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Small towns, big potential

Entrepreneurs are discovering small college areas provide steady clientele and an abundance of eager, qualified workers.

Associated Press
Published December 13, 2005

NEW YORK - As a student at Davidson College in North Carolina, art lover Drew Crawford saw business potential in the small college town. The nearby suburbs of Charlotte, N.C., were growing, and the town saw a steady stream of students and their parents each year.

So Crawford developed a plan for a gallery featuring functional art such as hand-carved furniture, blown glass and pottery. Last year, he brought Wooden Stone to life right in Davidson.

"It's centrally located, there's a booming population, it was perfect," Crawford said. "Because of the college, we had this arts draw already."

Entrepreneurs looking for a growing, diverse consumer base and young, talented employees are finding that college towns - and frequently, their own undergraduate stomping grounds - fit the bill. College town populations are booming, operating a business is usually cheaper in a small town than in a big city and college towns boast cultural advantages and educated young workers.

Because knowing the lay of the land is a big advantage, many entrepreneurs turn toward their old alma maters.

Shannon Williams, a 1999 graduate of the University of Texas in Austin, got interested in real estate after she bought a small house in Austin on a $27,000-a-year teacher salary, fixed the place up and sold it nine months later for a $200,000 profit.

She decided to start TriBella Realty in Austin because she knew there were thousands of students and recent graduates like her in need of affordable housing. Her first clients were students whose parents wanted to buy investment properties, and now about 30 percent of her business consists of investment properties and student housing near campus.

"I really did think, maybe I should move to Dallas or Houston," said Williams, who has since expanded into other markets. "But I realized there was a market for people my age here."

Austin isn't a cheap town - it's the most expensive city in Texas, Williams said - but it has growth potential. It has grown from 465,000 people in 1990 to more than 650,000 in 2000, and is projected to reach 800,000 by 2010.

Young, open-minded consumers are another advantage to starting a business in a college town.

"There's more tolerance for out-of-the-box ideas," said Rich Karlgaard, publisher of Forbes and author of Life 2.0: How People Across America are Transforming Their Lives by Finding the Where of Their Happiness.

When Dan White created his reusable ink cartridge business, he thought it would be easier to sell the idea in a college climate. In November 2003, he started Rapid Refill Ink in Eugene, Ore., the town of about 138,000 people where the University of Oregon is based.

"Rapid Refill Ink was almost an instant acceptance by the community," said White, a 52-year-old father of six who in the 1980s started a small chain of video stores in the New York and New Jersey region and later entered the technology field.

When he decided to make the company a franchise, he targeted college campuses around the country.

"There is a better awareness of recycling, more of an acceptance of recycled products" in college communities, White said.

The customer base in college towns is also usually consistent. Many small businesses have thrived in State College, Pa., home of Penn State, because recessions aren't felt as much as in other parts of the country, said Fred Hurvitz, a former small-business owner who teaches marketing at Penn State's Smeal College of Business.

"Parents make sure the students have spending money," Hurvitz said.

Students and recent graduates aren't just reliable consumers - they're good employees, too - said Daniel Stiefel, who runs a business process outsourcing company called My-Analyst Team in Charlotte, N.C., near the University of North Carolina.

Originally from New York, Stiefel got placed in Charlotte when he worked for Bank of America and stayed put when he started his own company because of the quality of life and the pool of young employees.

"They're willing to roll up their sleeves, and they're not saying, "I need a huge salary and stock options,"' he said.

It's especially beneficial for companies that need good tech staffers.

"They want young, really technically astute people. The odds of finding them are greater in a college town," Karlgaard said.

It's hard to predict the next Silicon Valley (the back yard of Stanford University), but towns that have seen solid population growth in recent years include Madison, Wis., home of University of Wisconsin; Missoula and Bozeman, Mont., (University of Montana and Montana State University, respectively); Fayetteville, Ark., (University of Arkansas); and Fort Collins, Colo., (Colorado State University).

"I contend that these college and university towns, especially broad-based universities with engineering, science and math, are going to outgrow the general population," Karlgaard said. "They're growing for a reason - they are providing jobs, and really 21st century kinds of jobs."

Starting a business in a college town isn't foolproof, of course.

Hurvitz said one drawback is that business can be slow during holidays and summer months, when students have left campus.

Also, not all universities have good relationships with their surrounding communities, so "areas you want to look at are where town and gown get along with each other," Karlgaard said.

But for the most part, betting on educational hubs is smart in today's economy.

"The natural resource of the 21st century is brains," Karlgaard said.

[Last modified December 13, 2005, 01:30:24]

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