The benefits of starting up in a small town
March 18, 2008 by ShannonCherry
Filed under Business
The Portland Business Journal just had a great article about why it can be beneficial to start your businesses in a smaller city, rather than a big one.
The advantages, according to the writer Wil Schroter, are numerous: from less competition to retaining good people and lower operation costs.
But I wonder how beneficial it really is. Sometimes isn’t it better to be among like-minded individuals in a bigger city, than the lone island in a smaller one.
Until recently, I felt I was alone in the Albany area – someone who did my work via the Internet. I longed to get out to California where people were already ‘getting it.’
It’s a little different now, but still, as far as I know, there are only maybe 4 people who live near me that have a virtual company.
What do you think? Is it better to be in a big city for a startup?
Why not try to get the best of both worlds and run your business out of a small city that is near a large city? For example, I’m originally from the Newark, NJ area but I am only at most an hour from New York City. In that scenario, I can get the best of both worlds to a certain extent.
I think it depends on the type of business.
If you’re manufacturing widgets, it doesn’t really matter where you are. But if you’re providing personal services, you need to consider your visibility in a smaller market.
A perfect example is our law firm. Most of our clients – and indeed our target market – hail from outside of the country, mostly western Europe. When we were searching for an office, we debated getting a space outside of the City in a smaller, more affordable town – less rent, less taxes. But you know what else? Less cachet, less recognition. As we tried to capture an international market – especially one that tends to tilt towards NYC and DC – Conshocken or Bala Cynwyd on the letterhead didn’t have the same result as Philadelphia. Being in the City of Philadelphia made some companies give us a second look – I feel confident that would not have happened in a smaller market.
I’ve been involved in two successful startups–one in the SF Bay Area, and the other in a small Midwest college town and I think both have their advantages and disadvantages.
With the larger city, you do have the benefit of having more resources available: talent, capital, the like-minded people–a feeling of community for your particular field, perhaps.
However, you also have to fight a lot harder to *keep* those talented people, get the capital, and the like-minded people can be very competitive.
In a smaller community, I found far more people were interested in helping and seeing us succeed without so much competition. Yes, it was harder to get good talent–but it was far easier to keep them once we did get them–and it was harder to get capital, but honestly, I think sometimes that is a blessing in disguise.
Of course, it really does depend on the nature of your business, but in the days of the virtual office, where you can have a mailing address and phone numbers in NYC, but have your actual employees in Podunk, SD and Middle-of-Nowhere, TN… I think where you are located is becoming less and less important for business that don’t need regular “face-time” with clients. And that’s a good thing…