Utah has just been named Forbes' Best State for Business for the third consecutive year. What’s happening in the Beehive State to receive this singular honor? And, most importantly, how can other communities get these advantages, too?
As a resident of Utah and a participant in a powerful economic engine, I am pleased to share with you why our state is at the top of the pack and, even more importantly, why its foundational underpinnings can provide ideas and impetus that could allow your own community to achieve a similar level of business winning success.
For the record
Since 2006, Utah’s economy has expanded at an annual rate of 2.3 percent, versus 0.5 percent for the nation as a whole. “We have a very fertile environment for entrepreneurs and business,” says Gov. Gary Herbert.
Herbert cites three areas where Utah has a competitive advantage: taxes, labor force and a favorable regulatory climate.
1. Utah’s 5 percent flat corporate tax rate is one of the lowest in the country. The Tax Foundation, which released a study in February of 2012 that measures the tax burdens in each state across different industries, rated Utah sixth best for existing firms. (Utah also ranked No. 10 for new firms.)
2. Utah has a young, vibrant work force. The state’s median age of 29 is four years lower than Texas, the next youngest state. A third of the state’s work force is bilingual, according to the Economic Development Corporation of Utah. This is largely a result of the state’s large population of LDS, many of whom spend time as missionaries overseas. Utah’s language ability is an attractive benefit for companies in an increasingly global economy and has helped lure large U.S. companies with international operations such as eBay, Goldman Sachs, Oracle and Procter & Gamble. Goldman Sachs’ Salt Lake City office is its second biggest in the Americas, with more than 1,400 employees. Utah has doubled its international trade over the past five years, and this year it is up nearly 40 percent.
3. Utah ranks third for a positive regulatory climate in the Mercatus Center’s Freedom in the 50 States study — a new metric in the Best States study. “Utah is less likely to reward frivolous lawsuits or to hand out excessive judgments,” says Jason Sorens, who co-authored the report. “Utah’s health insurance regulations are generally light, resulting in less costly policies and more choice for people in the small group and individual markets.”
Last year, Herbert initiated a review of the state’s nearly 2,000 administrative rules. The state eliminated or modified 368 of them that he characterized as “a drag on the economy.”
Among the other pluses for Utah: energy costs that are 29 percent below the national average. It is also one of only seven states to maintain an AAA bond rating from the three rating agencies — something the U.S., as a nation, lost last year.
Lastly, Utah is proud of its Olympic-level ski resorts, its urban attractions and its acclaimed status as the safest state in the nation.
What else is Utah doing that has propelled it to the top of the leaderboard for new business? Without question, Utah prospers due to a unified purpose and effort across all contributing economic entities. Its community leaders, from education to government, work harmoniously together to solve problems and to maximize powerful growth opportunities.
For example, I attend on a regular basis a gathering of local leaders with one thought on their collective minds — job creation for the residents of northern Utah. It’s similar in nature to what’s happening in Salt Lake City and in towns across the state.
Gathered around the table on a monthly basis are the president of the Chamber of Commerce, the president of the university, the school district superintendents, county commissioners, the mayor, the president of the technology college, successful business leaders both large and small, bankers, entrepreneurs, a spokesman for the local military base, area economic development directors, and local angel investors and venture capitalists. A well-respected community business executive is the leader of the committee. He has seen the need to organize the group, and he has invited other key luminaries to join the organization. None are paid. It is a labor of love.
Topics include what each organization is doing to support, encourage and actively foment business (recruitment, existing and entrepreneurial) growth with conversations on how these various entities can work together to remove barriers, improve communications and achieve measurable results. Interestingly, the group is not connected to any legal or elected body. It gathers its power from among the participants to make decisions for the common good of the community. Following a thoughtful debate on any given topic and a vote, each member sustains the plan unanimously. Action follows.
It has become clear to this high-powered committee that to build a robust and thriving local economy it must talk to its customers first. To this end, the committee invites aspiring entrepreneurs and human resource managers from area firms from high-growth industries and companies to a meeting to learn what key resources they might need, including the type of workers they will be hiring in the future, how many they will need and what skills workers will need to possess.
Working from this point of understanding, educational institutions know what subjects should be taught and when. If start-up and growing companies need funding, financial institutions, including angels, bankers and venture capitalists, make note to consider how they might participate. The chamber president alerts his membership to rally support; elected leaders ponder tax incentives as economic directors consider infrastructure capabilities such as power requirements and property for new buildings.
All leaders work together in a seamless collaborative fashion to help each growing business obtain the correct resources at the right time.
What can we learn from this powerful approach to economic development? Communities that want to build viable and sustainable economies need the following:
2. Clear purpose
4. Cooperation, collaboration
6. Hard work
7. Listening and learning from customers
8. Resource capabilities, alignment and implementation3 comments on this story
9. Love of community
Would you like to learn more about how you can launch some of the efforts we have started in your own community or state? Please contact me for more information. I am pleased to share what we have learned. You can reach me at @AskAlanEHall or via www.AlanEHall.com. Thank you for reading.
Alan E. Hall is a co-founding managing director of Mercato Partners, a regionally focused growth capital investment firm. He founded Grow Utah Ventures, is the founder of MarketStar Corp. and is chairman of the Utah Technology Council.