WalletHub Recognizes Business Friendly Cities
In an April 17th article by Richie Bernardo, Senior Writer for WalletHub, Superior is recognized as being the 16th best small city to start a business in. As Bernardo says, “bigger is not always better” when it comes to choosing where to start your small business.
WalletHub is a personal finance website launched in Washington D.C. in August of 2013. The website is known for producing reports and surveys on topic related to personal finance. It also offers free consumer tools such as the WalletLiteracy Quiz and its Financial Fitness Tool. As of today, the article has already been shared to Facebook over 4000 times.
The article makes the point that when it comes to starting a new business, size matters! Smaller cities offer fertile ground for small business owners, and chances of success are greater than in more competitive larger cities.
Before we delve into the methodology used by WalletHub to make their conclusions, we are happy to report that of the 1261 small-sized cities they surveyed, Superior ranks 16th in the rankings of where entrepreneurs are most likely to succeed. Duluth is also in the survey and came in at 1171.
What Do Smaller Cities Have Over Big Ones?
In a smaller city, an entrepreneur may have a great opportunity to meet and interact with potential customers, as well as government entities that may be of help in launching their business. Overhead costs related to rent and taxes may be lower in a smaller city. In the case of Superior vs. Duluth, sales taxes are already considerably lower and offer a fertile ground for up and coming retailers.
The sample included cities with populations between 25,000 and 100,000, with the term “city” referring to the city proper only, not the surrounding metro area. In other words, Duluth’s calculations do not include Hermantown, Superior’s do not include the surrounding communities in Douglas County.
One downside of a smaller town according to WalletHub is that the access to resources in cultivating a large professional network may be more limited. However, with our close proximity to Duluth, that may not be a detriment in Superior’s case.
This graphic from WalletHub shows the concentrations of smaller cities in America. By rolling your mouse over the dots, you can see city names and overall rankings.
How Superior Ranks Versus Top Ten and Duluth
The graphic below was taken directly from the WalletHub article. As you can see, Superior’s total score is 48.39 which puts our rank at #16 out of 1261 cities with populations between 25,000 and 100,000. You can see how bunched up the twelve cities immediately above us are. Just over a half of a point separates Superior from fourth place.
Superior Finishes Well
In the three “dimensions” or categories that WalletHub focused on, Superior came in at #32 for business environment, and in the top 25% for business costs. This can most likely be ascribed to our small town community where it is relatively easy to get to know people in the community who will be helpful to a new business owner, and to the moderate rental rates characteristic of Superior.
Duluth finished at #1171 out of 1261 in the survey with a total score of 33.38. The business environment of our neighbors across the bay was ranked #1103 and business costs came in at #1004. This is indicative of a very competitive business climate, higher rents, cost of living, and labor costs.
The only area Superior fell down in was access to resources (financing, staff and education), finishing at #953, which as I mentioned above is moderated by our close proximity to Duluth, which by comparison finished at #544. Simply put, if you can’t find financing in Superior, there are banks in Duluth to call upon. Also, Superior businesses can tap graduates of UMD, St. Scholastica, and LSC as easily as they can UWS and WITC.
Our Community Responds
ES reached out to Jim Caesar, Executive Director of the Superior/Douglas County Development Association (DA) for his input on the WalletHub article. The Development Association works with businesses and business owners to help them become established and grow in our community and surrounding area. They do this through partnerships with local business development centers like the: Small Business Development Center, US Small Business Administration, and the Northeast Entrepreneur Fund. A large part of their mission is to offer businesses access to local resources through partnerships, advocacy and networking.
I asked Mr. Caesar why doing business in Superior works and how his and other organizations can help bring new businesses to Superior? He responded by saying,
“When a new business comes in, our entire team meets with the business together. It’s almost like a swat team insofar as the group’s goal is to rapidly pool its expertise, resources and connections.
Being so closely connected on a regular basis allows us to take quick action when opportunity knocks or a need arises. We all come together and move quickly to get information and answers for the business.”
We also asked Jason Serck, Superior’s Planning, Economic Development and Port Director, what role the city plays in helping encourage and retain businesses in Superior. The City has been working to cultivate small businesses over the past decade plus, and Mr. Serck’s department is a part of that equation in cooperation with the Mayor’s office and the Common Council. He adds,
“We have the available land and incentives through our Tax Increment Districts, which makes us competitive. In turn, smaller more local companies tend to make decisions that are more rational than larger companies, where decisions are made elsewhere.
“We intend to continue to build on this #16 rating by striving to excel in tourism, housing or even brewing!” Superior is happy to be recognized as #16 in nation…and #1 in Wisconsin!”
Serck makes a valid point. Until he mentioned it, I had overlooked the fact that only two Wisconsin cities had cracked the top 100 cities in the WalletHub survey. Superior came in at #16 (48.39) and Fitchburg at #87 (44.92). Minnesota only placed one city in the top 10% with Inver Grove Heights coming in at #29 (47.1). (One Duluth did make the top 100 however…Duluth, Georgia at #67.☺)
Resources for Business Start-Ups in Superior
According to Caesar of the DA, members of his team are always on the lookout for new businesses to attract to our community. Once they get a lead on a business, they develop a plan to make opening a new business here a seamless and positive experience. In coming stories, ES will reach out to some of these businesses for their feedback as to how this helped them open up in Superior.
The Superior Business Improvement District (SBID) is another resource for business property owners within Superior. SBID comprises 89 blocks of Superior with over 300 businesses, and is the largest business improvement district in the state of Wisconsin. Lindsey Jacobson heads up the SBID.
The Douglas County Revolving Load Fund promotes economic growth county-wide, and has assisted fourteen businesses in the past 24 months. Another opportunity for new small businesses to get started is the Superior Business Center (SBC), a business incubator that services Superior and Douglas County.
The SBC acts as a resource center for small businesses, start-up and expansion of businesses, and provides temporary housing of businesses in transition, and meeting facility – conference room. Its location at 1423 No. 8th Street is designed for office, light to medium manufacturing, wholesale, trucking, and warehouse businesses, licensed shared-use commercial kitchen for use by caterers and food product entrepreneurs. Tenants of the SBC receive flexible, affordable space, low overhead expenses and opportunities to access entrepreneurial training.
The Methodology Behind WalletHub’s Survey
The WalleteHub survey used a data set of 16 key metrics ranging from average growth in number of small businesses to investor access to labor costs. Each metric was then graded on a 100 point scale, with 100 representing the best environment for launching a business.
Each city’s overall score was calculated based on its weighted average across all metrics of the survey, with the resulting scores being used to create the final ranking.
These are the three key dimensions measured by WalletHub:
Business Environment – Total Points: 50
- Average Length of Work Week (in Hours): Full Weight (~8.33 Points)
- Average Growth in Number of Small Businesses: Full Weight (~8.33 Points)
- Number of Startups per Capita: Full Weight (~8.33 Points)
- Average Revenue per Business: Full Weight (~8.33 Points)
- Average Growth of Business Revenues: Full Weight (~8.33 Points)
- Industry Variety: Full Weight (~8.33 Points)
Access to Resources – Total Points: 25
- Financing Accessibility: Full Weight (~4.17 Points), Note: This metric was calculated as follows: Total Annual Value of Small-Business Loans / Total Number of Small Businesses
- Investor Access: Full Weight (~4.17 Points)
- Human-Resource Availability: Full Weight (~4.17 Points), Note: This metric was calculated as follows: Number of Unemployed Residents – Number of Job Openings
- Higher-Education Assets: Full Weight (~4.17 Points), Note: This metric measures the average university rank (based on U.S. News & World Report’s Best Colleges Rankings) and number of students enrolled per 1,000 Residents.
- Workforce Educational Attainment: Full Weight (~4.17 Points), Note: This metric measures the percentage of the population with at least a bachelor’s degree.
- Working-Age Population Growth: Full Weight (~4.17 Points), Note: “Working-Age Population” includes those aged 16 to 64.
Business Costs – Total Points: 25
- Office-Space Affordability: Full Weight (~6.25 Points), Note: This metric measures the per-square-foot cost of commercial office space.
- Labor Costs: Full Weight (~6.25 Points), Note: This metric measures the median annual income.
- Corporate Taxes: Full* Weight (~6.25 Points), Note: Data for this metric were available only at the state level.
- Cost of Living: Full Weight (~6.25 Points)
Why Superior…Why Not?
See another article on ES about Superior where we compare the attributes of living, working and playing in Superior versus Duluth. Duluth was rated the Best Town in America by Outdoor Magazine in 2014. In this article, we compare ourselves to what Duluth has to offer using the topics included in the Outdoor Magazine article.