Does where you start your new small business affect its success? Definitely. The accessibility of financing, the availability of qualified employees, community and local government support for small businesses, cost of facilities—all are factors that can make or break your business’s short-term and long term viability.
We’ve pooled data from three recent studies using a variety of metrics to assemble the ultimate reader’s digest guide to the top U.S. destinations for small business owners.
Breaking Down the Metrics
Our first dataset comes from Nerdwallet, who conducted a study earlier this year based on six metrics in two categories: business environment, including average revenue, the percentage of businesses with paid employees and the number of businesses per 100 people; and overall economic landscape--median annual income, median annual housing cost, and unemployment rate.
Second, we used a similar study by WalletHub which ranked the 150 most populated cities in the U.S. by considering thirteen different metrics, spread across two categories: access to resources—accessibility of financing, cost of business space; and business environment--average workday length, cost of living, and the average education level of the workforce. WalletHub’s full study ranks metro areas by each of these categories and overall.
And finally, a 2014 survey by Thumbtack (its fourth annual) asked more than 12,000 small business owners across the country to rank their regions on “small business friendliness.” The survey covered overall friendliness, ease of starting a business, ease of hiring, regulations, and training/networking programming.
So which places made the cut? The results may surprise you. According to our evaluations of these three studies, here are 8 of the best places to jump-start your new company.
1. Boulder and Colorado Springs, Colorado
With its “abundant resources for entrepreneurs, including several co-working spaces, capital investors and incubators,” as well as a love of locally made goods, NerdWallet’s study ranks Boulder #1 on its top-ten list. The Thumbtack survey rates Colorado Springs the #1 city in the country for small business owners. Both cities benefit from what Thumbtack chief economist Joe Lieber cites as local government’s commitment to helping small businesses thrive: "Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, and Colorado's city and state governments are clearly taking that challenge very seriously."
2. The Great State of Texas
Texas made a strong showing across all three lists. With five of the top ten cities (#3: Houston, #4: Austin, #6: Dallas, #7: Fort Worth, and #8: San Antonio) as rated by Thumbtack and an overall grade of A+, Texas is where it’s at. Thumbtack’s small business owner respondents ranked Texas the #1 state in the country for friendliness of regulations and #2 for the health of the state economy relative to the national economy. Amarillo nabbed the #12 spot on WalletHub’s list. Cindy Yang of NerdWallet calls Beaumont-Port Arthur, Texas, a stand-out: due to high revenues and low costs, “on average, businesses here take in 155% more than businesses in the other metro areas.”
3. Wilmington, North Carolina
Wilmington ranked #2 in NerdWallet’s top ten, which cited the city’s growing population, strong tourism industry, and proximity to the beach. And at “about 15 businesses for every 100 people” it has “the highest volume of businesses” on their list, with approximately 900 of those businesses located in Wilmington’s thriving downtown.
4. Shreveport and New Orleans, Louisiana
Shreveport received WalletHub’s #1 spot, with New Orleans not far behind at #14. Louisiana as a whole is on its way up in small business rankings—its 2013 grade of B jumped a full letter grade to garner an A in 2014. Thumbtack respondents rated the state #5 overall, with the #1 ranking for ease of hiring employees, ease of filing taxes, and friendly environmental regulations.
5. Augusta and Columbus, Georgia
Two Georgia cities made WalletHub’s top ten—Augusta at #8 and Columbus at #10. Thumbtack graded the state A- overall and noted that Georgia came in at #10 in its nationwide ranking for both 2013 and 2014. Georgia also received an A- for its friendly environmental regulations.
6. Richmond and Virginia Beach, Virginia
With an overall rating of A+, Virginia made Thumbtack’s top five. Richmond was graded A and Virginia Beach A- for overall small business friendliness. Worth noting: African-American small business owners “felt significantly more supported by the Virginia state government than others,” with a rating about 14% above the average state ranking.
7. Evansville and Fort Wayne, Indiana
Perhaps the most surprising on our list, both Evansville and Fort Wayne, Indiana made NerdWallet’s top ten list, coming in at #4 and #9 respectively. Evansville received high marks for its “cultural districts with entertainment venues, local restaurants, and boutiques,” while Fort Wayne was highlighted for its “low cost of living, family-friendly neighborhoods, and vibrant downtown.” Fort Wayne also received the #11 overall ranking of 150 in WalletHub’s survey.
Yet while these two cities receive high marks, the Thumbtack survey is less positive about the state of Indiana as a whole, citing a “friendly outlook towards regulation” but room for improvement across several other factors.
8. Right Where You Are
While there are certainly pros and cons to entrepreneurship in various U.S. cities, when it comes to starting your own business, there’s some truth to the old adage, “there’s no place like home.” Don’t underestimate the priceless support of your local network—family, friends, and existing business contacts who can help you get your new local business off the ground.
Starting where you are also bypasses a common pitfall: if you’re waiting to find the “perfect place” to launch your company, you’ll likely never start.
As Brady Borhmann advises at Inc.com, “Waiting to be at the ‘right place at the right time’, whether literally or figuratively, is the wrong approach . . . Start solving a real problem right where you are in an unorthodox way and exciting things will follow. If down the road a move is the best way to continue to grow your business, that will become evident.” Borhmann also points out that vast amounts of advice and encouragement are available to new entrepreneurs no matter where they are—virtually.
And depending on your industry, you may already be in or near a hotspot: Nina Zipkin of Entrepreneur explored seven niche industries including health and medical, tech, restaurants and specialty food vendors, and the up-and-coming ridesharing industry to discover where these businesses are flourishing.
Different geographic markets are best fits for different industries. So before you launch your new business, do the necessary research to see how your business model will fit your target market, and how it will stack up to the existing competition in your city.
Image Credit: Ken Lund/Creative Commons
Breaking Down the Metrics
Our first dataset comes from Nerdwallet, who conducted a study earlier this year based on six metrics in two categories: business environment, including average revenue, the percentage of businesses with paid employees and the number of businesses per 100 people; and overall economic landscape--median annual income, median annual housing cost, and unemployment rate.
Second, we used a similar study by WalletHub which ranked the 150 most populated cities in the U.S. by considering thirteen different metrics, spread across two categories: access to resources—accessibility of financing, cost of business space; and business environment--average workday length, cost of living, and the average education level of the workforce. WalletHub’s full study ranks metro areas by each of these categories and overall.
And finally, a 2014 survey by Thumbtack (its fourth annual) asked more than 12,000 small business owners across the country to rank their regions on “small business friendliness.” The survey covered overall friendliness, ease of starting a business, ease of hiring, regulations, and training/networking programming.
So which places made the cut? The results may surprise you. According to our evaluations of these three studies, here are 8 of the best places to jump-start your new company.
1. Boulder and Colorado Springs, Colorado
With its “abundant resources for entrepreneurs, including several co-working spaces, capital investors and incubators,” as well as a love of locally made goods, NerdWallet’s study ranks Boulder #1 on its top-ten list. The Thumbtack survey rates Colorado Springs the #1 city in the country for small business owners. Both cities benefit from what Thumbtack chief economist Joe Lieber cites as local government’s commitment to helping small businesses thrive: "Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, and Colorado's city and state governments are clearly taking that challenge very seriously."
2. The Great State of Texas
Texas made a strong showing across all three lists. With five of the top ten cities (#3: Houston, #4: Austin, #6: Dallas, #7: Fort Worth, and #8: San Antonio) as rated by Thumbtack and an overall grade of A+, Texas is where it’s at. Thumbtack’s small business owner respondents ranked Texas the #1 state in the country for friendliness of regulations and #2 for the health of the state economy relative to the national economy. Amarillo nabbed the #12 spot on WalletHub’s list. Cindy Yang of NerdWallet calls Beaumont-Port Arthur, Texas, a stand-out: due to high revenues and low costs, “on average, businesses here take in 155% more than businesses in the other metro areas.”
3. Wilmington, North Carolina
Wilmington ranked #2 in NerdWallet’s top ten, which cited the city’s growing population, strong tourism industry, and proximity to the beach. And at “about 15 businesses for every 100 people” it has “the highest volume of businesses” on their list, with approximately 900 of those businesses located in Wilmington’s thriving downtown.
4. Shreveport and New Orleans, Louisiana
Shreveport received WalletHub’s #1 spot, with New Orleans not far behind at #14. Louisiana as a whole is on its way up in small business rankings—its 2013 grade of B jumped a full letter grade to garner an A in 2014. Thumbtack respondents rated the state #5 overall, with the #1 ranking for ease of hiring employees, ease of filing taxes, and friendly environmental regulations.
5. Augusta and Columbus, Georgia
Two Georgia cities made WalletHub’s top ten—Augusta at #8 and Columbus at #10. Thumbtack graded the state A- overall and noted that Georgia came in at #10 in its nationwide ranking for both 2013 and 2014. Georgia also received an A- for its friendly environmental regulations.
6. Richmond and Virginia Beach, Virginia
With an overall rating of A+, Virginia made Thumbtack’s top five. Richmond was graded A and Virginia Beach A- for overall small business friendliness. Worth noting: African-American small business owners “felt significantly more supported by the Virginia state government than others,” with a rating about 14% above the average state ranking.
7. Evansville and Fort Wayne, Indiana
Perhaps the most surprising on our list, both Evansville and Fort Wayne, Indiana made NerdWallet’s top ten list, coming in at #4 and #9 respectively. Evansville received high marks for its “cultural districts with entertainment venues, local restaurants, and boutiques,” while Fort Wayne was highlighted for its “low cost of living, family-friendly neighborhoods, and vibrant downtown.” Fort Wayne also received the #11 overall ranking of 150 in WalletHub’s survey.
Yet while these two cities receive high marks, the Thumbtack survey is less positive about the state of Indiana as a whole, citing a “friendly outlook towards regulation” but room for improvement across several other factors.
8. Right Where You Are
While there are certainly pros and cons to entrepreneurship in various U.S. cities, when it comes to starting your own business, there’s some truth to the old adage, “there’s no place like home.” Don’t underestimate the priceless support of your local network—family, friends, and existing business contacts who can help you get your new local business off the ground.
Starting where you are also bypasses a common pitfall: if you’re waiting to find the “perfect place” to launch your company, you’ll likely never start.
As Brady Borhmann advises at Inc.com, “Waiting to be at the ‘right place at the right time’, whether literally or figuratively, is the wrong approach . . . Start solving a real problem right where you are in an unorthodox way and exciting things will follow. If down the road a move is the best way to continue to grow your business, that will become evident.” Borhmann also points out that vast amounts of advice and encouragement are available to new entrepreneurs no matter where they are—virtually.
And depending on your industry, you may already be in or near a hotspot: Nina Zipkin of Entrepreneur explored seven niche industries including health and medical, tech, restaurants and specialty food vendors, and the up-and-coming ridesharing industry to discover where these businesses are flourishing.
Different geographic markets are best fits for different industries. So before you launch your new business, do the necessary research to see how your business model will fit your target market, and how it will stack up to the existing competition in your city.
Image Credit: Ken Lund/Creative Commons
Meredith Wood Meredith Wood is Editor-in-Chief at Fundera, an online marketplace for small business loans. She is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, and more.
