by Douglas Burger

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?

Final Rank	City	Taxes	Economy	Business Community
1	Boulder, CO	14	6	17
2	Fort Collins, CO	14	9	19
3	Columbus, OH	6	17	26
4	Charlottesville, VA	1	34	21
5	Austin-Round Rock, TX	49	2	8
6	Dallas-Fort Worth-Arlington, TX	49	3	16
7	Cincinnati, OH-KY-IN	6	28	41
8	Colorado Springs, CO	14	11	55
9	Ann Arbor, MI	29	40	22
10	Grand Rapids-Wyoming, MI	29	32	34
11	Denver-Aurora-Lakewood, CO	14	24	64
12	Houston-The Woodlands-Sugar Land, TX	49	26	28
13	Richmond, VA	1	57	58
14	San Antonio-New Braunfels, TX	49	15	57
15	Madison, WI	22	32	69
16	Naples-Immokalee-Marco Island, FL	75	42	12
17	Provo-Orem, UT	107	4	19
18	College Station-Bryan, TX	49	45	45
18	Lansing-East Lansing, MI	29	87	23
20	Kalamazoo-Portage, MI	29	61	53
21	Amarillo, TX	49	7	88
22	Virginia Beach-Norfolk-Newport News, VA-NC	1	37	108
23	Greeley, CO	14	8	127
24	Lubbock, TX	49	18	87
25	Appleton, WI	22	31	111
25	Jacksonville, FL	75	44	45
27	Barnstable Town, MA	100	30	36
27	Crestview-Fort Walton Beach-Destin, FL	75	53	38
29	Green Bay, WI	22	50	97
30	Waco, TX	49	29	99
31	Killeen-Temple, TX	49	25	105
32	Gainesville, FL	75	93	15
33	Cape Coral-Fort Myers, FL	75	63	50
34	Roanoke, VA	1	35	155
35	Burlington-South Burlington, VT	26	103	63
36	Ogden-Clearfield, UT	107	5	82
36	Orlando-Kissimmee-Sanford, FL	75	72	47
38	Bridgeport-Stamford-Norwalk, CT	36	87	72
38	Raleigh, NC	155	10	30
40	Sioux Falls, SD	19	12	171
41	Atlanta-Sandy Springs-Roswell, GA	112	36	56
41	Seattle-Tacoma-Bellevue, WA	128	51	25
43	Tallahassee, FL	75	119	13
44	Baltimore-Columbia-Towson, MD	20	109	80
44	Charleston-North Charleston, SC	66	48	95
44	Santa Rosa, CA	166	40	3
47	Wilmington, NC	155	38	18
48	Dayton, OH	6	55	151
48	El Paso, TX	49	61	102
50	Lynchburg, VA	1	74	138
50	Milwaukee-Waukesha-West Allis, WI	22	120	71
52	Des Moines-West Des Moines, IA	117	13	84
52	Omaha-Council Bluffs, NE-IA	91	1	122
54	Tampa-St. Petersburg-Clearwater, FL	75	70	70
55	Kansas City, MO-KS	120	58	42
56	Cleveland-Elyria, OH	6	151	67
57	San Luis Obispo-Paso Robles-Arroyo Grande, CA	166	58	1
58	Bremerton-Silverdale, WA	128	66	33
59	Cedar Rapids, IA	117	22	94
59	Lexington-Fayette, KY	27	73	133
61	Detroit-Warren-Dearborn, MI	29	129	76
62	Charlotte-Concord-Gastonia, NC-SC	155	21	60
62	North Port-Sarasota-Bradenton, FL	75	117	44
62	Salt Lake City, UT	107	14	115
65	Canton-Massillon, OH	6	123	108
66	St. Louis, MO-IL	120	39	81
67	Laredo, TX	49	102	90
67	Palm Bay-Melbourne-Titusville, FL	75	106	60
69	Manchester-Nashua, NH	65	80	97
70	Pittsburgh, PA	40	138	65
71	Port St. Lucie, FL	75	125	47
72	Worcester, MA-CT	100	27	122
73	Portland-South Portland, ME	93	125	32
74	Boston-Cambridge-Newton, MA-NH	100	49	102
74	Durham-Chapel Hill, NC	155	23	73
76	Corpus Christi, TX	49	71	133
76	Indianapolis-Carmel-Anderson, IN	140	20	93
76	Oxnard-Thousand Oaks-Ventura, CA	166	80	7
76	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	40	173	40
80	Minneapolis-St. Paul-Bloomington, MN-WI	123	42	89
80	Pensacola-Ferry Pass-Brent, FL	75	97	82
82	San Jose-Sunnyvale-Santa Clara, CA	166	85	4
83	Albany-Schenectady-Troy, NY	134	91	31
83	Harrisburg-Carlisle, PA	40	111	105
85	San Francisco-Oakland-Hayward, CA	166	86	5
86	Akron, OH	6	136	116
86	Santa Maria-Santa Barbara, CA	166	83	9
88	Toledo, OH	6	122	131
89	Beaumont-Port Arthur, TX	49	100	114
89	Youngstown-Warren-Boardman, OH-PA	6	125	132
91	Savannah, GA	112	76	78
92	Louisville/Jefferson County, KY-IN	27	66	176
93	Lincoln, NE	91	19	164
93	Olympia-Tumwater, WA	128	120	26
95	Vallejo-Fairfield, CA	166	95	14
96	Brownsville-Harlingen, TX	49	105	122
97	Miami-Fort Lauderdale-West Palm Beach, FL	75	153	49
98	Deltona-Daytona Beach-Ormond Beach, FL	75	145	59
99	Huntsville, AL	93	112	76
100	Asheville, NC	155	92	36
100	Kennewick-Richland, WA	128	63	92
102	San Diego-Carlsbad, CA	166	114	6
103	Washington-Arlington-Alexandria, DC-VA-MD-WV	35	132	120
104	McAllen-Edinburg-Mission, TX	49	107	133
105	Norwich-New London, CT	36	114	141
106	Trenton, NJ	71	78	143
107	Salisbury, MD-DE	20	147	128
108	Santa Cruz-Watsonville, CA	166	129	1
109	Greenville-Anderson-Mauldin, SC	66	58	173
110	Hartford-West Hartford-East Hartford, CT	36	159	104
111	Rochester, NY	134	103	65
112	Flint, MI	29	176	99
113	Allentown-Bethlehem-Easton, PA-NJ	40	149	120
114	Urban Honolulu, HI	93	100	118
115	New York-Newark-Jersey City, NY-NJ-PA	71	168	75
116	Boise City, ID	111	54	153
117	Nashville-Davidson--Murfreesboro--Franklin, TN	195	16	110
117	Phoenix-Mesa-Scottsdale, AZ	123	114	84
119	Lancaster, PA	40	154	128
120	Los Angeles-Long Beach-Anaheim, CA	166	146	11
121	Reading, PA	40	150	141
122	Sacramento--Roseville--Arden-Arcade, CA	166	158	10
123	Columbia, SC	66	133	137
124	Portland-Vancouver-Hillsboro, OR-WA	146	108	84
125	Salinas, CA	166	151	28
126	Buffalo-Cheektowaga-Niagara Falls, NY	134	113	99
127	Fort Wayne, IN	140	51	157
128	Augusta-Richmond County, GA-SC	112	90	150
128	Springfield, MA	100	63	189
130	Erie, PA	40	177	138
131	New Haven-Milford, CT	36	172	148
132	Spokane-Spokane Valley, WA	128	128	105
133	Ocala, FL	75	171	118
134	Syracuse, NY	134	143	90
135	Tucson, AZ	123	133	112
136	Oklahoma City, OK	164	45	160
137	Champaign-Urbana, IL	186	143	42
137	Prescott, AZ	123	169	79
139	Atlantic City-Hammonton, NJ	71	180	122
139	Modesto, CA	166	173	34
141	Springfield, MO	120	117	138
142	Chico, CA	166	188	24
143	Winston-Salem, NC	155	45	181
144	Lakeland-Winter Haven, FL	75	162	145
145	Stockton-Lodi, CA	166	167	51
145	York-Hanover, PA	40	166	178
147	Baton Rouge, LA	149	141	95
148	Greensboro-High Point, NC	155	89	143
149	Myrtle Beach-Conway-North Myrtle Beach, SC-NC	66	156	170
150	Chicago-Naperville-Elgin, IL-IN-WI	186	175	39
150	Davenport-Moline-Rock Island, IA-IL	117	99	184
150	Fayetteville, NC	155	123	122
150	Spartanburg, SC	66	137	197
154	Evansville, IN-KY	140	77	186
154	Salem, OR	146	110	147
156	Scranton--Wilkes-Barre--Hazleton, PA	40	185	179
157	Topeka, KS	190	56	161
158	Utica-Rome, NY	134	141	133
159	Binghamton, NY	134	159	116
159	Tulsa, OK	164	82	163
161	South Bend-Mishawaka, IN-MI	140	83	190
162	Birmingham-Hoover, AL	93	159	162
162	Hickory-Lenoir-Morganton, NC	155	74	185
164	Merced, CA	166	197	54
165	Fresno, CA	166	200	52
166	Riverside-San Bernardino-Ontario, CA	166	181	74
167	Visalia-Porterville, CA	166	196	62
168	Anchorage, AK	49	184	192
169	Yakima, WA	128	148	152
170	Knoxville, TN	195	69	166
171	Bakersfield, CA	166	198	67
172	Jackson, MS	71	179	182
173	Macon, GA	112	163	158
174	Duluth, MN-WI	123	140	175
175	Hagerstown-Martinsburg, MD-WV	149	133	158
176	Eugene, OR	146	183	112
177	Columbus, GA-AL	112	165	169
178	Providence-Warwick, RI-MA	104	178	167
179	Albuquerque, NM	110	189	153
180	Fayetteville-Springdale-Rogers, AR-MO	192	66	198
181	Wichita, KS	190	79	188
182	New Orleans-Metairie, LA	149	182	130
183	Chattanooga, TN-GA	195	93	174
184	Reno, NV	144	154	165
184	Tuscaloosa, AL	93	187	183
186	Little Rock-North Little Rock-Conway, AR	192	98	176
187	Clarksville, TN-KY	195	139	146
187	Mobile, AL	93	193	194
187	Montgomery, AL	93	192	195
190	Memphis, TN-MS-AR	195	96	191
191	Charleston, WV	105	190	196
192	Peoria, IL	186	157	155
193	Rockford, IL	186	164	149
194	Huntington-Ashland, WV-KY-OH	105	199	199
195	Lafayette, LA	149	191	168
196	Shreveport-Bossier City, LA	149	193	172
197	Las Vegas-Henderson-Paradise, NV	144	186	187
198	Fort Smith, AR-OK	192	129	200
199	Gulfport-Biloxi-Pascagoula, MS	149	195	180
200	Kingsport-Bristol-Bristol, TN-VA	195	170	193

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.

Unemployment Rate

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%.

Rank	City	Rate
1	Sioux Falls, SD	2.2
2	Burlington-South Burlington, VT	2.5
2	Manchester-Nashua, NH	2.5
4	Boston-Cambridge-Newton, MA-NH	2.8
4	Boulder, CO	2.8

Rank	City	Rate
200	Visalia-Porterville, CA	11.3
199	Merced, CA	10.5
198	Bakersfield, CA	10.3
197	Fresno, CA	9.7
196	Modesto, CA	8.7

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.

Rank	City	COL
1	McAllen-Edinburg-Mission, TX	85
2	Brownsville-Harlingen, TX	85.8
3	Fort Smith, AR	86.1
4	Indianapolis-Carmel-Anderson, IN	87.2
5	Killeen-Temple, TX	87.4

Rank	City	COL
200	New York-Newark-Jersey City, NY-NJ	216.7
199	Honolulu, HI	165.7
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.

Rank	City	Offices
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
4	Chicago-Naperville-Elgin, IL-IN-WI	1,655
5	Washington-Arlington-Alexandria, DC-VA-MD-WV	1,239

Rank	City	Offices
200	Merced, CA	7
199	Yakima, WA	12
198	Prescott, AZ	15
197	Bremerton-Silverdale, WA	16
196	Kennewick, Richland WA	17

Experts' Take

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.

Methodology

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).

Taxes

Average State + Local Sales Tax Rate * / SalesTaxHandbook
Small Business Tax Index * / Small Business Tax Index
2017 State Business Tax Climate Index * / Tax Foundation

Economy

Unemployment Rate / Bureau of Labor Statistics
Median household income / U.S. Census Bureau
Forbes best states for business * / Forbes
Cost of living / infoplease

Business Community

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

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.

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