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Oregon towns make WalletHub study list of best and worst cities to start a business

The location your startup can be as important to its success as the rest of the details such as product or service, web or brick-and-mortar, and personal timing.

In light of national small business week back in April, WalletHub revealed a study on 2018's best and worst small cities to start a business.

The study found Bend and Redmond, Oregon, have the highest number of startups per 100,000 residents — 273.40 — which is 9.3 times higher than in Salisbury, Maryland, the city with the lowest at 29.48.

PAMPLIN MEDIA GROUP: FILE PHOTO - Katie Tuma, originally from Prineville, started an organic cosmetic business in Bend with her friend Heather Nashelle. Tuma researched organic cosmetics while recovering from thyroid cancer treatment so she could wear cosmetics that were safe for her.Aloha was ranked No. 3 for highest average revenue per business, alongside Texas City, Port Arthur, Bayton and Deer Park, Texas.

Bend and Redmond were also found to be in the top three for least accessible financing — along with Nashua, New Hampshire — suggesting many businesses there are self-starters, rather than seeking investors.

Overall, Redmond was ranked No. 53 and Bend No. 110, out of 1,261 small cities.

The personal finance website identified the most business-friendly small markets in the nation, comparing 1,261 small cities across 18 key metrics with a data set ranging from average growth in number of small businesses, to investor access to labor costs.

The methodology examined cities with populations between 25,000 and 100,000 across three

factors: business environment, access to resources and business costs. There were 18 metrics in subcategories graded on a 100-point scale.

The study said cities with smaller populations can offer a greater chance of entrepreneurial success, depending on the founder's type of business and personal preference.

"Every small city offers unique advantages and disadvantages to new business owners," the study reads. "Some benefits include lower overhead costs, stronger relationships with customers and the potential to become a big fish in a little pond."

The top five overall best small cities to start a business are Holland, Michigan; St. George, Utah; Aberdeen, South Dakota; Wilson, North Carolina; and Cheyenne, Wyoming.

Nola Miyasaki, executive director for outreach and the entrepreneurship program in the Warrington College of Business at the University of Florida, served on the panel of experts for the study.

"Small communities are accessible in terms of other entrepreneurs and resources," Miyasaki said. "Conversely, those resources are not very deep or broad. Most importantly, small cities lack much in the way of an entrepreneurial ecosystem to support startups —there is a limited customer base, lack of investment capital options, and limited diversity and depth in mentors and experts. Typically, there are not enough lawyers who know how to work with startups, their issues and how to advise them for potential investment."

Cheyenne was ranked No. 1 for business environment, Holland No. 3 for access to resources, and Aberdeen 13 for business costs.

Cities with the most accessible financing include St. Cloud, Minnesota, and Pine Bluff, Arizona. Cities with the highest human resource availability include San Luis and Yuma, Arizona.

The most educated workforces can be found in Wellesley, Massachutsettes, and Bethesda, Maryland — Coachella, California, has the least.

Miyasaki said the key to the kinds of new businesses that can make it in a small city is finding a unique niche that reflects the nature of the community and its region — but that tech ventures usually struggle because of lack of growth funding and lack of access to a qualified labor force.

The cheapest office spaces are in Kentwood, Michigan, and Barberon, Ohio — the most expensive are in California in places like West Hollywood, Beverly Hills and Menlo Park.

The lowest labor costs are in Carbondale and East St. Louis, Illinois.

The longest work weeks are in Fort Hood, Texas; Jacksonville, North Carolina; and Twentynine Palms, California. The shortest work weeks are in East Lansing, Michigan and West Lafayette, Indiana.

The places with the highest average revenue per business are Texas City, Port Arthur, Bayton and Deer Park, Texas; and Aloha, Oregon.

"(Entrepreneurs should) take advantage of your surroundings, find creative ways to leverage local resources, engage in clever guerilla tactics, looks for ways to bootstrap the business, find mentors and experts to help," Miyasaki said. "Local authorities should consciously develop and support a local entrepreneurial ecosystem. They should realize that startups take the form of survival, lifestyle, managed growth and aggressive growth ventures, and each has distinct needs. The city should buy from small businesses and remove local regulatory and licensing obstacles."

Read the study here.

By Jules Rogers
Reporter, The Business Tribune
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