Overhead Overrated: Small towns answer a lot of questions
Thursday, October 25, 2018
Entrepreneurs love the “how.”
That is our favorite question: How could we get that idea done? Asking “How?” injects energy into an entrepreneur’s brain like nitrous oxide into the engine of a street racer. Our answer to “When?” tends to be “Now.” The process of working out “What?” and “Who?” can be rewarding, but they sometimes drain our juices as much as they fill them. Nothing gets us out of bed every morning like “How?”
However, until recently, we forgot to ask, “Where?” For many startups, there were two options: 1) launch your company wherever you live right now with whatever resources you can scrape together or 2) move to Silicon Valley. With time, more and more CEOs looked to other urban areas to create hubs for entrepreneurship. Boston, New Orleans, Salt Lake City and St. Louis, among others, built reputations as great places for startups to find venture capital, even rivaling the innovation culture of San Francisco. And just like San Francisco, each new startup-centric city saw lease prices and other costs of doing business skyrocket. This turns the next wave of entrepreneurs away and into the open arms of the next more affordable city, then the next and the next. Eventually, every major city will have been, at one time or another, the new Silicon Valley.
At some point, we have to ask, “Why?” Why do we start these companies and chase these dreams? What are our goals, in the end?
For many, we want to build healthy companies with clients and employees who feel fulfilled. We want to make the world better with our solutions and innovations. We want financial liberation and the thrill of conquering an industry.
For others, the dream might be simpler. A happy family, a home with a lawn, good schools, some property in the country, time to vacation, maybe a boat -- these are the goals of many when they take the time to imagine themselves enjoying the fruits of their labors.
Good luck affording these luxuries when your million-dollar startup owes ten million to lenders and pays $7,000 per month in rent. Your salary may be comfortable as long as the investors do not pull the plug, but your $3,000 monthly rent for a one-bedroom apartment gives you 3,000 reasons why you will not be able to afford that home in the country for a while.
This is why I assert again and again that small towns are the next frontier for entrepreneurship. If an entrepreneur builds a scalable business, then it can scale as easily from a small town as from a city. Coders, designers, copywriters, order fulfillment services and salesmen can communicate from anywhere on the planet. Those with a physical product to sell benefit from small-town workforces that often have a rich heritage of manufacturing and know-how behind them. Here in the Midwest, our small towns also benefit businesses that save on distribution costs from our centralized location.
Plus, small towns provide obvious savings. That $7,000 per month space in the city would go for $1,000 here, and the CEO would pay $750 for her one-bedroom apartment four blocks away from her office. Her payroll would be lower, too. Our schools, our standards of living, our hospitality and our proximity to nature are all attractive to those who want their dreams now, while they can enjoy them.
An alarming number of new businesses fail very soon after opening. The money it takes to get started digs a hole too deep to overcome. In a small town, the climb is easy and fun.
Colby Williams founded Parengo Coffee in Sikeston, Missouri, with his parents in 2013. His new book, “Small Town Big Money,” which hits shelves Jan. 8, explores topics such as innovation in small towns, gratitude, failure, second chances, hard work and how to see things from a unique perspective.