Letters

Readers respond to recent Inc. articles, including the "South Shall Ride Again," "What Do Teens Really Want?" and "The ABCs of Profit".

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Nothing grabs a reader's attention like news about his or her hometown. So it came as no surprise to us to receive numerous letters about our December feature " Best Cities to Start and Grow a Company in Now." Readers wrote in about everything from the downside of the cities we listed to the challenges of changing locations.

Lies, damn lies, and statistics?
Inc. used statistics from Cognetics Inc., an economic-research company, to create the lists published in December's "Best Cities to Start and Grow a Company in Now." One reader took issue with the rankings.

Tallahassee has had more companies on the Inc. 500 list the past two years than any other city in Florida except Miami, so we were surprised to learn in your December issue that as a good place to start a business, we had "plunged," from 13th place to 51st. Research by the Brandow Co., an economic-research company whose methodology we feel better captures current trends than the Cognetics model your magazine uses, indicates that Tallahassee's technology-company concentrations are "above average and pulling away" and that our three-year technology-start-up rate is 14% above the national average. Our surviving technology companies exhibit stronger-than-average growth in both employment and sales. Growth in key technology clusters was one of the reasons Forbes recently ranked Tallahassee 37th among 200 metro areas, both large and small, as a good place to do business.

Wayne Harris
Vice-president, technology
Economic Development Council of Tallahassee/Leon County
Tallahassee, Fla.

The editors respond: Comparing statistical models carries with it the danger of comparing apples with oranges. The Cognetics survey has the advantage of having consistently tracked the success rate of start-ups and young, growing companies -- all types of young companies, not just those in the technology sector -- since 1993. That gives it a strong basis for historical comparison.

Another reader reminded us that statistics don't always tell the whole story.

I noticed my own town, Huntington, W. Va., on your "best cities" list and was somewhat surprised. Since I have started businesses here, I know from experience that it's not a good place in which to do so.

For starters, West Virginia is notorious for its business-vicious tax base. Recently, I received a tax form from the state requiring me to pay taxes on all my business property -- which, it turned out, included my personal property. The state even wanted me to pay taxes on the books in my library at home!

Perhaps you did not consider that West Virginians pay more for their food than the citizens of many other states do, while they earn much less. The health of the general public is poor; that should concern an employer in regard to sick days and insurance premiums. There is also a severe shortage of housing. It seems that "suitable housing" for renters often does not include working toilets and drains. Business property is also overpriced and frequently in disrepair.

In short, if I had my druthers and the money, in 2001 I would go elsewhere.

Sal Norris
Editor
Fletcher Publishing
Huntington, W. Va.

This reader wrote in response to " The Location Advantage," by senior staff writer Emily Barker, which profiled several CEOs who had moved their companies, some for personal reasons and some for business reasons.

Your recent feature raised many important issues about location choice. I'm a site-selection consultant with more than a decade's experience working with companies on relocations, expansions, and consolidations.

The emphasis on personal versus business reasons for location choice is important. One reason people start companies is to gain more control over the choices in their lives. But the best personal choice may not be the best business choice. For example, a company founder may set up shop near the beach because that's where he or she wants to live. However, that location may not, in the long run, be the best choice for the company -- and moving could mean betting the business. The costs and risks of moving between cities increase as a company grows. Losing people and their intellectual capital are the critical risks, especially in small, fast-growing companies where few things may be written down.

Splitting the company also raises other issues. Many companies operate with geographically decentralized facilities. However, such an arrangement may pose hurdles for small, growing companies. After all, proximity and face-to-face communications are most important when issues are evolving and unusual rather than routine and when rapid, iterative feedback is critical.

Finally, put financial incentives like tax credits in their proper role. First, find places that make sense for operating the business, and then consider the financial incentives. Incentives rarely, if ever, make a bad choice good for the long term. It's understandable that entrepreneurial companies in search of capital might seize on funding incentives. But as a lot of recent dot-com busts are reminding us, funding isn't everything.

Jerry Szatan
Principal
Szatan Associates
Chicago

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