Let’s go on road trip!
Uh-oh! It’s time to go off the highway and suddenly we’re rolling through a typical town in the heartland. Hmmm. It looks like this place has seen better days. The commercial strip has quite a few small business storefront vacancies.
Nonetheless, we find a good local burger joint, have a great meal and hit that long ribbon of highway again.
(Four hours later.)
Time to refuel – both the car and our stomachs – so we again point ourselves to the off ramp.
Ah-ha! This town has it happening. The small businesses are hopping and people are out on the sidewalks enjoying themselves.
Do either of these towns sound like yours?
Fortunately for our country, it seems like more communities have active and healthy storefront (small business) economies, according to a new study by CAN Capital and PYMNTS.com. The companies looked at the growth of the businesses that typically make up the heart of a community’s commercial life blood.
The quarterly Can Capital Store Front Business Index (SBIF) slices and dices this growth data in three basic ways:
- By industry (eating establishments, professional and personal services, construction, remodeling and repair services, fitness clubs, and a wide variety of retailers),
- By payroll (wage growth and employment growth ), and
- By region (Northeast, South, Southwest, Pacific West, Mountain, and Midwest).
In 2014, the SBIF grew 3.8 percent and is expected to grow by 2.9 percent through the first half of 2015. Here’s how the regions fared in 2014:
- Pacific West, 5.2 percent growth.
- Mountain, 4.1 percent growth.
- Southwest, 4.1 percent growth.
- Northeast, 3.6 percent growth.
- South, 3.4 percent growth.
- Midwest, 3.0 percent growth.
If we break it down by industry, here are the 2014 rankings:
- Building contractors/remodelers, 7.3 percent growth.
- Fitness, 5.5 percent growth.
- Professional services, 5.0 percent growth.
- Service/repair, 4.5 percent growth.
- Personal services, 3.2 percent growth.
- Healthcare, 3.1 percent growth.
- Eating and drinking places, 2.8 percent growth.
- Retail, 1.6 percent growth.
It’s fascinating to me that the construction industry did so well. This could be due to the fact that construction took such a heavy blow after the mortgage industry collapse, so it was starting from a very low number. Further, having been down so long there may have been significant pent up demand.
As we saw with the fictional road trip that started this article, small business health can vary widely even in towns that are not too widely separated. When a major industry closes in a small or medium-sized town, the impact on small businesses can be huge.
This information is great for budding small business owners. It offers encouragement as well as guidance regarding the best small businesses to start and where to start them. However, I think the study must be missing some points. For example, Texas has had by far the most robust economy in the country over the last several years, yet its region (the South) ranks almost at the bottom of the list.
Here’s a recommendation for anyone considering a small business or startup in the near future: Take the information in this study and overlay it with lists that rank the most business-friendly states and towns. That should give you a very good idea where you need to locate for the best odds at small business success.