There are more than five million companies in the U.S. And more than 76% of them have less than 10 employees, according to the U.S. Census Bureau.
Small businesses are an important part of the economy. To determine the best cities in the country for small businesses, we looked at 11 data points from eight reputable sources. Below you will find our results, as well as a detailed methodology explaining how we arrived at them.
The Best Cities for Small Business Owners
To determine the best cities for small business ownership, we analyzed factors relating to taxes as well as the economic and the business environments. We then combined all of these three categories and ranked them from the best to the worst.
1. Boulder, CO
- Taxes: 14
- Economy: 6
- Business Community: 17
2. Fort Collins, CO
- Taxes: 14
- Economy: 9
- Business Community: 19
3. Columbus, OH
- Taxes: 6
- Economy: 17
- Business Community: 26
4. Charlottesville, VA
- Taxes: 1
- Economy: 34
- Business Community: 21
5. Austin-Round Rock, TX
- Taxes: 49
- Economy: 2
- Business Community: 8
The Rest of the Best
The five above were tops, but 195 other cities were under consideration. Where did yours rank?
|2||Fort Collins, CO||14||9||19|
|5||Austin-Round Rock, TX||49||2||8|
|6||Dallas-Fort Worth-Arlington, TX||49||3||16|
|8||Colorado Springs, CO||14||11||55|
|9||Ann Arbor, MI||29||40||22|
|10||Grand Rapids-Wyoming, MI||29||32||34|
|12||Houston-The Woodlands-Sugar Land, TX||49||26||28|
The Top (and Bottom) Five Cities for...
Colorado took the top two spots on the list along with two Texas cities in the top six. Here we take a specific look at a few of the data points and explain them in more detail.
Boulder and Fort Collins, Col., both hold unemployment rates under 3%, according to the Bureau of Labor Statistics, and ranked fifth and seventh in this data point, respectively. California had the six worst rates, all over 8%.
|1||Sioux Falls, SD||2.2|
|2||Burlington-South Burlington, VT||2.5|
Cost of Living
A city’s cost of living of living is important both for consumers and businesses. Not all cities had data available on infoplease.com. Those cities were given a base number of 100 for this data point. Texas and Tennessee are some of the cheapest states, holding nine of the top 15 on this list.
|3||Fort Smith, AR||86.1|
|200||New York-Newark-Jersey City, NY-NJ||216.7|
|198||San Francisco-Oakland-Hayward, CA||164|
|197||North Port-Sarasota-Bradenton, FL||159|
|196||San Jose-Sunnyvale-Santa Clara, CA||156.1|
Number of Offices
Small businesses have a lot of obstacles to overcome in order to succeed. A local coffee shop with a Starbucks down the street has to find a way to compete with a large corporation. We took a look at the number of corporate, subsidiary, and regional managing offices in each city (from U.S. Census Bureau data) with a smaller number being more ideal for small businesses.
|1||New York-Newark-Jersey City, NY-NJ-PA||2,697|
|2||Los Angeles-Long Beach-Anaheim, CA||1,824|
|3||Dallas-Fort Worth-Arlington, TX||1,705|
|196||Kennewick, Richland WA||17|
To vary our coverage of the best cities for small business, we put the data aside and sought out experts for answers to questions of concern.
Stay tuned as our experts weigh in.
In order to determine the best cities for small businesses in the U.S. we looked at 11 data points from eight reputable sources.
Data for the regulatory environment was not available and was not included in the study. We focused on areas of data that would help a small business be sustainable, but also flourish based on the economic traits of the city.
Below, we breakdown each statistic and point to its origin. Those marked with an asterisk are state-based (not city-based).
- Average State + Local Sales Tax Rate * / SalesTaxHandbook
- Small Business Tax Index * / Small Business Tax Index
- 2017 State Business Tax Climate Index * / Tax Foundation
- Unemployment Rate / Bureau of Labor Statistics
- Median household income / U.S. Census Bureau
- Forbes best states for business * / Forbes
- Cost of living / infoplease
- Percentage of population 25 years and older with at least a bachelor's degree / U.S. Census Bureau
- Number of Small Business Association offices/resources * / Small Business Association
- Number of mortgage and nonmortgage loan brokers / U.S. Census Bureau
- Number of corporate, subsidiary, and regional managing offices / U.S. Census Bureau