Best regions for business: achieving business success today may depend on where you locate your business. (Entrepreneurship).

JUST WHERE IS THE BEST PLACE TO LOCATE YOUR company? These days that question may be a head-scratching proposition--especially with the number of states reeling from budget crises and slowly recovering from last year's recession. But geography is a worthy consideration if one of the following statements applies:

* Your business is incredibly successful and it's time to clone it across the country.

* The market you're in is as dry as the Dust Bowl from The Grapes of Wrath.

* You're sizing up sites to sprout your first venture.

One way you can make such a daunting choice is through the use of the research, first-hand accounts, and advice from the regional fronts you'll find in this article. We begin by pointing out the four regions of the country--Northeast, South, Midwest, and West--that have high numbers of fast-growing, black-owned businesses. Of course, regional information is only one piece of the puzzle: You have to choose a location that is suited to your type of business and determine how state, city, and community policies will affect it. As always, you'll need to do market research if you provide a product or service in a given locale, as opposed to owning a factory that ships parts all over the country. Still, starting off in a region that has proven fertile ground for fast-growing businesses could put your business one step ahead, depending on key factors for your particular enterprise.

How have we identified these areas? First, we pored through data compiled from the ING Gazelle Index (www.gazelleindex.com), a quarterly survey of the fastest-growing, black-owned businesses in the United States conducted by Dr. Thomas D. Boston, president of the Atlanta-based Boston Research Group Inc. (www.bostonresearch.com) and member of the SLACK ENTERPRISE Board of Economists. Next, we gained valuable insight from experts like Boston and Dr. Karen Y. Wilson-Starks, president and CEO of Transleadership Inc., based in Colorado Springs; information from resource organizations; and front-line intel from owners of successful businesses classified as "gazelles."

WHERE THE GAZELLES ARE

Boston Research Group Inc. (BRG) identified 1,497 African American-owned businesses with 10 to 100 employees (the average was 25) and employment that increased by at least 5% over the last five years. BRG surveys 350 of these "gazelles" at random each quarter and beaks the country into the following regions:

* The South Alabama: Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.

* The Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

* The West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

* The Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

The highest concentration of fast-growing black businesses is in the South, with 52.9%; followed by the Midwest, with 21.1%; the West, with 14.9%; and the Northeast, with 11.1% (see chart). In interviews with experts and entrepreneurs, we found that the characteristics of a certain region that appeal to entrepreneurs include a favorable climate for black business development, a viable support system for small enterprise, and the expense of doing business there--including labor costs and tax structure.

According to Boston, fast-growing African American entities flourish in areas with economic activity and growth and a strong history of expansion in African American businesses. The renowned economist asserts, "Studies I've done have demonstrated three factors that affect the growth of African American business: a large in-migration of black entrepreneurs, along with a large general population growth; income growth in the general population; and, most important, black political power." Boston says he found those elements in the places with the most vigorous growth of African American businesses--notably, the South and Midwest. "Atlanta, D.C., Richmond, Baltimore, Chicago, and Detroit have a strong and long history of black entrepreneurship," says Boston. "As blacks in those cities gained power, they created opportunities for others. The extent to which blacks can exercise power in a particular area [for example, having a mayor who can influence procurement] can create a more favorable economic environment.

"If a politician's political base is black," he adds, "the politician is more closely aligned with the African American community. Local city governments establish affirmative action for minority businesses, and that influences others in the private sector to do the same thing; it influences practices. It's bad business practice for a big corporation to have no commitment to affirmative action. The programs themselves are important because there is still discrimination, and we need government to make sure they are successful."

The experience of Donna Stevenson, CEO of Baltimore-based Early Morning Software Inc. (www.emslab.com), bears out Boston's assertion. She speaks highly of former Maryland governor, Parris N. Glendening, who set higher goals for the number of contracts that must include small and minority-owned businesses. "This governor recognized the value of small business in the economy," says Stevenson, who is originally from Maryland and whose partner worked there before the business site was chosen. "Maryland made sense. The state supports small and minority businesses with partnership opportunities for firms that team up to bid," says Stevenson. Her company has partnered with IBM and Titan Corp. to fulfill major state contracts. It will be interesting to see, however, the maintenance of Maryland's business climate under the administration of Republican Gov. Robert Erlich and Lt. Gov. Michael Steele, one of three African Americans in the nation to hold such a high-ranking post.

Missouri's late governor Mel Carnahan created a rare requirement that minorities must sign documents of the details of partnerships with majority firms, including copies of invoices. Brenda Newberry, president and CEO of St. Charles, Missouri-based The Newberry Group Inc., says that process reduces "fronting," in which large companies could win state contracts using affiliations with black businesses and then prevent the minority firm from fully participating or gaining payment for its labor. Newberry hasn't seen a similar government-vending program replicated in other states or on the federal level. Still, locales that foster partnerships between minority and majority firms can help bolster the economy. Boston points to success stories such as the use of black construction and architectural firms in the South and automotive suppliers in the Midwest.

Another reason for the growth of black businesses in the South and Midwest is the snowballing influence of corporate transplants. "About 50% of successful entrepreneurs were former managers and administrators in the corporate sector," maintains Boston.

TECHNOLOGY STILL DRIVES GROWTH

Boston's gazelles are also prevalent within certain industries in the growth regions. The most notable sector is business-to-business information technology services. That area is followed by engineering, architectural services, construction, and health services--mostly located in Georgia, Virginia, Maryland, and the District of Columbia.

Boston acknowledges that the ease of obtaining capital is one characteristic that's difficult to assess by region. After reviewing statewide initiatives to support businesses, Early Morning's Stevenson took an informal look at access to capital in her region. "I would say Maryland banks are a three on a one-to-five scale in terms of getting capital for small businesses in [the] technology [field]," says Stevenson. "I feel there are still inequities in access to capital by minority-owned and women-owned businesses of similar size."

Outfits in some cities, like Atlanta, have taken steps to close the capital gap. One such organization, GRASP Enterprises (www.graspnet.org), which is tied to the Greater Atlanta Small Business Project and made up of retired executives, helps small businesses to, among other things, find startup and expansion money.

DISPATCHES FROM THE OUTPOSTS

For years, Louis S. Culpepper has found growth for his $4 million firm in the South. He has expanded Atlanta-based Culpepper & Associates Security Services to satellites in New Orleans; Birmingham, Alabama; Tampa, Florida; and Jackson and Pascagoula, Mississippi. In general, Culpepper advises entrepreneurs to stick to states east of the Mississippi and south of Virginia because of lower taxes and other incentives. "In the South, it's easier than in metropolitan areas," he says. "Different business organizations help you develop your company."

But he counsels that all states in a given region don't have the same modus operandi. For example, Culpepper doesn't count Arkansas and Louisiana among high-opportunity states for African Americans. "Unless you were raised in Louisiana and developed personal relationships, it's very difficult doing business there," he says.

Now that his company has an established presence in the South, Culpepper has decided to go West--the next to slowest growth region of the four. In the second quarter of 2003, he will open a new branch in Las Vegas. Why? "Las Vegas has great growth opportunities," says Culpepper, "because the cost of living is economical. The state has a Southeast aura from an economical standpoint."

Joe Blackstone, president of Blackstone Consulting Inc. (www.blackstone-consulting.com), which provides janitorial services, food service, and security personnel has planted his entrepreneurial flag on the West Coast. Headquartered in Los Angeles, Blackstone finds the city's cultural diversity "a real positive," successfully leveraging the financial community and government agencies. "In my business, there is more opportunity on the West Coast because I do a lot of military contracting. One benefit of military contracts is that all the contractors automatically bid the same dollar amount, as set by the military, for labor and compete on other points."

Blackstone also serves the private sector in large cities within the region, including San Diego, San Francisco, and San Jose, California. His company has gained major contracts because of the diversity of industries, dealing with companies tied to the shipping technology, biomedical, and entertainment sectors. "Some [companies] are up during the down times and some are down during the up times," says Blackstone. "There's so much diversity in the economy in California that there's always the ability to market your services."

Blackstone advises entrepreneurs who choose a business location to figure the cost of living and the tax structure: The downside of operating in California is exorbitant taxes. Though much of Blackstone's workforce may be in other regions, he says, "The overall cost of living and doing business are higher than in other parts of the country, particularly the South. If I have a janitorial contract in California, the Worker's Compensation costs are four to five times higher in California than in other states."

He also concedes that there's a smaller African American business community in California than there is in the South. "There's also a greater diversity of industries and ethnicities on the West Coast," he says. "If I went to Atlanta, there are hundreds of black-owned businesses there--and a bigger community to support them. But for those making it on the West Coast, it's a vibrant community for participating in business." Because he's on the West Coast, Blackstone's much more likely to win contracts in the region--even though most are federal. "There's a comfort level for your customer that you're a one-hour flight away from any city in California."

Things are different for George W. Woods, who has had to be as tough as an iron bar to make it in the Northeast corridor. His Upper Darby, Pennsylvania-based USA Environmental Management Inc.--a $6 million environmental remediation' compliance, and industrial hygiene firm--is one of the few gazelle companies in that region. African Americans have had to battle what Woods calls "a lack of business credibility and racism"--a war he has successfully waged for decades. "How can you maximize the results of success in terms of dollar value and legacy? How can you continue your business legacy?" Woods asks. [By providing] "high-quality services to the community. The image has been projected of who we are: an honest, trustworthy firm. It's the intangibles--the silent message that speaks louder than words--that count. I hire people that buy into that."

James Jordan operates in the slowest region for African American business as well. Syracuse, New York-based Omega QSE Inc. has 99% of its construction, maintenance, and food services business in government and military contracts. His $10 million operation is not stymied by location and, as a result, Jordan hasn't felt the economic pinch.

WHAT TO DO WHEN YOU MAKE THAT MOVE

Before you choose a home for your business, Boston advises business owners to ask these critical questions:

* What is the extent of growth and economic activity in the area?

* Is it growing in your field of expertise?

* How hospitable is the region to African American entrepreneurs?

* Have black entrepreneurs successfully gotten access to financing and credit?

* Have they broken into business networks and connected with top-level decision makers?

Boston counsels entrepreneurs to contact business leaders and representatives from organizations like the National Minority Supplier Development Council Inc. (www.nmsdc.org) as well as community organizations that can give your company visibility. "Talk to established businesses in the area," says Boston. "They can tell you right off if one business organization is important to [join] so you can get the information. You have to get into the network or you will not be successful."

When moving to a new location, Wilson-Starks of Transleadership says business owners should reach out and begin the process of establishing relationships instead of going into a community "cold." She maintains that places like Atlanta offer a critical mass of black achievers that provide a baseline of credibility. "When people have gotten used to excellent work from that group, then it's up to you to establish your personal credibility and business credibility," she says.

"A place like Colorado Springs [also] possesses advantages," Wilson-Starks asserts of her company's western presence, citing visibility in a small city and the ability to gain referrals and access to multiple networks. In fact, the city's small airport affords her the opportunity to connect with local political and business leaders at a moment's notice. "In our case, we were interested in building more of a presence in Christian-based businesses through the Christian Management Association groups. It doesn't take long to be known in the local Christian community. In Atlanta, there is more competition in pursuing business opportunities."

Whether African Americans set up shop in cities densely populated with blacks like Atlanta and Chicago, or those absent of color like Bangor, Maine and Boise, Idaho, they must still be prepared to face myriad business and cultural challenges. "Given our heritage in this country, we have a legacy of creativity, surviving against odds, and forging new territory; finding alternate ways to do things," says Wilson-Starks. "This is how we've survived in the United States [and ifs] the very same things you need to thrive in business. Even some of the difficulties we've been through have given us the skills and abilities that can take us through hard times."

How's that for a geography lesson!

Top 10 Detail Industries for Gazelles

Computer and Data Processing Services   19.7%
Management and Public Relations          6.9%
Services to Buildings                    6.6%
Engineering & Architectural Services     6.6%
Trucking & Courier Services, Ex. Air     3.7%
Residential Building Construction        2.6%
Electrical Work                          2.6%
Personnel Supply Services                2.6%
Legal Services                           2.6%
Nonresidential Building Construction     2.0%

SOURCE ING GAZELLE INDEX

Gender of Gazelle Owner

Male     74%
Female   26%

Distribution of Gazelles
by Geographic Regions

West        14.9%
Midwest     21.1%
Northeast   11.1%
South       52.9%

SOURCE: ING GAZELLE INDEX

Note: Table made from pie charts.