The Coronavirus pandemic gave plenty of entrepreneurs and forward-thinkers the impetus and time to finally pursue their dreams and start a business.
When launching a business, there are various factors to consider. You may want to think about local success rates, how high business taxes are, how much you are likely to earn and whether you can be your own boss. All of these factors differ from state-to-state and from city-to-city.
So, at Pheabs, we have done the research for you and compiled a list of 15 cities which are ideal for those who are on the search for the ideal launchpad for their business. We have based our findings on the US Census, and some other useful information which is handy to know.
How We Determined Our List
With high business success rates comes low unemployment. Therefore, cities which boast low unemployment point in the direction of your business going well.
According to the US Bureau of Labor Statistics, the national unemployment rate is at an impressively low 3.6% as of April 2022. When electing where to start your business, checking the unemployment rate is a useful indicator of how strong the local economy is where you are looking to move. Indeed, the employment rate is also useful if yourself or a family member is looking for work.
Of course, costs are amongst the most important considerations when starting a business. Corporate rates are difficult to avoid entirely, as 44 of the 50 states levy taxes on businesses. However, amongst these 44 states, taxes range from 2.5% (in North Carolina) to 11.5% (New Jersey). When deliberating over where you wish to locate your new venture, you should think about how much tax you will be forking over.
Office Rental Prices
For many entrepreneurs, renting an office represents a huge cost on their balance sheet. There is huge disparity in how much offices can cost to rent, and so we have taken into account how far your money will take you when securing a rental office.
When considering where to rent and how much you have to spend, you should account for how many workers you will have in the office, whether you have large equipment which will take up space, how close to public transportation or parking facilities you are, and whether you have particular needs, such as an energy-efficient building, if you use a lot of electricity.
This is the factor that we all want to know! Of course, how much fruit your business will bear is at the top of the priority list. If income is low, and your costs of starting your business are going to be high, it is near impossible that you will profit in your first few years of operation, if at all.
Therefore, it is worth looking at income next to costs (tax, office rental) when comparing locations.
Self Employment Rate
This has climbed the priority list of many workers since the Covid-19 pandemic shunned workers from offices and created a home-working culture, which was music to the ears of many.
Since then, many workers have been keen on becoming their own boss, and turning their work culture hybrid, or entirely home-working-based. If you are amongst the pro-WFH and be-your-own-boss crowds, then you should be looking out for a high self employment rate. 28.3 million US workers were self-employed in 2021, and so there is no shortage of cities where this is a common work culture.
- Western and Southern States Top The Charts
Cities offering high standards regarding all of the variables above seem to be concentrated among the western and southern states. North Carolina, Wyoming, Utah and Arizona, just to name a few, all feature on our list.
- High Costs Don’t Always Mean Low Profits
Where there are high rental or taxation costs, there are often higher median incomes. That is why we have compiled these findings side-by-side for you, so you can see this for yourself. That is not to say that all states with high costs offer high incomes, but there are certainly a few which do.
- Your Money Will Often Get You A Larger Office In The South/Midwest
In particular, Michigan, Delaware and North Carolina all offer low costs of office rental. If you think you’re going to require a large office space, either to accommodate large equipment or a sizable team, then maybe these areas are best for you.
Top 15 US Cities To Start A Business In
1. Austin, Texas
With startups often revolving around creative and innovative ideas, Austin is a place to thrive. Saturated with creatives – artists, musicians, actors and more – Austin is certainly a welcome space for imaginative startups targeting the creative world. Austin has been a successful breeding ground for new businesses, in part because locals have been supportive, eager to keep Austin a diverse environment. From the creative scene to housing businesses like Google, Indeed and Dell, there is room for all kinds of businesses. And, with a high proportion of self-employment in Austin, it’s possible to be your own boss!
2. Charlotte, North Carolina
Forbes has honored North Carolina in their where-to-start-a-business rankings every year since they launched them in 2006. Boasting low business costs and a high labor supply, and respectable wages, North Carolina has lots to shout about. The cost of living in Charlotte is 1.2% lower than the national average, and the city’s population is expecting to double by 2030, with institutions like Bank of America there to support the growing community.
3. Seattle, Washington
It comes as no shock that Seattle features here… Home to Jeff Bezos and Bill Gates, Seattle works magic for many businesses. With low business costs and impressive incomes, Seattle has proudly become home to ten Fortune 500 companies. Seattle offers growing room for all manner of start-ups, with a booming tech industry and an increasing number of unicorns (highly valued start-ups).
4. Salt Lake City, Utah
Famed for a favorable regulatory climate and low start-up costs, Utah has been acclaimed as a sensible place to start a business. Importantly, office/warehouse rental is cheaper in Salt Lake City (and Utah generally) than other start-up hubs. This means that entrepreneurs’ initial costs are lower, allowing them to take home more profit.
5. Tampa City, Florida
Not only a beautiful place to live, but a melting pot of innovative and successful new businesses. Tampa Bay’s emerging tech-hub has fostered growing employment, to a well-educated workforce, offering useful skills and acumen to business owners. Tampa’s entrepreneurial population are quick and have even succeeded throughout the Covid-19 crisis, with local businesses turning their attention to producing hand sanitizer, staying afloat in dark waters.
6. Doral, Florida
Ranked by Money Magazine, CNNMoney.com and Go as a strong catalyst for successful business, Doral has a high quality of life, low unemployment rate, and impressive growth. These are all ingredients which cook up strong businesses. With a growing population and affordable housing, and modest business costs, this Floridian spot is becoming more and more popular for start-ups, with more than 150,000 commuting to Doral for work each day.
7. Tolleson, Arizona
A smaller city than most of those tanked here, but with low rental costs, and a high self-employment rate. Tolleson offers high employment and a strong communal feel. Tolleson is less well known among the start-up community, but is no stranger to successful business, with the likes of PepsiCo operating there.
8. Durham, North Carolina
Like Charlotte, Durham has been acclaimed as a North Carolina’s gem, offering ample opportunities to new businesses. Durham’s physical transition, sprouting new office buildings, skyscrapers, warehouses and housing developments, all points to the thriving business scene. Offering low business costs and overflowing with beautiful nature, Durham is becoming a magnet for business owners – like you!
9. Billings, Montana
The number of new business applications doubling over 2020, Montana is climbing the business ranks. Energy companies there have attracted eco-conscious start-ups to flock, also attracted by low-business costs, respectable housing costs, and short commutes to work.
10. West End, District of Columbia
DC hosts an ambitious workforce, many of whom dedicate their lives to helping others through starting businesses rooted in social goals and missions. But, that’s not all! Tech is a thriving industry DC, with almost 30,000 working in cybersecurity alone. One major benefit of starting a business in DC is the huge supply of investment. With business acumen and capital in abundance, investors are always looking out for new opportunities to invest their bucks.
11. Denver, Colorado
Denver’s investors are marching forwards, with start-up funding in Colorado increased by 64% over the course of 2020-1, resulting in over 1,000 start-ups operating in Denver in 2021 (a Denver Personal Best!). With low corporate tax, high income, and relatively manageable office rental costs, Denver is watching as its influx of start-ups grow into scale-ups.
12. Cheyenne, Wyoming
The state of Wyoming has the fourth highest rate of new entrepreneurs, paying homage to its welcoming conditions for businesses. With low tax, an exceptional business survival rate (ratio of 1:61), and lax licensing regulations, Cheyenne is waiting with open arms to usher in a new generation of entrepreneurs who want to succeed. When it comes to personal life, and thinking about moving to Cheyenne, the capital of Wyoming endures as one of the US’s most affordable cities to live in, with a safety index of 78.57, which is pretty impressive.
13. Newark, Delaware
Delaware attracts companies who prioritize their legality and regulations. Delaware offers exceptional legal services and corporate law, offering stability to newly founded businesses. Meanwhile, there are well established financial services in Delaware, including Bank of America, JPMorgan Chase, Citigroup and Deutsche Bank. Given that Delaware is the US’s second smallest state, there is a reason why businesses dream of setting up here.
14. Baltimore, Maryland
Baltimore boasts over 21,000 employer businesses, with over 90 start-ups in Baltimore securing over $500,000 in funding. Baltimore is principally catered to tech start-ups, but remains a fantastic environment for differently-minded businesses. With impressive salaries and comparatively low office rental prices, Baltimore is a financially strong place to set up shop. And, on top of that, Baltimore holds the ribbon for 7th best start-up survival rate. What are you waiting for?
15. Traverse, Michigan
Traverse’s USP is the wonderfully low cost of office rental. This means that starting a business is cheaper to begin with, and made even more attractive by their low corporate taxes. Many entrepreneurs find themselves drawn to Michigan because of the low cost of living, abundance of housing, and the ability to be their own boss, due to the high rate of self employment. Job creation is expected to surge by 34.7% in the next ten years, creating an even more diverse workforce.
Top 15 US Cities To Start A Business In
|City||Unemployment Rate||Corporation Tax||Office Rent / Sq Ft||Median Income||Self Employed Population|
|2||Charlotte, North Carolina||4.90%||2.50%||$29.23||$38,069||4.50%|
|3||Seattle, Washington||3%||0.471 (B&O Tax)||$41.40||$56,055||5.80%|
|4||Salt Lake City, Utah||2.70%||5%||$23.30||$34,504||5.10%|
|5||Tampa City, Florida||5.40%||5.50%||$31.17||$37,834.00||4.80%|
|8||Durham, North Carolina||3.20%||2.50%||$24.61||$36,319||3.80%|
|10||West End, Washington DC||2.30%||8.25%||$51.50||$27,083||4.20%|