Chattanooga is lowest cost city for business startups

Sharyn (CQ) Moreland, director of the Chattanooga office of the Tennessee Small Business Development Center, participates in a staff meeting.

Chattanooga is the least- cost city in America to start a business, according to a study released Wednesday by the online personal finance website SmartAsset.

With relatively cheap office space, utilities and wages - combined with the least expensive gigabit-per-second Internet hookup connections in the country - Chattanooga boasts the lowest overall startup costs for businesses of any U.S. city. The estimated first-year costs of starting and running a business in Chattanooga are about half what it costs in Silicon Valley, where most of the century's best-known startups have been birthed.

"One of the first cities in the country to invest in fiber-optic Internet service, Chattanooga's ultra-fast Internet has become a major draw for businesses," Smart- Assset's Nick Wallace wrote in the report on startup business costs in different cities. "High-speed Internet is great, but for many startups it is far from top priority. A young business can deal with the occasional Internet outage, it can't weather exorbitant costs. In Gig City, however, it isn't an either-or."

SmartAsset's research found that Chattanooga has some of the most affordable office space in the country. A one-year lease on a 1,000- square-foot office in Gig City would cost less than $15,000 on average. Chattanooga also boasts the lowest payroll costs among any of the top 10 cities.

"Your dollar goes a lot further in a place like Chattanooga than in Silicon Valley or many other cities and that doesn't even take into effect that our quality of life with our mountains, rivers and outdoor attractions is one of the best of anywhere in America," said Nick Wilkinson, Chattanooga's deputy administrator for economic development. "We know the importance of keeping costs down to help the success of businesses so we're working to do even more to make Chattanooga more affordable and easier to start a business."

The city of Chattanooga has budgeted $100,000 for small business grants every year and Chattanooga is one of 11 U.S. cities that have committed to streamline their business licensing processes to allow entrepreneurs to find and complete applications to start a business in just one day.

The cheaper cost of doing business and Chattanooga's GigTank program helped lure Lucy Beard from San Diego to Chattanooga last year to develop her 3-D shoe printing business known as Feetz.

The company uses pictures of a person's feet to create 3-D printed shoes that are customized to exactly fit that person's feet. After a customer uses the app to upload photos of his feet and pick a design for his shoes, Feetz prints the pair and ships it within seven days.

Feetz got funding and counseling from GigTank and has developed in space at Hamilton County Business Development, Tennessee's largest business incubator where space rents for as little as $5 per square foot.

"Chattanooga's lower costs are helping to recruit a lot of startup businesses and I think you'll see that trend continue, especially as more venture funding becomes available here," said Sharyn Moreland, managing director of the Tennessee Small Business Development Center in Chattanooga. "Office space, in general, is very affordable in Chattanooga and you have tremendous support services and low-cost accounting, legal help and training available here that really lowers the cost of getting started in business."

The Smart Asset study found nine of the 10 cities with the lowest startup costs are in the South, primarily due to lower labor costs and commercial office space rents.

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.