Bacon's Rebellion

Democracy Thrives in Sunlight

Hooville the Best Small City in Virginia to Start a Business?

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by

James A. Bacon
in

Source: WalletHub

From the data geeks at WalletHub comes a new list of the best small cities in the country to start a business based on 15 metrics encompassing business environment, access to resources, and business costs. Here are the Virginia cities listed:

best_small_cities

The Virginia results are, shall we say politely, counter-intuitive. Northern Virginia’s “small cities” (in reality suburban communities) fare poorly while depressed cities such as Petersburg and Danville score near the top. The methodology gives brownie points to cities with low business costs, which could in theory should be helpful to any small business but in reality mostly reflects a lack of demand for real estate, labor and other business inputs.

Another issue I have is the need to distinguish between types of small business. A new Subway franchise and a cyber-security start-up are both small businesses. But the employment of the former will top out at about 15 or so low-wage employees, while the latter has the potential to grow to an enterprise with hundreds of highly compensated employees. Which one would you rather have in your community?

I see this list as being useful mainly for stimulating a discussion about the kinds of things we should measure to identify the important drivers of entrepreneurialism and economic growth.

— JAB

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4 responses to “Hooville the Best Small City in Virginia to Start a Business?”

  1. LarrytheG Avatar
    LarrytheG

    re: ” A new Subway franchise and a cyber-security start-up are both small businesses. But the employment of the former will top out at about 15 or so low-wage employees, while the latter has the potential to grow to an enterprise with hundreds of highly compensated employees. Which one would you rather have in your community?”

    I think there’s another even more important distinction and that is the Subway is not adding net new jobs because there are not really net new customers – just a new restaurant to switch to and away from another existing restaurant.

    In other words – unless the area served is actually growing (or attracting outside customers) – more restaurants just are feeding off the same fixed pool of consumers and so Subway gets it’s business at the expense of other restaurants – perhaps a Burger King or a Mom/Pop nearby. In fact, the Subway will often end up hiring people who worked at the other nearby restaurants …..

    Quite often – when a new restaurant opens in an area – another one will give it up – and close. You can even see this at Interstate exits where a shiny new Burger King will sit across the street from a recently closed Mom/Pop or other brand.

    if you went to a town and kept track of all restaurant jobs – over a few years – it would likely not change much if the population did not change much -even though there will be new restaurants opening and others closing.

    no net new jobs.

    Also – it may not be a 300 job cyber security company.. it may well be a 13-job cyber security company … but it’s STILL net new jobs AND 13 NEW customers for the new subway that were not there last year!

    It’s not a zero sum game either for industry – it’s the demise of obsolete industry and the creation of new jobs for modern technology industry.

    it’s trading a manufacturing job – for a cyber security job.

    the key is – in a small town – if the local manufacturing plant closes – do it’s workers get re-trained to be qualified for cyber-security jobs?

    And are the kids in the local schools – getting educated to qualify for a manufacturing job or a cyber security job?

    If we don’t re-train existing workers – and also don’t educate k-12 kids for the jobs that are actually IN the economy – we lose out to the other places and other countries that DO do that and Subway will not save us and no cyber-security company wants to locate in a dying town with former workers now on welfare and whose kids are getting inferior educations…

  2. Cville Resident Avatar
    Cville Resident

    As I’ve posted before, I’m not a fan of Wallethub. But in the interest of discussion:

    At the Tom Tom Fest this weekend, I can say that you are 100% correct about the Great Inversion. The desires of 20 and 30 somethings is increasing to live in dense, walkable places.

    But I would also make an observation about “restaurant jobs”. Another thing that I’ve noticed is how much the 20 and 30 somethings are obsessed with food. Whether cooking or going out, they are much more food conscious than their Gen X and Boomer predecessors. So…take Subway out of the equation….but I do wonder how much the selection of restaurants plays in younger individuals’ choices of where to live, work, and start that “cyber security business.” It may be that the restaurant jobs (assuming that they’re a “hot” cuisine) help drive the decisions of those other young entrepreneurs. I’m not saying that it’s the most important factor. However, I do wonder just how much of a difference it would make to younger workers/entrepreneurs if a community had a Whole Foods/Trader Joes/authentic Afghan restaurant v. Applebee’s and Olive Garden. Just a hypothesis…..

  3. LarrytheG Avatar
    LarrytheG

    I don’t know about the Millennials and I’ll repeat that …

    but most of us cannot afford to eat out all the time or lets at least say – that eating out at places higher up than fast food – can get pricey.

    but perhaps the younger set is willing to go cheaper on cars and housing so they can eat out more and pay off their student loans!

    I simply don’t find it that wonderful to be eating at restaurants all the time – anyhow….

    but again – maybe I’m out of the loop for the younger set these days.

    Maybe restaurant food is getting as cheap as supermarket food!

    😉

  4. Blackbird Fly Avatar
    Blackbird Fly

    I suspect you mean Hooville, not Hookville…

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