 39 29 +10
Boston, MA 44 35 +9
San Antonio, TX 27 20 +7
Tampa-St. Petersburg, FL 34 27 +7
St. Louis, MO-IL 36 30 +6

Source: Cognetics Inc.

Phoenix
Rank in 1999-2000: 1
Change in rank since 1993-1994: +25
Big reason for rise: Rapid population growth

Phoenix is the country's second-fastest-growing large metro area, with a 34% increase in population from 1990 to 1999. Phoenix also enjoys an overall operating cost advantage of 7% to 13% over cities of comparable size, according to Rick Weddle, president and CEO of the Greater Phoenix Economic Council. And the region's high-tech roots are paying off. Large manufacturers have formed partnerships with local universities to create a more educated workforce, and refugees from companies like Intel have provided a ready source of employees for many start-ups, according to Tim Riester, president of Phoenix-based ad agency Riester-Robb. Plus, "you wake up every day, and it's beautiful," says Riester. --Mary Kwak


Big cities that plunged down the list

Since 1993 these large metro areas have shown the biggest decline in their business climate.

City 1993-1994 rank 1999-2000 rank Change
Greensboro-Winston-Salem, NC 12 40 -28
Seattle, WA 15 37 -22
Los Angeles, CA 17 34 -17
Portland, OR-Vancouver, WA 13 28 -15
Milwaukee-Racine-Sheboygan, WI 7 22 -15
Miami-Fort Lauderdale, FL 11 24 -13
Nashville, TN 5 16 -11
Cleveland-Akron, OH 30 39 -9
Bridgeport-Stamford-Norwalk, CT 37 44 -7
Rochester, NY 43 49 -6

Source: Cognetics Inc.

Greensboro-Winston-Salem
Rank in 1999-2000: 40
Change in rank since 1993-1994: -28
Big reason for drop: Being overshadowed by boomtowns Raleigh-Durham and Charlotte, N.C.

What North Carolina's triad area -- Greensboro, Winston-Salem, and High Point -- seems to be missing is critical mass. Yes, the Triad has universities, venture capitalists, incubators, entrepreneurial networking groups, and other small-business support organizations. It just doesn't have as much as the neighboring Raleigh-Durham-Chapel Hill nexus has. "There is a sense of a brain drain from the 25- to 39-year-old demographic: people graduate from school, spend a couple of years here, decide it's a lousy place to find a mate, and move to Charlotte and Raleigh," says Michael Dougherty, president of Kindermusik International, which teaches music and movement to children. --Emily Barker


Small cities that blasted up the list

Since 1993 these small metro areas have shown the most improvement in their business climate.

City 1993-1994 rank 1999-2000 rank Change
Portsmouth-Dover-Rochester, NH 99 31 +68
Corpus Christi, TX 123 60 +63
Fort Collins-Loveland-Greeley, CO 88 27 +61
Flint, MI 126 69 +57
Fargo-Moorhead, ND-MN 55 2 +53
Portland, ME 115 63 +52
Duluth, MN 121 71 +50
Brownsville-McAllen, TX 93 43 +50
Huntington, WV 111 67 +44
Waco, TX 128 85 +43

Source: Cognetics Inc.

Portsmouth-Dover-Rochester
Rank in 1999-2000: 31
Change in rank since 1993-1994: +68
Big reason for rise: Scenic, lower-cost alternative to Boston's high-tech corridor

As the Boston area fills up, companies are heading north to the "E-coast," where prime office space can cost $20 to $24 a square foot -- as much as 50% below the rates along Boston's famous Route 128 technology belt. But Portsmouth isn't just cheap; it's becoming cool. "If we located down in the Route 128 area, we'd pretty much be just another company somewhere off an exit," says Jack Serfass, cofounder of Bowstreet, an E-commerce software company. "We wanted competitive differentiation to attract the first 100 people, and Portsmouth proved to be a great area to do that." The outdoor lifestyle is a magnet for work-hard-play-hard new-economy employees. -- M.K.


Small cities that plunged down the list

Since 1993, these small metro areas have shown the biggest decline in their business climate.

City 1993-1994 rank 1999-2000 rank Change
Honolulu, HI 3 105 -102
Lancaster, PA 41 116 -75
Spokane, WA 23 95 -72
Salinas, CA 56 127 -51
Reading, PA 38 107 -69
Melbourne, FL 14 74 -60
Allentown, PA 80 125 -45
Hickory, NC 6 48 -42
Santa Barbara, CA 58 97 -39
Tallahassee, FL 13 51 -38

Source: Cognetics Inc.

Honolulu
Rank in 1999-2000: 105
Change in rank since 1993-1994: 102
Big reason for drop: Hawaii's economic doldrums

The Hawaiian economy wiped out in the recession of the early 1990s. Then the Asian crisis of 1997 slowed the flow of tourists. "Unlike the mainland, we're not in a boom," says Jim Richardson, associate professor of management at the University of Hawaii at Manoa. Entrepreneurs also face some indigenous challenges: high real estate, energy, and freight costs combined with a small market and labor pool. "If we were in California or Kansas, we could drive further down the road to find new customers. We can't do that here," says Bernie Boltz, founder of Intech Inc., which makes products from recycled paper. But Hawaii is looking to the high-tech sector to diversify its economic base. --E.B.

Click here for more on the Best Cities to Start and Grow a Company in Now.


Please e-mail your comments to editors@inc.com.

Last updated: Dec 1, 2000




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