2015 Best Cities to Start a Business
Many thanks to Wallet Hub for including Boston College on its expert panel regarding the Best Cities to Start a Business. The interview link is here and I’ve separately pasted in the responses below. They distribute this content to national news outlets throughout the US, as well.
Ask the Experts
As current self-employment figures have shown, an increasing number of Americans aim to become more economically self-reliant by working for themselves. To assist them in that goal, WalletHub asked some of the foremost entrepreneurship experts what advice they would offer an aspiring entrepreneur. Click on the experts’ profiles to read their bios and responses to the following key questions:What tips would you offer an aspiring entrepreneur?
How important is the city an entrepreneur picks to start a new company?
Which are some of the biggest mistakes entrepreneurs make?
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?
What is the best source of funding for new companies?
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?
Gregory L. Stoller
Adjunct Lecturer of Operations Management at Boston College, Carroll School of Management
What tips would you offer an aspiring entrepreneur?
Begin planning your business as early as possible, even before you begin developing your products (or services), or actually selling them to customers. Areas to consider are: 1) Type of incorporation entity and any necessary, and associated, Partnership Agreements, and 2) What types of people you’ll be raising money from, as this might require separate registrations in individual states across the US.
You’ll also want to give some thought to what I consider the “Big 3” questions, through a carefully honed 3-minute Elevator Pitch: 1) How does the business make money, 2) What is its competitive advantage and 3) Why will your management team positively contribute toward its success?
How important is the city an entrepreneur picks to start a new company?
This will depend on the type of business you’ll be starting. If it’s retail focused, not only the city but also the street address / location will matter significantly, in terms of visibility or walk-in traffic. If you’re in the manufacturing or tech space, the city choice will be important in terms of partners, vendors and suppliers, whom you might need to be in close proximity. But, with the internet and mobile telephony being what it is today, the choice of city isn’t necessarily as crucial as it once was.
Which are some of the biggest mistakes entrepreneurs make?
The biggest mistake is engaging in what I call a “ready, fire, aim” strategy, either externally or internally.
Externally, I see lots of executives, 99% of whom have the best of intentions, going full throttle launching a company or product too soon without having first more carefully researched the market’s potential acceptance, pricing, competitive landscape or barriers to entry.
Internally, entrepreneurs need to ensure they’ve vetted the chemistry and capabilities of people on their management team, the amount of assistance investors can provide well beyond the monies they have access to, and ensuring an entrepreneur has a solid network of service providers (i.e., lawyers, accountants, insurance, landlords, etc.).
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?
There are 2 ways entrepreneurs can make their mark:
1) Changing existing behaviors such that customers will have disincentives to *stop* using their products once they’re adopted. Consider how reliant we’ve become on ATMs or auto bill pay. These are comparatively low-tech solutions but now that we’re used to them, people will likely avoid going back to the “old system” of in-person bank tellers or paper checks.
2) The second way an entrepreneur can be positively disruptive is by improving an existing process, but doing so without needing to re-invent the proverbial wheel. Satellite radio was one of the pioneers here in that it charges a modest subscription fee for something which used to be free (i.e., listening to the radio) but now gives consumers a huge of amount of additional choices through access to more channels. Leveraging the same resources across multiple channels, often with pre-recorded content, greatly reduces overall cost.
What is the best source of funding for new companies?
If a company has collateral it can lend against, then debt financing is preferable. While less expensive than equity, the cost is, in general, more predictable (especially with a long-term loan or fixed rate line-of-credit) and the lender is the ‘partner which goes away,’ once the indebtedness is repaid. Equity is, of course, more effective for new companies just starting out and although it will be more expensive financing, it will also likely include strategic counsel from the investors providing the funds.
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?
They can assist in two ways — 1) Provide tax breaks to new businesses as an incentive for entrepreneurs to set up shop in their particular city or state. 2) Help craft long-term legislation so it benefits local or US business sectors, in terms of allowing them to be competitive in the wake of potential off-shore, lower-cost entrants.
