Editor’s note: The research in the post was recently featured in an article by Richard Florida on Atlantic Cities that can be accessed here.
Many policymakers believe that low taxes and business-friendly regulations are the keys to attracting great entrepreneurs. It turns out that this is completely wrong.
Our team at Endeavor Insight recently surveyed and interviewed 150 of the fastest-growing entrepreneurs in the U.S. and asked them why they chose to start their companies in the specific cities where they did so. We found that entrepreneurs were most interested in three things: local quality of life, access to talented employees, and access to customers.
QUALITY OF LIFE
Close to half of the respondents in our study cited their current residence as a factor in deciding where to launch their company. The most common reasons they gave for selecting their current residence were connections to the local community and the quality of life in the area. The quotations below illustrate some of their responses.
ACCESS TO TALENTED EMPLOYEES
Over 30 percent of founders cited access to talent as a factor in their decision on where to launch their company, with many specifically mentioning technically skilled workers. This was the most frequently mentioned business-related resource among all the entrepreneurs we encountered.
ACCESS TO CUSTOMERS
Approximately one in five entrepreneurs cited access to clients and suppliers as a factor in deciding where to launch their company. This response was most common among entrepreneurs leading companies that sell to other businesses.
According to the founders of fast-growing companies, these three factors are critical for cities that want to cultivate the development of great entrepreneurs. However, many government officials are more concerned with creating low tax rates and business-friendly regulations. These policies do not seem to be important to the entrepreneurs in our study. Only 5 percent of the respondents mentioned tax rates and only 2 percent mentioned regulations.
The message from entrepreneurs is clear. The best formula for attracting and retaining the founders of fast-growing companies is a great place to live plus a talented pool of potential employees and excellent access to customers and suppliers.
For more information on the study and its methodology, please check out the report embedded below.
Contributed by Rhett Morris.