11/4/2009 - 12:00 AM

CNN Money's Ranking of Kingsport is Inaccurate

Scott Robertson

The Business Journal has always maintained that promoting the growth of business in the Tri-Cities is central to our mission. So it pains us to have to report that the most positive piece of news regarding the region’s economy in recent memory is, in fact, inaccurate.

In mid-October, CNNMoney.com posted a list entitled “Best Places to Launch.” The list ranked the growth rate of small businesses in the country’s MSAs based on the percentage increase in the number of businesses with fewer than 50 employees from 2004-2007 CNNMoney.com’s methodology used U.S. Census Bureau numbers to determine that growth rate.

To the surprise of virtually everyone who saw the list, Kingsport ranked No.1 with a growth rate of 43.7 percent. The news was met with a flurry of celebration locally, as economic developers began making plans to use the news as a tool with which to attract even more new small businesses. But questions arose almost immediately.

How could Kingsport grow so many new small businesses without a concurrent increase in population? Or traffic? Or economic growth? And where were these hundreds of new small businesses? It didn’t add up.

We at The Business Journal hypothesized that CNNMoney.com used the wrong batch of Census data. In late 2003, The Office of Management and Budgets, which is responsible for designating MSAs, changed Kingsport’s MSA to include not only Sullivan and Hawkins counties in Tennessee and Scott County in Virginia, but also Bristol, Virginia and, in fact, all of Washington County, Virginia. The 43.7 percent increase would make sense only if CNNMoney.com used numbers from before Washington County, Virginia’s inclusion in the MSA as its starting figure.

Before The Business Journal went to press, we discussed this with several other individuals who had the same hypothesis. The first to crunch the numbers and publish his findings regarding the flaw was Tim Siglin, the man who founded the Kingsport Office of Small Business Development & Entrepreneurship for the Kingsport Chamber of Commerce. Siglin published his findings on his blog, developedeconomy.com on November 3.

Unfortunately, those findings prove the CNNMoney.com numbers do not accurately reflect the growth of the local small business community. Says Siglin, who also posted that it pained him to publicize the error, “The math that CNN used took the correct final number (6,087) for all four counties and Bristol, VA, and subtracted the faulty baseline number (4,235) from the first three counties in the Kingsport MSA. This change in composition means that CNN Money derived inaccurate small business growth (6,087 – 4,235 = 1,852 new businesses) with an errant growth rate (43.7%) that made Kingsport the number-one growth area in the nation.

“In reality, in the mid-2003 Census Bureau data, Bristol, VA already had 647 small businesses and Washington County, VA already had 1,132 small businesses. The corrected MSA numbers would show that the Kingsport MSA gained 73 total small businesses for the 2004-2007 timeframe, a 1.21% growth rate.”

You may ask why The Business Journal is choosing to publicize this. First, our obligation to present accurate business information regarding the Tri-Cities demands we address it. Second, we have already been made aware that one local economic development entity plans to go ahead and use the CNNMoney.com numbers despite its awareness of the inaccuracy. We believe that such use would harm the region in the long run. It’s one thing for CNNMoney.com to have made an error. It would be another thing entirely for someone from the region to knowingly use the flawed material and then to be called on it by a competing community. At length, truth will out.

And it’s not just the communities we compete with for new jobs and economic investment that could hurt us with this. Do you think that Las Vegas, which would move into the top ten on the list with Kingsport’s removal, would think twice about outing Kingsport to do so? No, the time to talk about this is now, and the facts should come from inside the Kingsport MSA, not from outside rivals.

There is no shame in not being number one. The shame would be in using favorable numbers that we know to be inaccurate, in letting ambition trump integrity.

For us, the bottom line is this: Kingsport is a growing community. It is a great place to start a small business. And we at The Business Journal will continue to support Kingsport and every other community in the region as we all work toward the day when we can call ourselves, indisputably, Number One.