5 Best Cities for Starting a Business

Starting a business can be both an exciting and nerve-racking endeavor. Finding the perfect location, though, can help ease your worries by providing your company with better long term prospects. Based on commentary from various small business owners, economic research, an expansive data collection effort, we’ve compiled six of the best cities to start a small business in.

Business owner working in a cafe in Austin, TX

Many business owners know the old saying: “Location! Location! Location!” But take it from a (once) small business owner, Michael Nemeroff, founder of RushOrderTees, “When we founded RushOrderTees in 2002, we were just serving our city. We didn’t know we would be a nationwide company. If we had, we may have decided on a different city to start in.” Nemeroff stresses the point that the must think long term when choosing where to locate your business.

Despite their notoriety among investors and startups, some cities, such as San Francisco and New York City did not make the cut. Not only are they among the most expensive cities to live in, according to the Tax Foundation, California and New York impart two of the U.S.’ worst business tax climates.

As you can see, understanding where potential small business owners will have the greatest long-term financial opportunities is key. After analyzing over 175 metropolitan areas, we’ve found two commonalities that were determining factors in many entrepreneurs success:

Smaller markets = Bigger payouts. Within local markets, becoming a trusted source of quality products was almost always the number one reasons small businesses thrived in smaller to midrange cities.

Consider the Midwest. Like we mentioned, coastal cities have the appeal of metropolitan life (and money), but many mid-sized cities in the Midwest offer a lower cost of living and less competition.

Considering all this information, these are 6 of the best of cities to start a business in:

1. Oklahoma City, OK

Oklahoma City downtown

photo credit: Wikimedia Commons

Metro area population: 1.3 million

Number of small businesses per 10,000 people: 148

Cost of living for self-employed: 10.1% below U.S. average

Percentage of population with bachelor’s degrees: 27.9%

Unemployment rate: 4.2%

Affordability is the name of the game in Oklahoma City. Between the low living costs and business costs that fall below the U.S. average, both the city and state entice small business owners with tax incentives. You can visit the Great Oklahoma City Partnership for more information on current incentives.

2. Omaha, NE

Downtown Omaha, Nebraska

photo credit: Wikimedia Commons

Metro population: 866,454

Number of small businesses per 10,000 people: 138

Cost of living for self-employed: 12.3% below U.S. average

Percentage of population with bachelor’s degrees: 32.7%

Unemployment rate: 3.6%

According to KPMG, Omaha’s business costs are highly valued at 5.7% lower than the U.S’ average. With a rapidly growing number of investors and client base, who wouldn’t want to live in what’s referred to as the “Silicon Prairie”? You can learn more at omahastartups.org.

3. Nashville, TN

Downtown Nashville

Metro population: 1.6 million

Number of small businesses per 10,000 people: 123

Cost of living for self-employed: 9.8% below U.S. average

Percentage of population with bachelor’s degrees: 30.8%

Unemployment rate: 5.3%

Nashville’s leading nonprofit for small business owners, The Entrepreneur Center aids startups in fields such as health care, technology, social enterprise, and digital and entertainment industries. They offer mentorships, networking help, and other various resources to get your business off the ground. Nashville, while a slightly larger market on the list, still boasts low living costs and equally affordable business costs which still come in lower than the national average.

4. Tulsa, OK

Downtown Tulsa, OK

Metro population: 936,717

Number of small businesses per 10,000 people: 136

Cost of living for self-employed: 11.0% below U.S. average

Percentage of population with bachelor’s degrees: 25.7%

Unemployment rate: 4.6%

Back to Oklahoma! With over 13, 000 small businesses, Tulsa is a hotbed of entrepreneurial activity. With a centralized downtown that hustles and bustles with clientele everyday, Tulsa is another great place to get started. According to the Tulsa Regional Chamber, small businesses create two-thirds of all new jobs in the region and post an annual payroll of $1.4 billion. And those numbers nothing to turn your nose up at.

5. Austin, TX

Downtown Austin, Texas

Metro population: 1.7 million

Number of small businesses per 10,000 people: 136

Cost of living for self-employed: 5.0% below U.S. average

Percentage of population with bachelor’s degrees: 40.0%

Unemployment rate: 4.2%

Some things are more average-sized in Texas. With over 20,000 small businesses in the capital area, Austin is a heavy hitter when it comes to supporting local startups. Since 2014, Austin has been among the top 10 metro areas locations for venture capitalists. Tech-oriented startups will jump at the chance to install Google Fiber in their place of business, as well. The city offers countless opportunities for tech savvy entrepreneurs to sharpen their skills and fill their rolodex (or iPhone) with potential investors at networking events.

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