Sometimes there is a shred of truth to an urban legend, or at least the ring of plausibility. That’s what gives them the power to perpetuate.
And there’s one urban legend that courses through the local business community, and especially in the small business and start-up world: Richmond is one of the hardest places to start a business.
Perhaps you’ve heard another iteration: If you can make a business work in Richmond, it can work anywhere.
We’re trying to see what might be true, and what’s just an old wives’ tale. Of course, it might also be a way for entrepreneurs who have trouble to displace some of the blame, and it could be the sort of statement that entrepreneurs make in every city.
Scot McRoberts, who worked at the Greater Richmond Chamber of Commerce for nine years and who now runs the Virginia Council of CEOs, said he had never heard it.
“But the one thing I’ve heard over time is the lack of angel investing and venture capital,” he said. “But there is never enough money, and so you have to take that with a grain of salt.”
Indeed, Craig Forbes, who co-founded Alpha Omega Wealth Management
in May, said the local venture capital scene is tough for companies that need seed money, so perhaps that is where it comes from.
“I think Central Virginia has struggled from the old mentality, where the older, wealthier people put money in Philip Morris stock and real estate. To get them outside that, unless they are super-wealthy, well, they are just not comfortable with it.”
Terry Weisenberger, a professor of marketing at the University of Richmond’s Robins School of Business, said that starting a business in Richmond is like anywhere else.
“Cash flow, cash flow, cash flow,” Weisenberger said. “Whether it’s Richmond or anywhere else, a small business needs cash to run. And I haven’t heard that Richmond is any harder to start a business in than anywhere else. But it’s not surprising that a lot of small businesses fail, because that’s anywhere.”
Several large companies have tested ideas in Richmond and then taken them national. That may lend a shred of credibility to the second refrain, that an idea that works here will work anywhere.
Richmond is also one of the most popular test markets in the country. A June 2004 survey by research firm Acxiom Corp. ranked Richmond as the 10th best test market out of 150 cities. The results were based on how the population compared and contrasted to the U.S. population on age, martial status, home ownership and estimated income.
Some concepts that tested in Richmond turned out to be total flops, such as Frozen Coke and Miller Clear Beer.
Others have gone on to do incredibly well, such as CarMax . When Circuit City first revealed they would start selling used cars in 1993, it raised lots of eyebrows on Wall Street. Now the used-car store has outlived the company it was spawned from.
Perhaps the most successful product to ever be tested in Richmond was the beer can. In 1934, the American Can Company convinced Kreuger Brewing Company to let them test their beer in cans. They distributed free samples to 1,000 households in Richmond with a questionnaire. By 1935, canned beer was selling throughout the city.
If you’re an entrepreneur, we want to here from you for a more in-depth story on this matter. In particular, please contact us if you’ve started a business in Richmond and also outside Central Virginia. And perhaps we can get to the bottom of this once and for all.
Aaron Kremer is the BizSense editor. Please send story ideas to [email protected] Al Harris contributed to this story.
I have heard that the Richmond market, being relatively stable in terms of population turnover, can be hard on a business that does not start out well. Although willing to give a new business a chance, people in this market are more likely to stick with established preferences, especially if the initial experience with a new business is not a positive one. More fluid population centers, like northern Virginia or the Virginia Beach area, where new people are coming into the area more frequently can allow a business having a slow start a fresh, uncommitted market.
Actually opening a storefront or physical location can be difficult because of inspections and zoning. A lot of people start businesses without knowing about all the local fees and taxes.
Richmond has talent dying for an opportunity – with the exception of a very few personally awesome, well heeled risk takers (individuals and not vc firms), it is near impossible to get money for new, good ideas…I have successfully done it, but it was not easy… Also the talent to support those ideas is minimal – outside of the few true entrepreneurs and a core group of people with real startup experience – I am talking about real businesses attempts (game changers), not the local focused “consulting shops” That said, I am exited to see what happens in the wake… Read more »
I am the Founder and CEO of Romp n’ Roll. We started the company here in Richmond five years ago and have since taken the business national with 10 locations and more on the way. From the perspective of a small business, I now have a point of comparison between Richmond and other communities in which we’ve opened such as the suburbs of Philadephia, Washington DC, Charlotte, Denver, San Juan, and Lynchburg and I have to say that in my experience Richmond excels in many areas. Within the business community, we have a number of small local banks that are… Read more »
I think Richmond is a great place to start business or raise the family. I started from nothing. But since 1982 I have created at least 40 businesses of multi millions in size and all of them happened to be profitable. they are all over Richmond Metro and have done well regardless of the location whether it is Midlothian, hull street, Short Pump, Mechanicsville, Colonial Hts, Ashland, VCC, Chester, Downtown or Hopewell. when you start business in Richmond or elsewhere, first you must enjoy what you are doing, second never be discouraged by unexpected negative events but expect them to… Read more »
It’s an interesting question, so long as we all use it as a call to arms for Richmond. Whether our great city is tough for startups doesn’t really matter. The question we should all be in regards what we can do to make it world class. We started New Dominion Angels last year in part because of the vacuum in the city for small- scale angel capital and support. There is no shortage of creativity and smarts in Richmond and we’ve been so pleased with the brilliant entrepreneurs we’ve met. We’re long on Richmond and look forward to the day… Read more »