1. Invest in a Promising Market
Oh, Utah — the Beehive State, the hub of the industrious Midwest, the up-and-coming “new Silicon Valley,” and the place to be if you want to kick start your business and make it last. Utah is currently a model state for where America would like to head economically and it seems like people are finally taking notice.
Every year various network organizations, publications, etc. come up with a number of categories through which to evaluate each of our 50 states to determine rankings for each state’s ability to successfully play host to entrepreneurs, business owners and operators and the like. Over the past few years, Utah has come out on top in many of these categories, even making claim to some first place titles. This is in part because of what Utah has been doing over the last decade or so to develop an opportunistic, prosperous and sustainable environment for businesses and the middle class through things like reasonable taxation laws and an innovative and hard-working general workforce, which are just some of the desirable characteristics that have drawn major companies to our developing economic haven.
CNBC took the initiative to report on business rankings based on a point system. There are 2,500 points possible where all 50 states gain points, according to Scott Cohn, “on more than 60 metrics across…10 categories.” Categories are weighted by “how frequently the states use them in their sales pitches to business.” Those categories are as follows: workforce, the cost of doing business, infrastructure, economy, quality of life, technology and innovation, education, business friendliness, cost of living and access to capital. Utah scored extremely well overall with 1,598 points, and was the first in CNBC’s 10 years of recording history to place “in the top half of each of [the] 10 categories of competitiveness.” Additionally, in this particular tallying, Utah’s highest placement was in the “economy,” category, where it took third place, arguably thanks to Governor Gary Herbert, who created 100,000 jobs in seven years by allowing the economy to sort things out independently without much political influence, but with the help of the positive foundations and resources of Utah’s economic climate.
Utah’s education systems, along with its generally hard-working populace, has also fed into the development of what has come to be known as the “Silicon Slopes” of Salt Lake City, named after the well-known Silicon Valley of California. Cohn reports on how there is a great technology sector here thanks to the STEM (science, technology, engineering and math) workers that have come out of well-acclaimed academic programs from schools like the University of Utah and BYU. These workers and their resources are posing as huge draws for developing, as well as established, modern-day businesses that are looking to continue to grow and innovate to stay competitive, and need the right workers and environment to prosper.
But those at CNBC aren’t the only ones who have recognized what Utah’s been up to. Forbes magazine, in November of last year, published a state profile on Utah and its compatibility with good businesses. In its report, the magazine explained how Utah businesses could benefit from the state’s low energy costs, which “are 19 percent below the national average and fourth lowest in the U.S., according to Moody’s Analytics.” Utah’s employment rates have also gone up approximately 3.1 percent each year for five years, which sets our lovely state at number two in the nation for relevant growth. Forbes’ writers also touched on the winter tourist attractions of Park City and ski resorts, as well as the religious homogeneity of the state, which can help to create common values and expectations state-wide to lead to steadier growth and more cooperation.
So, before you let everybody’s complaining about the smog and the “outdated culture” get to your head, remember that Utah is doing great things. And while the state is still improving, it really is a good place to be, especially if you’re looking to get involved in a progressive and prosperous business.
2. Better Options Out of State
You’re an up-and-comer. You’ve got a promising business idea and the gusto to get the word out there, but should you set up shop in Utah, or look for more fertile grounds? Although the University of Utah boasts one of the highest rates of student entrepreneurship, Utah itself might not be the best place to get your business started. It comes down to two things: a limited market and population.
Make no mistake, you get a lot of write-offs for starting up in Utah, and do enjoy some of the most lenient regulations in the States, but you also get a logistical anomaly. If what you intend to sell is physical or service-based, then Utah’s location will immediately become a problem. Simply put, when it comes to shipping your product out of the state you’ll have to ship it a long way to get to the more lucrative markets like California or the East Coast. In addition, your shipping options are limited. There’s basically ground freight and nothing else. This means slower shipping times and a higher price as you send things thousands of miles away. You can’t exactly charter a ship out of Utah, and the costs for air freight are too expensive for a startup unless you plan on handing down that cost to your customers.
But what if you don’t plan to branch out and instead keep it a local business? Not a bad idea per se, but Utah is one of the least populated states in the nation. When it comes to maintaining a bottom line and keeping out of the red, you want to avoid any hindrances that you can. Utah’s limited population and marketplace will quickly become a drawback. If it is true that Utah is one of the most entrepreneur-friendly states in the country, that only compounds the issue. As more big businesses move in to take advantage of the state’s lax laws and plentiful land, and as more startups crowd the market, it becomes that much easier for your business to get lost in a sea of noise or worse, driven out of the market altogether.
There’s also the ethical questions to consider. While Utah might be a ‘growing’ state there is a host of problems that come with that growth and one of them is overpopulation. Utah may be one of the least populated states in the US, but already there are signs that it’s becoming overpopulated for what it can sustain environmentally. The Great Salt Lake is shrinking, Salt Lake City has some of the worst air pollution in the country, and clean water availability has become a concern forcing lawmakers to think about ways to dam up the Bear River just to meet demand.
If your business would benefit from a large market, Utah isn’t necessarily set to give that to you. If your business contributes to the pollution problem, don’t expect to curry favor with the locals. If your business wants to expand, Utah presents an interesting logistical challenge for that growth. I mean, there are a few business models that won’t suffer from any of these problems. Software is a good example, where the upfront costs are low and the logistics simple. However, if your idea is retail or food or some type of service-based business then there are probably better places to look.