It's a lesson that's all too easy to forget in a world driven by mobile devices, cloud computing and home offices. There are big benefits to setting up shop in the right spot—especially among lots of peers in the same field.
Just ask sports-gear makers in Ogden, Utah. Or health-care companies in Nashville. Or nanotechnology researchers in Albany, N.Y.
These cities, and others like them across the country, have become hubs for specific industries. Entrepreneurs are moving there and flourishing in the teeth of a bleak economy. The cities, in turn, are nurturing the entrepreneurs by giving them access to funding, mentors and facilities.
All in all, these clusters can be ideal spots for an entrepreneur in the field. Being there means getting access to a much wider range of suppliers, customers, employees and industry experts. What's more, industry peers are often willing to support each other as they get off the ground, sharing recommendations about staffers, potential sales leads and attractive office space, or giving each other guidance and insight about the industry.
Jeffrey Logsdon can attest to that. Five years ago, he moved his cybersecurity firm from Phoenix to San Antonio—a city that's seeing a surge in business for companies in the field. Company revenue doubled within three years of the move.
"I'd attribute a lot of our success to the location," he says. "I think the availability of cybersecurity talent and the low cost of doing business here has helped us. And because there are so many different cybersecurity companies, we have improved each other's business through partnerships."
As a hub grows, it brings other benefits to small firms. For one thing, even as businesses cooperate, they challenge each other to innovate—to come up with new ideas that make them stand out from the crowd. "Specialization in a region increases patents, business formation and higher wages," says Rich Bryden, director of information products at Harvard Business School, who's working with a team mapping industry hubs in the U.S.
When businesses come together, they also catch the eye of big players with deep pockets—especially beneficial when the economy is weak and financing is limited.
"It's easier to be on the radar for investors when you're part of a critical mass," says John Fernandez, assistant secretary of commerce for economic development at the U.S. Economic Development Administration.
Hubs also catch the eye of government, says Dan Carol, senior fellow at the New Policy Institute think tank in Washington, D.C. A concentration of small firms in the same field is more likely to be recognized on the municipal level, where funding programs and policies can be created to stimulate their growth.
Here's a look at seven up-and-coming innovative centers. All have solid partnerships between the public and private sectors, a growing work force to fuel the industry and long-term strategies for development. And entrepreneurs say being there is vital to their success.
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