Terry Corbell, The Biz Coach
By Terry Corbell
Business Consultant

Where the Action is for U.S. Small Business Growth


Valuable insights for getting a competitive edge are contained in a financial-service firm’s report – it provides details on the U.S. markets experiencing rapid small-business growth.

With so many businesses having trouble getting capital and some Silicon Valley startups facing a Series A funding crunch, this is obviously a soft economy. So, it’s important to look for competitive edge.

My sense is that the study provides insights for entrepreneurial growth in different ways. That includes where to launch a startup, expand into new markets, or deciding where B2Bs might target small businesses.

The financial services firm, Biz2Credit.com, released its 2013 report on U.S. markets in four categories.

By category, here are the No. 1 ranked cities:

  1. Average Annual Revenue – Riverside-San Bernardino, CA ($508,538)
  2. Average Number of Employees – Houston (7.1)
  3. Youngest Average Age of Business (in Months) – Houston (34.0)
  4. Highest Average Credit Score – San Francisco-Oakland Bay Area (643)

File:Sb 2004 dt skyline 006a.jpg

San Bernardino, CA

“Houston has had sustained growth, thanks to an influx of immigrants who have started their own businesses” says Biz2Credit CEO, Rohit Arora.

“The city’s small businesses have created the highest average number of jobs (7.1) and are the youngest in age (34 months), meaning that these are new businesses that have started up only in the past three years,” he explains. “If local governments want to promote small businesses, they cannot handcuff entrepreneurs with fees and costs.”

Parameters of study

Biz2Credit analyzed data for 15,000 small businesses from 2011 to 2012. The firm defines small businesses as companies operating for more than a year and having fewer than 250 employees with less than $10 million in annual revenue.

“When we embarked upon this study, we expected cities such as New York City, Boston, and Philadelphia, which both have well deserved reputations for business innovation, to be atop the list,” says Mr. Arora.

“However, the costs of doing business are much greater in big cities along the east coast,” he adds. “In other sections of the country, the cost of living is much cheaper. Technology levels the playing field.”

For example, Mr. Arora says New York hampers growth potential for small business in multiple ways:

  • State and local tax burden
  • Government fees
  • Cost of living (property taxes have risen about 30 percent in past few years)
  • Prevalence of unions
  • High insurance costs make it unattractive for knowledge-based businesses, which don’t have to have a presence in the Big Apple to be successful.

“While sales in New York are higher than in other places, the operating costs are also higher. Thus, revenues are up, but profits are down,” says Mr. Arora. “These realities do not bode well for small business growth.”

Drivers of small business growth include the arrival of large numbers of Latinos and south Asian immigrants, who are starting companies in metropolitan areas in all sections of the country, including cities in southern California, Texas, and Florida.

Average annual revenue

The top-10 metro areas with the highest small-business loan-application growth by annual revenue: Riverside-San Bernardino, CA, New York City, Los Angeles, Boston, Houston, Washington, DC, Jacksonville, Detroit, Cincinnati, and Cleveland.

Average number of employees

Small businesses in Houston had the highest average number of employees. Mr. Arora astutely points out that this measurement is significant, as smaller companies have created the lion’s share of new jobs during the past decade.

“Houston was well ahead of the other cities in the average number of employees at small companies,” explains Mr. Arora.

The top-10 metro areas with the highest small-business loan-application growth by the number of employees: Houston, Miami-Fort Lauderdale, Los Angeles, Washington, DC, Phoenix, Charlotte, Philadelphia, Chicago, Atlanta, and Cincinnati.

Youngest average age of business (in months)

When sorted by age of business, Houston was again the leader.

“The small number of months in business indicates more startups in the area,” explains Mr. Arora. “Cities such as New York, Detroit, Los Angeles, Cincinnati, and Boston tend to have older, more established companies, which raise the average.”

The top-10 metro areas with the highest small-business loan-application growth by age of business: Houston, Tampa-St. Pete, Denver, Seattle, Dallas-Fort Worth, Orlando, Atlanta, Charlotte, St. Louis, and San Francisco-Oakland.

Highest average credit score

When sorted by average credit score, the San Francisco-Oakland Bay Area was No. 1.

“Small businesses in cities such as San Francisco, New York, Boston, and Los Angeles tended to have higher credit scores,” says Mr. Arora. “Many of these cities are tech hubs with small, nimble and profitable small businesses. They are also areas with a long history of innovation and success, and thus achieve higher credit scores.”

The top-10 metro areas with highest small-business loan-application growth by highest credit score: San Francisco-Oakland, New York City, Boston, Los Angeles, Seattle, Chicago, San Diego, Philadelphia, Baltimore, and Washington, DC.

Having arranged $800 million in funding throughout the U.S., Biz2Credit touts itself as the No. 1 online credit resource for small business loans, lines of credit, working capital and other funding options.

The company says it matches borrowers to financial institutions based on each company’s unique profile – completed in less than four minutes – in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers.

From the Coach’s Corner, related information:

“A bank is a place that will lend you money if you can prove that you don’t need it.”

-Bob Hope

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Author Terry Corbell has written innumerable online business-enhancement articles, and is also a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

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Seattle business consultant Terry Corbell provides high-performance management services and strategies.