Why You Should Start A Company In... Bismarck

Move to North Dakota for your startup? Yes, really. Shake off any residual snobbery, friends, because the Roughrider State offers chasteningly attractive conditions for entrepreneurs. Julie Kuennen, executive director of the IDEA Center of North Dakota, shares five things you need to know about opening up shop there.

Remember American’s fat years, when unemployment rates dipped south of 5%? North Dakota never forgot them. The state’s current unemployment is 3.1%, lowest by a wide margin of any state in the union. (Nebraska is No. 2 at 4% as of February.) Bismarck ranks No. 1 and Fargo No. 6 among American metropolitan areas with the lowest unemployment rates. Oh, and they’ve sustained those rates throughout the entire Great Recession. 

North Dakota’s boom is fueled–-literally–-by the Bakken Shale Formation, a 14,000-square-mile oil formation sprawling across North Dakota, Montana, and Canada. Oil companies large and small are racing to tap the reserves using innovative drilling techniques and controversial hydraulic fracturing (aka "fracking"). With at least 4 billion barrels of recoverable oil that’s only 6% tapped, Bakken has been on oil-watchers’ radar for 40 years–-but only recently has it become both profitable and feasible to extract the oil. North Dakota’s crude oil output now exceeds that of Nigeria and Colombia, reducing our dependence on imported oil.

Combine that with its bustling agricultural and commodities market, one of the last bastions of smaller-scale American manufacturing, and a state government that’s actually running a surplus, and–-well, are you laughing at North Dakota now?

This modern-day gold rush has attracted oil companies large and small, including Hess, Brigham Continental Resources, and EOG Reserves. It’s also driven startup opportunities to service the influx of fortune-seekers–and, Dubai-like, turn this new Wild West into a confortable home for all kinds of businesses.

Here, Julie Kuennen, executive director of the IDEA Center of North Dakota, a local incubator for homegrown and newly arrived entrepreneurs, shares five things North Dakota offers aspiring businesses:

Opportunities are spilling out from the oil boom.

“Bakken is certainly important [to the economy], but families come here and need to find a whole range of job types and services,” Kuennen says. Kuennen cites the old adage about the original Gold Rush: that it wasn’t so much the gold prospectors who got rich as those who sold them their pickaxes and gear.

Oil activity in North Dakota has sparked a housing construction boom, land-leasing activity, and food trucks galore. Opportunities are cropping up in wildly unexpected spots, like air travel. Bakken Air offers an hourly air shuttle and charter flights between Bismarck, the state capitol, and Williston, the town that’s mushrooming thanks to Bakken. Can you manufacture weatherproof tents, refurbish Winnebagos, or build onsite temporary housing? Williston’s “man camps” could use steady supplies of all those things. (“Mancamps are basically ugly hotels” built to house workers temporarily,  Kuennen says. “This is real Wild West stuff.”)

Other startups address a broader range of customers, from Bakken oil-drillers to local manufacturers. Take Innovative Solutions, a technology firm that designs, prototypes, and produces solutions for agricultural, energy, and manufacturing clients. It also comes up with security systems like “The Grabber," a doo-hickey that helps police nab fleeing cars. Other security plays are more prosaic but equally necessary--and immediately useful in the oil fields and beyond. For instance, Pivotal Edge, an Innovative Solutions client, manufactures lids for bulk trucks that allows operators to remotely open them for filling--much safer for the truckers, who ordinarily climb onto the truck to pop the lid. Security and safety solutions for mining are another growth area.

Like-minded entrepreneurs will happily show you the ropes.

While some argue that North Dakota has cozied up to oil companies at the expense of the environment, there’s an upside to that business-friendly attitude: it’s, well, friendly. “We have successful businesses here volunteering their time to help other businesses get started, which isn’t usual,” Kuennen says. “[Mentors] know exactly how difficult it is to start a business, and they foster an innovative spirit in our town. There’s none of this fiefdom stuff.”

Her own organization, IDEA Center in Bismarck, offers startups tailored advice on resources available to their industry and lifecycle phase. (That introduction may include actual handshakes with mentors ready to give you a leg up.) The North Dakota Department of Commerce underwrites grants to lessen the startup costs for viable projects. Innovate ND is a state-wide competition offering incubator support. The Bank of North Dakota gets into the startup action, too. Its North Dakota Development Fund offers grants similar to a Small Business Administration funding, but it’s defiantly local–-you can march right into their offices for a face-to-face anytime with the people funding your project. It’s this handshake culture that fosters long-term loyalty and cuts red the tape, Kuennen says.

Live in Bismarck, and you can work anywhere.

The housing shortage in Williston can only be described as extreme. “There’s a better lifestyle in Bismarck, whereas Williston is a more temporary place, all about filling needs,” Kuennen says. “Families come to Bismarck, workers go to Williston.” Corporate housing has eased the difficulty of finding a new home for workers, and private construction is racing to erect more housing for the rest. Build a commute into your mental picture of North Dakota--luckily, it's a short one.

Ladies, take heed: It's still a boys' club.

The entrepreneurial ferment that makes North Dakota exciting nowadays also makes it tumultuous. Newcomers should come prepared for a daily paradox: a marvelously peaceful spot, full of wide-open natural spaces that are filling at a madcap pace with oil rigs, unsightly temporary housing, chain stores, and tawdry bars.

Ladies, in particular, should take note: Boomtowns are disproportionately clogged with men, and not the gentlemanly sort. Kuennen suggests watching the YouTube video, Boomtown Girls, for a taste of how five native-born sisters are harnessing the economic opportunities here–-and dodging the problems prosperity has wrought.

Everyone hibernates in the winter.

North Dakota is relentlessly frosty in the winter. Three years ago, it got down to minus-44 degrees, nearly breaking a more than 70-year-old record. North Dakotans treat the winter pragmatically: They travel less during the worst days, and telecommuting during storms is the norm rather than the exception."Yes, it's cold here in the winter," Kuennen says. "But once you buy your cold-weather gear and learn to dress appropriately, it'll be like nowhere else you've lived."

Follow the conversation on Twitter using the tag #USInnovation.

[Image: Flickr user gfpeck]

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