In 2022 Venture Forward, GoDaddy’s research initiative launched several new metrics available for download on our website. One of these, the Microbusiness Activity Index (MAI), assess how connected and active the community is in terms of online business activity. Using this metric, we’ve uncovered some important relationships between how robust an online microbusiness community is, and the economic outcomes in their respective communities.  

MAI is comprised of 3 sub-indices: engagement, participation and infrastructure.  

• Engagement provides a way to compare how much a community’s microbusinesses are functioning by looking at things like how built-out the online microbusiness is, how much traffic it generates, and what economic footprint it makes, among other characteristics
• Participation describes how concentrated microbusinesses and their everyday entrepreneurial owners are in the community.
• Infrastructure gives a look at how prepared the community is to support microbusinesses, in terms of the human capital and internet connectivity required.

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To learn more about the Microbusiness Activity Index and its component variables click here.

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In the summer we posted an article exploring some of the top gainers/decliners in terms of the MAI. 

We discussed how communities are using the measure to identify where they stand in understanding and growing the microbusiness presence in their areas. The MAI has proven to be a powerful tool in identifying opportunities to build on the progress many of these community leaders have already made. The index provides actionable insight for policymakers to determine how and where to allocate time and resources.

The first step in accomplishing this goal is to determine where a community stands relative to other similarly sized communities. Knowing the index and sub-index values for your community is important, but they aren’t nearly as meaningful as they are when compared to other communities that are similar in population size.  

The infrastructure sub-index is built using annual data, and as such does not vary month-to-month for each city. It’s important to have an annual snapshot of how connected a community is but it can only be evaluated once per year. However, the engagement and participation sub-indices do vary month-to-month and can give us a moving picture of how cities are faring with each quarterly update from Venture Forward.  

Below we identify the cities that are seeing the most improvement in engagement and participation sub-indices, the two sub-indices that directly describe the microbusinesses and their owners. For proper comparisons we split America’s cities into three groups by population: micropolitans under 50,000, mid-size metropolitan areas under 500,000, and the largest 100 metro areas with more than half-a-million people in them.

Micropolitans

This quarter brings with it some more geographic diversity in the top gainers list. Last quarter the top gainers were primarily located in the Midwest and the South, whereas we now have cities from everywhere except the Northeast, where MAI scores tend to be rather high to begin with (making gains a little bit harder).  The top five gainers in both categories from last quarter are not present this time around – suggesting a bump to those cities in the prior period that tapered off a bit this period. 

Dixon, Illinois is this quarter’s big gainer in terms of engagement. The city has invested a lot into the arts and entertainment sectors of their economy. There has also been an influx of infrastructure investments in the area, creating a very attractive place for new entrepreneurs to move. Being nearly an hour and a half away from Chicago, Dixon offers all of the amenities with a small-town feel. A recent federal grant award of more than $1.2 million in August 2022, is set to inject more resources into a growing and expanding economy, and we expect Dixon to be at the top of the MAI list for many quarters to come. A 21% boost to their engagement score is reflective of all the hard work Dixon has been doing over the past couple decades.  

Bennington, Vermont is quite a bit smaller than Dixon and managed some really impressive growth in terms of participation scores. This means their microbusiness community is exploding in terms of raw numbers, but their absence on the engagement list suggests that many of them are new and just starting. One lesson to be learned from Bennington potentially resides in their low interest business loan program which provides funding to small business owners looking to start or grow a business. Their loan program funds projects between $2,000 and $35,000, the exact range most microbusinesses cite as their start-up capital needs when we talk to them. They also offer a housing loan program through the town that provides funding to low- and moderate-income families. This could help free up resources for starting or growing a business. 

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Click here for more insights from our national survey of microbusiness owners.

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Mid-Sized Metropolitans 

This is the second quarter in a row the Blacksburg-Christiansburg, Virginia metro area has appeared on our top five gainers list. Montgomery County, Virginia is the heart of this metro area, and the Montgomery County Economic Development Agency describes themselves as “a progressive, technology-driven community with an abundance of lifestyle amenities.” The area is home to Virginia Tech, and many graduates of the school stay in the area and start new businesses. Areas with similar institutions should look to this region to learn how they’ve partnered to recreate their success story. 

On our participation list, all five cities are new. Pittsfield, Massachusetts stands out as a mid-sized metro where a massive influx of microbusinesses has been noted over the past three months – a roughly 40% growth in the number of microbusinesses and microbusiness owners. As with Bennington in the list of small-sized micropolitans, Pittsfield administers business loans and tax incentive programs that help free up capital for things like starting a business. It has also invested heavily in its downtown area and in creating a welcoming atmosphere for people to relocate and put down roots by starting something new. This includes strong investments in arts and entertainment in the area, similar to Dixon. 

What can be learned here? Investments in your communities can attract talented individuals and/or cause young people to stick around and put down roots. It must be an effort more involved than building bike paths and renovating parks, however. As Bennington and Pittsfield show us, we can see huge benefits of innovative micro-lending operations at the municipal level. 

Largest 100 Metropolitans 

Last quarter we highlighted Columbus, Ohio as a large metropolitan area that others could look to when devising new economic policy. This quarter, there isn’t one clear stand out among the crowd. Columbus continues to perform well, but the huge jump from last quarter did not translate into a second quarter of similar growth (in fact, they shrunk slightly in participation while seeing a modest 2.4% growth in engagement quarter over quarter).  

We noted last quarter that it is more difficult for large metro areas to move the needle, as their MAI scores are generally pretty high to begin with. This remains true this quarter as well. Notable, though, is that the cities topping the list this quarter are cities that have been experimenting with new economic development approaches separate and aside from the “smokestack chasing” of yester-year. While it’s still important to try to bring that next big manufacturing plant to town, policymakers and community leaders in this space are realizing they can boost their economies by making investments from the bottom up.  

Yet despite this, many of these areas do not have a municipal-level business investment strategies or have dated approaches in need of revamping. These cities could look to their smaller counterparts to help guide a new micro-lending business start-up program, or programming and workshops around developing skills that translate directly into new business start-ups.  

Concluding Remarks 

We continue to see evidence that there is not a one-size-fits-all approach to developing and sustaining a robust microbusiness community. The sheer fact that the cities growing in engagement are not the top cities in participation growth suggests a multi-prong effort is best. It’s important to encourage new businesses to get up and running, but it’s also important to support them once they’ve started.  

An interesting thread to tug on may be the efforts in the small micropolitans and mid-sized metropolitans where they appear to be a little more willing to experiment with economic development policy. Some in-depth case studies of these areas would be well worth looking into, if you’re considering a shift in your approach to attracting and supporting new small businesses.