Best and Worst Places to Start a Business in the U.S.

Business.com / Starting a Business / Last Modified: February 22, 2017

What’s the best (and worst) city in which to start a business? What metrics determine city rankings for business? What factors to consider?

Where’s the best place to start a business? Perhaps the knee-jerk response is somewhere in Silicon Valley (the southern portion of the San Francisco Bay Area). Seattle also comes to mind. Brooklyn has become particularly hip of late and is home to many successful startups while Manhattan is sometimes referred to as Silicon Alley.

Perhaps the knee-jerk response is somewhere in Silicon Valley (the southern portion of the San Francisco Bay Area). Seattle also comes to mind. Brooklyn has become particularly hip of late and is home to many successful startups while Manhattan is sometimes referred to as Silicon Alley.

The New Yorker argues for the metropolitan areas of Salt Lake City, Provo and Ogden, all in Utah, as having a particularly high concentration of advanced industries.

WalletHub employed 13 metrics to evaluate 150 of the most populated cities and determine which were the best places to start businesses. The measurements included such factors as:

  • Office space cost and availability
  • Financing accessibility
  • Available labor pool and associated skill levels
  • Taxes
  • Cost of living
  • Range of industries
  • Five-year survival rate of new businesses

Related Article: Movin' On Up: Why Relocating Offices Doesn't Have to Suck

The Best Place to Start a Business

And the winner is: Shreveport, La., third largest city in the state and 113th largest in the U.S. Don't just take WalletHub’s word for it, The Shreveport Times reports the relative ease with which Jason Kline, whose Epic Aquaria furnishes and stocks custom saltwater fish aquariums, established his business as fairly typical.

Shreveport Skyline

The city’s Downtown Development Authority notes the area is large enough to provide the opportunities and crucial amenities required for start-ups while still small enough so that almost any type of business can find its niche. In addition, there’s an extensive network of local support groups dedicated to helping businesses get started and continue to succeed.

Interestingly, the cities that round out the Top 5 in the WalletHub study are located in the southern or midwestern sections of the country, between the two coasts that are generally considered entrepreneurial hotbeds. They are (drum roll please):

#2. Tulsa, Okla.

#3. Springfield, Mo.

#4. Chattanooga, Tenn.

#5. Jackson, Miss.

Perhaps another place you might never think of came in as the sixth best city—Sioux Falls, South Dakota.

Related Article: 5 Emerging Business Trends You Should Know About

The Worst Place to Start a Business

We figured you’d want to know. Newark, N.J. came in dead last, with nearby Jersey City earning runner-up honors. This may seem odd, particularly given the proximity of both cities to New York City. As NJ.com notes, the ranking came right after Newark’s mayor stated the city is on the verge of a renaissance, particularly with its Newark 3.0 concept designed to attract tech-based businesses.

Newark, New Jersey

Among the harbingers of success is Audible founder Dan Katz, who moved his company to Newark in 2007 and more recently during a TEDx talk encouraged other corporations to consider moving to Newark.

Not Everyone Agrees

Of course, everyone is entitled to their opinion. Using a similar set of metrics, NerdWallet ranked Oklahoma City, Okla. as number one, followed by Miami, Fla. and Omaha, Neb. What the two surveys share is favoring cities in the South and Midwest.

Forbes, however, disagrees that success lies only in the heartland. The magazine’s top 12 list to launch a new business in 2014 was more of what you’d expect of the conventional wisdom. San Diego, Calif. leads a pack that includes the usual suspects of Boston, New York City and Chicago.

The Small Business Administration says that choosing your business location is perhaps the most important decision you can make for your start-up. You want a locale that is business-friendly, is affordable, has a suitable labor pool, is near your suppliers and partners and allows for future growth.

Of course, all of this depends on what kind of business you’re starting. Anycity, USA that doesn’t have a pizza place on the corner might be a good place to start a pizza place.

Which leads us to suggest one thing. If you’ve got a good business idea and people in place to execute a plan that has sufficient financial backing, as Dorothy once said, there’s no place like home. Wherever you choose to make that home.

 

 

 

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