On February 2, 2014 Endeavor Insight published a report: “What do the Best Entrepreneurs Want In A City? Lessons from the Founder’s of America’s Fastest-Growing Companies.” Why should we as economic developers be concerned about what entrepreneurs want in a city? As the report eloquently states: “Research shows that a relatively small number of fast-growing firms have the ability to create a large number of new jobs. For example, between 1994-2006, the fastest-growing American companies represented less than 3% of all firms, but generated almost all U.S. employment and revenue growth.”
Although fast-growing companies only represent 3% of all firms, the growth they generate is unprecedented in the workplace. Taking notes? So are we. Endeavor Insight interviewed 150 founders of some of the fastest-growing companies in the US to determine what these entrepreneurs look for in the cities where they choose to locate their businesses.
They narrowed it down to four factors:
- Strong Quality of Life: “Entrepreneurs at fast-growing firms usually decide where to live based on personal connections and quality of life…” 80% of the entrepreneurs surveyed had lived in their city for nearly two years before founding their company. When starting a new company entrepreneurs tend to stay where they already live.
- Talent Pool Matters: According to the report, 31% of entrepreneurs cited access to talent as a major factor in their business location decision. The survey responses are telling: “Human capital is the most essential common ingredient of all start-ups…” A large portion of entrepreneurs would agree, especially those looking for talent with technical skills.
- Customer Base is Important: One in five entrepreneurs cited access to clients and suppliers as an important factor in their business location process. Other considerations for entrepreneurs were proximity to large population centers and access to markets. This was especially important to businesses that sell to other businesses.
- Low Taxes/ Business-Friendly Regulations not an Incentive: As surprising as it may sound, entrepreneurs do not base their next business location decision on business regulations. The report states: “… the lack of discussion of these factors indicates that marginal differences in these areas at the state or municipal level have little influence on great entrepreneurs decision-making processes.”
Not all of us live in thriving cities, but those in small towns still need to consider what entrepreneurs look for in potential business locations. Instead of discussing low taxes or business regulations, maybe your community should discuss it’s unique quality of life. Does your community highlight these factors? What things could your community do to become a more attractive business location?
Read the full report here.