Montana: The Good And Bad of Doing Business in Big Sky Country
Montana landed right in the middle of the pack in CNBC’s “America’s Top States for Business” at No. 24. Here’s why: Montana is both the best of states and the worst of states for doing business.
In 1996, I founded PrintingForLess.com in Livingston, Montana and since then have experienced the highs and lows of doing business in a rural state in the Northern Rockies.
First, here are some of the best things about doing business in Montana. The “last best place” is a truly great place to live. On any given weekend, you can find PFL employees enjoying the spectacular scenery and recreational opportunities in the great outdoors with friends and family.
People who live in Montana for the skiing, fishing, hiking, river floating and open spaces value a great workplace as an important part of their lifestyle.
They bring their high expectations and “work hard, play hard” ethic into the office, making PFL a great place to work. We especially love hiring people who grew up on a family ranch. Their work ethic is incredible.
The powerful allure of Big Sky Country makes recruiting talented people easier than you’d think. We attract a steady stream of qualified applicants from all over the U.S., many looking to escape the big-company rat race.
Our low cost of living, especially housing, means that wages are reasonable, allowing us to compete with high-cost urban areas. Montana has become one of the leaders in the “rural on-shoring” movement.
Businesses don’t have to pay or collect sales tax, and the state has a relatively light regulatory burden. Montana also offers inexpensive property for businesses looking to expand.
Now for the negative side of the ledger. Supply chains are long and sometimes rickety. At PFL, we use paper, lots of paper, but transportation costs drive up the price for this commodity. Service technicians for our machinery are a plane flight away. And the healthcare insurance market is essentially a duopoly because we are a small market, and can’t buy across state lines like we can with every other purchase. Limited competition means higher prices.
We are far from major markets. With a population of less than one million, Montana represents under 0.3 percent of GDP, and even less of consumer and business purchasing power, which is one of the reasons we became an e-commerce company serving small and medium-sized business (SMB) customers nationwide.
Airline travel is expensive, and we are at least two hops from anywhere, so seeing customers on the coasts is expensive in both time and money. We also can’t deliver to our customers with a local truck (but FedEx takes care of that for us nicely.)
While Montana doesn’t levy a sales tax, it has something even worse: a tax on job-creating capital equipment that is collected not just upon purchase, but every single year. Worse yet, it exempts politically connected industries, proving that crony capitalism is not just a Washington, D.C. phenomenon. Other taxes are also burdensome, including high corporate, personal, and capital gains rates.
Access to capital is very limited. A Bay Area venture capitalist once told me that he doesn’t look at deals that are more than a 45-minute drive from his Sand Hill Road office.
Montana VCs? Non-existent. Bankers, while friendly, are more comfortable lending to ranchers than to growth companies. And while commercial and industrial real estate is affordable, I had to personally guarantee a $1 million municipal bond in order to get sewer and water service extended to our manufacturing plant.
Finally, because of a 100-year-old grudge against the abuses of the Copper Barons, labor regulations are heavily tilted in favor of employees. Montana has the most restrictive “at will employment” regulations in the country, giving employees a “right” to their jobs, absent all but the most gross malfeasance. This limits flexibility and makes businesses view employees as liabilities rather than assets, depressing hiring.
To again paraphrase Dickens, “A man must take the fat with the lean.” That summarizes doing business in Montana, the 24th best — and 26th worst — state for business.
Field is the President and CEO of PrintingForLess.com. He founded the company in 1996. This is his third start-up company. Andrew was named Montana's Entrepreneur of the Year in 2004.
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