When business leaders look into the economics and realities of starting or moving a business to a Midwestern state like Ohio, they often find that their preconceived notions are incorrect. With lower operating and payroll costs, combined with a wealth of talent and initiatives to support businesses, companies may want to look at the many reasons to set up shop in the state.
A webinar at the recent Inc. 5000 conference highlighted one CEO’s experience building a high-growth business in Cincinnati that was an Inc. 5000 company for three consecutive years. Heena Rathore, CEO of TrueChoicePack, co-founded her company in 2008. It specializes in design through delivery of packaging and disposable products technology. During the webinar, Rathore discussed how to build a business between the coasts with Jason Jolley, a professor of rural economic development at the George V. Voinovich School of Leadership and Public Affairs at Ohio University. Jolley also works with economic developers throughout the state, particularly in Appalachian, Ohio–a region in the southeastern portion of the state consisting of 32 counties, according to the Appalachian Regional Commission. Here are four takeaways from that conversation:
- Ohio has plentiful access to capital and talent
While Rathore lived in New York for many years and understands the value coastal markets bring, she appreciates that Ohio has easy access to capital and a strong talent pool. When it comes to capital, $1.2 Billion in venture capital investments were made by Q2 of 2021, with an increase of over 23% since 2019. And when it comes to talent, Midwestern universities produce a diverse group of international, national, and local students in a variety of fields, including engineering and high-tech fields. Ohio private and state schools enroll about 80,000 students. “We’re producing a lot of very talented graduates, many of whom want to stay in Ohio after college,” says Jolley. It also costs businesses less money to hire employees in Ohio. For example, “companies are able to pay software engineers about 40 percent less than in California,” he says.
- Economic development agencies offer support to companies
Ohio, its cities, and its business communities offer support to companies through business incubators, tax breaks for companies that create jobs or generate certain levels of capital investment, access to venture capital, as well as other resources. JobsOhio, the state’s economic development, and the Ohio Department of Development’s Third Frontier program, help innovative startups through programs that support businesses and communities. “With all these resources, starting and developing the company, in my experience, was much easier than developing and growing companies in New York or the other coast,” Rathore says.
- Site Selection magazine gives high marks to Ohio and its cities
In 2020, Site Selection magazine awarded Ohio the Governor’s Cup for having the most projects per capita nationwide. The state also ranked second in the country for having the greatest number of projects. Toledo, Ohio, tied for the top spot for Tier 2 metro area last year, and four “micropolitan” areas–urban centers with populations between 10,000 and 50,000–were in the top 10 for that category, with Findlay, Ohio, in the number one spot for attracting 22 new development projects. Ohio has no corporate income tax, and that helps attract companies and new projects to the state.
- Ohio offers culture, affordability, and a diverse economy
Especially compared to the coasts, “you’re combining a great low-cost place to live, work, and grow your business with affordable, but talented workers,” Jolley says. Cincinnati, where TrueChoicePack is located, also is the hub for Fortune 500 companies like Procter & Gamble and Kroger. With a diverse population, a family-oriented culture, and high-tech jobs, the city is attracting young and talented workers, says Rathore, and it’s a less challenging place to live than San Francisco or New York. “Our home prices in our three major metro areas–Columbus, Cleveland, and Cincinnati–are well below the price of competing metro areas such as Austin, Boston, and Chicago.”
With several large cities and smaller metro and rural areas, Ohio offers a diverse economy and a great distribution network. It’s easy to get goods to market, especially to the Midwest. The state is experiencing growth in sectors like warehousing and distribution, as well as in health care, high tech, and manufacturing. Combine that sector growth with a less-expensive cost of living, lower operational costs, and resources from economic development agencies to help attract and build businesses, Ohio has a lot to offer companies that are looking to lower business costs. “When I moved from New York to Ohio, a lot of people were are asking me questions like, ‘Why are you moving to Ohio from New York?’ But here we are, 15 years later, and we were able to really do very well in Ohio,” says Rathore.