Location plays a bigger role in entrepreneurial success than you might think
Conventional wisdom holds that it doesn't matter where a business is located anymore, given the mobility of capital and the free flow of information, but two articles in this month's issue offer powerful evidence to the contrary. Take a look at " Growing Home," for example. Location has certainly made a huge difference to each of the great hometown businesses profiled by contributing editor Donna Fenn and senior writers D.M. Osborne and Susan Greco.
Then there is former venture capitalist David Bayless, who addresses the subject directly. In " Know Your Place," he asks, in effect, What are the qualities that make a particular city or region a good place for starting companies, and can you develop those qualities in your area if it doesn't have them to begin with?
Twenty-five years ago, it would have been impossible to answer Bayless's questions, assuming that anyone would even have bothered to ask them. Entrepreneurship as we know it didn't really exist back then. People who started companies had to make it up as they went along, finding their own solutions to virtually every challenge they confronted. There were few sources of information they could turn to and little understanding of the entrepreneurial process as such. Almost no one had bothered to study it.
Today, of course, there is an abundance of resources for would-be entrepreneurs in the form of books, magazines, tapes, Web sites, college courses, conferences, and so on. But the knowledge that people need most resides elsewhere, I believe -- in the formal and informal support networks that have sprung up all over the United States in the past 20 years.
I'm referring partly to groups of seasoned entrepreneurs who can serve as both angel investors and mentors to people starting out on their first venture. Equally important are the accountants, lawyers, bankers, venture capitalists, and other professionals who can provide the services young companies need.
Those social networks, as I call them, are crucial precisely because they allow people starting out on their first venture to acquire the knowledge they need in the most effective and efficient manner possible: one-on-one, face-to-face. There's growing evidence, moreover, that the entrepreneurial vitality of a region is directly related to the strength of its networks.
Louisville is a case in point. I was there recently for our annual Inc. 500 conference, and I couldn't help being struck by the way business leaders in the city had gone about building up its entrepreneurial-support networks. For example, one veteran entrepreneur talked about having to go to San Jose to get the legal and auditing expertise he needed to do certain kinds of strategic alliances. He made sure, however, that his Louisville lawyers and auditors came with him so that they'd learn how to do such deals in the future.
That type of thinking has no doubt played a role in Louisville's steady rise up the lists of the best places to start a business -- a fact that should offer hope to David Bayless and his compatriots in Bozeman, Mont. Yes, it is possible to foster the qualities that make a particular city or region an entrepreneurial hot spot -- and you can even do it in a location that just happens to be a great place to live.
Even Norm Brodsky gets to take a month off now and then. Street Smarts will return in September.