Ask most young entrepreneurs where they think they should base their companies in order to position themselves as the next unicorn or NASDAQ IPO, and you might expect a majority to respond with Los Angeles, Palo Alto or New York. But you probably wouldn't expect them to respond with Newport, Arkansas or American Fork, Utah--the birthplaces of industry titans Wal-Mart and Domo Technologies.
In a 2017 research study, many nationwide SME businesses reported that they found mid-size cities to offer most of the same benefits found in major metros. And in some instances, choosing a smaller city actually helped businesses maximize profitability across categories including cost and access, general business index, environment and quality of life.
1. Closing the Livability Gap
In the survey, respondents placed an extremely high value on overall quality of life. Talent you find in a major city are often chasing the latest opportunity, while groaning beneath the weight of crippling rents, high anxiety, and insanely long commutes. So, while the pool of workers may be smaller in a city of 200,000 than one of four million, the employees you find in the mid-size city will likely have a higher loyalty rate, reasonable rent or mortgage costs and a commute less than 15 minutes. These differences cultivate a happier employee base and greater productivity.
2. The Visibility Myth
In a big city, there's a much higher chance that your brand will be drowned out in the cacophony of competition. By contrast, take the Progressive Corporation, one of the most successful insurance companies in the world. The company started in Cleveland (current population: 386,000) and expanded throughout the 20th century, until deciding in the 1970s that even Cleveland was too big for their tastes. Progressive is now happily headquartered in the Cleveland suburb of Mayfield Village, where it has no trouble dominating the insurance conversation in northern Ohio, while still competing with big-city operators like MetLife.
3. Chasing Talent
There's a persistent notion that, if you want to attract young, hip workers, you'll need to set up shop in New York or L.A. Maybe that was true, once, but times have changed. Millennials are increasingly returning to smaller cities, where rents are lower and restaurant scenes are blooming. As Curbed notes, "demographic data suggests those [millennials] moving home are part of a boom in the country's second-tier cities." For example, in the years from 2010 to 2015, the millennial population in Colorado Springs (population 465,000) jumped ten percent.
4. Entertain Me
There's no question that big cities have more entertainment options than their mid-size counterparts--but the same drawback apply here as in other areas. A young New Yorker, making $40,000 a year and paying $1,500 a month in rent (while spending an hour and a half every day on the subway) doesn't have a lot of time or cash to spend on the latest Broadway revival--that is, if there are any tickets available. On the flip side, take a city like Amarillo, Texas, which has an opera, a ballet, and a symphony, as well as nightly music performed in clubs all over the city. Oh, and the average monthly rent for a one-bedroom in Amarillo is $2,000 cheaper than in New York City.
Mid-sized cities have more to offer than what meets the eye. Choosing a smaller city to start or expand your business may mean the difference between modest growth and a tremendous flourish. For more information about the benefits of growing your business in a mid-sized city, download the white paper, Medium-Sized Cities Outshine Large Ones in Business Relocation Study, here.