The way some commentators put it, you’d think a web of regulations and taxes are driving an exodus of San Diego companies – or that San Diego is the best place in the nation to start a business.
But there’s much more to those conflicting narratives, and the urban legends surrounding the region’s business climate deserve some myth-busting.
Here’s a quick roundup of some myths I’ve debunked so far during a weeks-long quest to expose the realities of doing business here.
San Diego businesses are flocking to Texas in droves.
Headlines abound about San Diego companies packing up for Texas but the truth is, there just aren’t that many.
A massive database tracking California business moves revealed just 379 San Diego County companies moved to Texas from 1989 through 2011. That’s a pretty low figure when you consider San Diego houses tens of thousands of businesses.
Company moves to Riverside County and elsewhere within California were far more frequent. Businesses were almost four times more likely to move to Riverside County than the entire state of Texas during the 22-year period the database covers.
Business relocations matter.
Stephen Levy of the Center for Continuing Study of the California Economy put it most succinctly: “Relocation data is a pimple on the state of California economy.”
Consider this: San Diego actually gained a net 248 companies and 7,932 jobs due to business moves, figures that include relocations within California and out of state. That equates to just .5 percent of the county’s current labor force.
Levy and other experts say job creation numbers, including those tied to new businesses, are far more telling.
There is one relocation trend that deserves more attention. There’s been an uptick in the number of Californians and San Diegans departing the state. The volume of people moving dwarfs the number of jobs and businesses that are fleeing.
Business rankings reveal the state of our business climate.
A host of national publications rate the ease of doing business in San Diego, with some conflicting results.
There’s a reason for that: Such rankings purport to measure what it’s like to do business here – a concept that even San Diego business owners disagree on – and choose data sets that drive their conclusions.
The results say as much about their own priorities what they’re purporting to explain.
Startups and small businesses are the same thing.
Politicos and news outlets often refer to startups and small businesses as if they’re interchangeable.
Many small business owners start a company with the help of a bank loan or their own money and are immediately focused on sustainability. They hire a handful of employees and want to quickly be viable enough to pay their bills.
Startups tend to follow a different path. They start small but they’re bent on explosive growth. An entrepreneur has an idea she hopes will make a massive impact, seeks out multiple investors and potentially, millions of dollars in profits. The payoff may be years away. For most, it never comes.
Startups and small businesses need different things to thrive.
Governments have long catered their programs and incentives toward small companies. Some San Diego-based startup evangelists say they’d like to see the city do more to promote their success.
San Diego effectively bans startups.
San Diego has a rule on the books that bars folks from operating businesses with employees out of their homes, a code some tech startups consider a handicap. After all, some of the world’s most famous startups operated out of garages and dens before they experienced explosive success – or had the resources to move to a real office.
One San Diego startup veteran was so concerned when he learned about this law that he raised the issue with a City Council committee and described it as a ban on startups.
It turns out San Diego isn’t the only city that cracks down on home businesses, but it’s not clear any tech startups have actually gotten in trouble with the city. San Diego officials say the companies that get their attention here are those that rile up neighbors by dominating nearby parking options or bringing in deliveries around the clock. Tech startups tend to be much quieter.
This is part of our quest digging into the difficulties – real or perceived – of doing business in San Diego. Check out the previous story in our series, A Reader’s Guide to San Diego Business Incentives, and the next, Business Backers to San Diego: California’s Dragging You Down.