Steamboat Springs: How A Rural Town Built A Resilient Economy
Steamboat Springs: How A Rural Town Built A Resilient Economy
Ask residents of Steamboat Springs, Colorado, what makes the local economy tick, and you’ll likely get three answers: tourism, the coal mines and ranching. But longtime resident Scott Ford, an economist and former city council member, points to a less obvious, but fast-growing driver: microbusinesses.
“I can’t tell you if it’s as big as a breadbox or a boxcar, but I know the economic impact is big,” says Ford, who runs two microbusinesses himself: an economics consultancy and a site he created with a friend to promote their book on local fly fishing.
The latest data from GoDaddy’s Venture Forward, a multiyear study to quantify the economic impact of microbusinesses that use the web, can help fill in the blanks. According to Venture Forward, Steamboat Springs and surrounding Routt County have 3,400 of these entities. That works out to 13.2 microbusinesses per 100 residents, more than four times the national average of 3.1, making Routt County one of the highest in the country.
These everyday entrepreneurs run the gamut from ski enthusiasts trying to scrape together enough to stay in town to well-heeled professionals including oil-and-gas consultants, architects and software developers. Most are drawn to the striking beauty, world-class skiing, rafting and hiking opportunities in the Western Rockies. It doesn’t hurt that Steamboat is well-known as the top producer of winter Olympians in North America, with 98 athletes so far.
“There’s such great opportunity to have small businesses here,” says Frankie Azulay. She and her boyfriend, Anson Palmer, graduated from Steamboat-based Colorado Mountain College five years ago and were determined to remain in town. So in mid-2020, even as the pandemic was raging, they started the Burlap & Berry Coffee Company. They’re following in the footsteps of the Steamboat-loving founders of industrial contractor TIC and outdoor apparel makers Big Agnes and Smartwool.
Making the most of natural advantages to attract business entrepreneurs
The area’s natural advantages have attracted a highly educated, highly entrepreneurial population. Unlike tourist-driven destinations such as Vail and Breckenridge, Steamboat, which is located three hours and three mountain passes from Denver, tends to attract more people who call the ski town home.
John Bristol, the town’s director of economic development, notes that the percentage of residents with a bachelor’s degree is higher than in Boulder, Colorado, or Washington, D.C., where he used to work as a congressional aide.
“Everybody in economic development talks about the importance of talent,” Bristol says. “Well, we’ve got talent.”
But the city has done far more than rely on nature’s gifts. Unlike many resort areas, it’s been thoughtful about diversifying its economy and, most importantly, making it a great place to live rather than just visit. “I like to say that we’ve made the transition from a tourism-based economy to an amenity-based economy,” says Ford. “Just be a great place to live, and people will come.”
Finding the hidden economic growth engine
This transformation started in 2000, when employment in ranching and, in particular, coal mining, was shrinking. As he dove into the publicly available data, Ford was flummoxed by the strength of the economy. Sales taxes and other measures of economic activity were rising far faster than the number of local jobs should have been able to sustain. An “aha” moment came when he realized that his friend Peter Parsons ran a company that paid its employees from its headquarters in Boulder, but Parsons lived and spent his money in Steamboat. “He was a classic ‘location-neutral,’” before location-neutral was a term of art, says Ford.
Interestingly, Parsons had decided to move full-time to Steamboat just after the area was wired for high-speed broadband and ISPs had started providing service. “Before that, all we had was dial-up; one ringy-dingy, two ringy-dingy,” says Jane Blackstone, Bristol’s predecessor as economic development director. “It was really impossible to work from here.”
By 2006, ISPs such as Comcast delivered high-speed broadband to tap into the growing population. “That’s when we really started to see the growth in location-neutral and externally facing companies selling via the Internet,” Blackstone says. In 2012, after a Halloween outage brought the Internet to a halt for a day, local groups including the hospital, school system and the Chamber of Commerce created the nonprofit Northwest Colorado Broadband to bring more reliable fiber networks into town, says Blackstone, who handles communications for the group. NCB recently began reselling its capacity to commercial ISPs, which should further improve the quality and drive down prices.
But great broadband is already taken for granted around town. Burlap & Berry launched a website last November so that people could order online. Six months later, digital orders are 20% of the total, says Azulay, and her diligent work on the cafe’s Instagram and Facebook pages has helped establish them in the tight-knit rural community. “Steamboat hasn’t gone corporate yet,” she says. “If people want a burrito or a cup of coffee, they tend to go to a local place. But you need a digital presence so people feel connected.”
That digital presence proved valuable for many microbusiness owners during the pandemic. According to a Venture Forward survey, 60% said having a website helped them deal with the economic disruption caused by COVID-19. Overall, the number of microbusinesses like Burlap & Berry actually rose during the first three quarters of 2020. That’s good news for the overall economy. Venture Forward has found that every increase of one in the number of microbusinesses per 100 people reduces unemployment by .2% in counties with strong broadband adoption.
Areas with a higher concentration of microbusinesses have stronger economic resilience
A higher concentration of microbusinesses also makes local economies more resilient. When the “Great Recession” hit in 2008, Steamboat weathered the blow better than many other ski towns. And since then, the economy has been booming, despite continued shrinkage of energy and agriculture jobs. Sales taxes have risen 40% and real estate values have soared since then. Location-neutral jobs have risen to 1,400, or about 11% of total employment in the county. That figure could well be higher, because businesses are not required to register to do business in Routt County. “It’s an old West thing,” says Bristol. When TIC, Big Agnes and other local startups-made-good left, the impact was negligible. “The economy was so vibrant that the community didn’t even see them leave,” says Ford.
Steamboat’s remote workers and microbusiness owners also helped the community get through COVID-19. While the tourism industry, which is roughly 22% of the economy, was hit hard, sales taxes fell only 1.3% in 2020. “We all went through the same storm, but not all of us were in the same boat,” says Ford.
Planning for the future
To ensure the city doesn’t rest on its laurels, Bristol has won support for a 10-year vision to continue building the economy that focuses on a few pillars:
- Attracting and retaining location-neutral workers and businesses by continuing to improve the quality of life in the area. One example: To build new lodging, owners must pay a “trails tax” to help build hiking trails.
- Outdoor apparel – While Big Agnes and Smartwool, which was acquired in 2011, have grown up and moved to lower cost areas, a generation of startups such as Hala Gear, a paddleboard maker, and Grass Sticks, which manufactures bamboo ski poles, have set up shop in Steamboat. “We’ve got the best R&D lab anywhere,” says Bristol. “If you want to test out a new paddle, just go outside into the Yampa River and do it!”
- Value-added agriculture – Local food entrepreneurs are cropping up to sell products for the outdoorsy set, such as organic jerky from Sweetwood Cattle Company and energy bars by Honey Stinger. Bristol is also looking to get a jump on the so-called cottage food industry, which is growing as local governments pass laws allowing people to sell certain types of products from their own kitchens without having to satisfy all the regulations governing larger food companies.
- Creative industries – Bristol is a fan of urban theorist and author Richard Florida, who argues that no city can afford to ignore the increasing economic impact of the “creative class,” such as knowledge workers, scientists, architects, chefs and artists. “That applies to rural communities as well,” says Bristol, who wants to continue building up the vibrant arts scene, which includes the century-old Perry-Mansfield Performing Arts School and Camp.
Meanwhile, more work is being done to get a fuller understanding of the role these microbusinesses can have, and on how to support their creation and growth. Since 2016, Ford has been pulling together public data sources to create a detailed economic index so the local government can better compare itself with other mountain towns. And Bristol has commissioned a study to scrub data such as new school registrations and voter rolls to figure out if many of the entrepreneurs who rode out the pandemic in Steamboat plan to stay in the area.
Both Ford and Bristol plan to make use of Venture Forward data to help fill in the gaps in that understanding, and build on the city’s 20-year effort to keep them.
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