Everyone loves Madison, Wisconsin, for its brats, beer and cheese, but the city’s business owners have found a lot more to love.
“The customer base here is fantastic,” says Tony Trapp, founder of Tony Trapp Remodeling and Repairs.
Trapp originally moved to Madison to attend the University of Wisconsin, and like many Badger alumni, he hasn’t left. He loves the city, the people and the cross-country skiing in the winter. Plus, his home remodeling business has been successful: When he started in 2002, it was just him and his Toyota Corolla. Now, he has two commercial vans and four employees on payroll.
When it comes to starting a business, location is key. A business’s location determines its customer base, informs its marketing and branding strategy and even affects its financials. For longtime residents and transplants alike, it’s important to understand a city from a business perspective before starting a new venture there. NerdWallet talked to Madison business owners and business experts about what to know beforehand.
Overview of Madison
Madison is Wisconsin’s capital and the state’s second-largest city, after Milwaukee. The community is defined by two lakes — Lake Mendota and Lake Monona — that provide scenic views and trails for walking, running and biking. The State Capitol building is centered between the lakes and is accessible from the University of Wisconsin campus via State Street, a pedestrian stretch lined with locally owned restaurants, boutiques and bars.
The state government and UW’s flagship campus are mainstays that keep visitors coming, no matter how the economy is doing. They make the city “recession-proof,” says Michelle Somes-Booher, a consultant at the University of Wisconsin Small Business Development Center.
Benefits of owning a business in Madison
Big-city perks, small-town feel. Madison has the amenities of a major city — a large research university, a rich arts and cultural scene and several hospitals — but it feels like a cozy community. Bike lanes and trails crisscross the city, cutting down on traffic and creating an active community in the warmer months. Madison residents and business owners also benefit from a relatively lower cost of living compared with the coasts.
A local focus. People in Madison value local products and services, especially when it comes to what the city does best: food.
“Madison has an appreciation for craft products — craft beer, craft cheese, artisan foods,” Somes-Booher says.
Every Saturday from April through November, residents and visitors flock to the Dane County Farmers’ Market in the heart of downtown. More than 160 local vendors fill the streets around the Capitol selling fresh produce, meat, cheese and baked goods.
A foodie’s haven. They may be in the Midwest, but Madison’s population craves a global array of cuisines. Many of the restaurants tend to be locally-owned, says Greg Frank, managing partner of Food Fight Restaurant Group. The group manages several independently run restaurants in Madison, including Bluephies, Fresco and Johnny Delmonico’s.
“It’s not a chain restaurant town by any stretch of the imagination,” Frank says.
Madison also has a growing food truck scene. Trucks tend to park around the Capitol and near campus, and can be a way to test out a business idea before pouring money into a brick-and-mortar store, Somes-Booher says.
Challenges of owning a business in Madison
Funding. Finding financing is a challenge faced by small businesses throughout the United States because bank loans are hard to come by for new enterprises. Small-business owners can try crowdfunding, borrowing from friends and family or applying for a loan backed by the Small Business Administration. Additionally, the Wisconsin Women’s Business Initiative Corporation offers microloans up to $100,000 for Wisconsin businesses.
Cold weather. Winters can be brutal, especially for businesses that do outdoor work, such as construction companies. Trapp has tried to keep his remodeling business busy during the cold months by fixing leaky roofs that occur when snow builds up on houses, and taking on basement remodeling jobs. Still, being productive is tough in sub-zero temperatures.
“You just can’t work as fast when it’s minus-13 degrees,” Trapp says.
Traffic disruptions. Since winters keep crews inside, Madison’s road construction projects explode in the spring and summer. Closed streets and interrupted traffic patterns can hurt local businesses, especially restaurants and retail shops that rely on the impulse purchases customers make when they pass by.
“If you lose that drive-by traffic, it has a true cost to your bottom line,” says Zach Brandon, president of the Madison Chamber of Commerce.
The Chamber’s Small Business Advisory Council created a Road Construction Survival Guide to help small business owners anticipate upcoming construction projects. The guide recommends businesses keep up with Madison’s Transportation Improvement Program to see which road projects are planned for the next five years. When construction is underway, businesses should display signs outside their locations and post on social media to let their customers know they’re open during the construction.
How to start a business in Madison
Starting a business anywhere in the U.S. involves writing a business plan, choosing a business structure and finding funding. Beyond that, here’s what businesses in Madison need to do before opening:
1. Choose a location. Businesses that can score a spot near State Street or the Capitol are almost guaranteed tons of customers through foot traffic. Additionally, Somes-Booher recommends businesses consider Monroe Street on Madison’s west side, the Willy Street Neighborhood on the east side, and downtown Middleton, a west Madison suburb.
2. Register with the state, if necessary. Businesses that are corporations, limited partnerships, limited liability companies (LLCs) or limited liability partnerships (LLPs) must register with the Wisconsin Department of Financial Institutions. General partnerships and sole proprietorships are not required to register.
3. Apply for relevant licenses and permits. Certain businesses will need licenses and permits, depending on their business type. Businesses can use the SBA Business Licenses and Permits tool to identify which federal and state licenses they need. The City of Madison Clerk’s Office has information about local licenses, including food and alcohol licenses and sellers’ permits.
Additional resources for small-business owners in Madison
- The UW-Madison Small Business Development Center offers free one-on-one consulting and low-cost courses about business management. Business owners can also call the Wisconsin Business AnswerLine at 800-940-7232 to talk with a consultant.
- Business owners can join the Greater Madison Chamber of Commerce to be included in the chamber’s directory and attend networking events.
- The Madison SCORE Association is an SBA-sponsored organization that offers free mentoring and low-cost business workshops.
- 100state is a nonprofit community for entrepreneurs that provides a mailing address, workspace, public meeting rooms, workshops and networking events for a monthly fee.
- Dane Buy Local is a county organization that supports locally sourced goods and services. Members are listed in its online directory and are invited to regular networking events.
For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
Top: Looking down State Street toward the Wisconsin State Capitol. Image via iStock.