2015'S BEST CITIES TO START A BUSINESS

The number of self employed Americans is expected to rise to more than 60 million by 2020.


In order to help aspiring entrepreneurs maximize their chances for long term prosperity, WalletHub analyzed the relative start-up opportunities that exist in the 150 most populated U.S. cities. We did so using 13 key metrics such as the number of small businesses per capita, financing accessibility and the educational attainment of the local workforce.

Best Cities to Start a Business

1. Shreveport, LA / 2. Tulsa, OK / 3. Springfield, MO

4. Chattanooga, TN / 5. Jackson, MS / 6. Sioux Falls, SD

7. Memphis, TN / 8. Augusta, GA / 9. Greensboro, NC

10. Columbus, GA


Worst Cities to Start a Business

141. Anaheim, CA / 142. San Jose, CA / 143. Santa Ana, CA

144. Oakland, CA / 145. Ontario, CA / 146. Fremont, CA

147. Yonkers, NY / 148. Garden Grove, CA / 149. Jersey City, NJ

150. Newark, NJ

KEY STATS

  • Office space is four times more affordable in Toledo, Ohio, than in San Francisco.

  • The median annual salary is four times higher in Fremont, Calif., than in Detroit.

  • The cost of living is two times higher in New York than in Laredo, Texas.

  • The workforce is six times more educated in Irvine, Calif., than in Santa Ana, Calif.

  • The number of small businesses per capita is two times higher in Miami than in Bakersfield, Calif.

Americans are born with an entrepreneurial streak. It’s in our DNA. From Manifest Destiny and the Gold Rush to the Industrial Revolution and the Internet Age, intense periods of innovation have molded our economy and sparked important societal advancements.

Innovation is never easy, though. Hardship and necessity underpin much of our entrepreneurial progress largely because the motivation to enter the unknown in the face of bleak odds simply is not in abundance when more comfortable avenues remain to be explored.

Driven by a dearth of traditional job opportunities and a reenergized hesitancy to put one’s fate in the hands of others, somewhere between 15 million and 53 million Americans are now working for themselves. There is always room in the market for new ideas, products, services and multi-million dollar success stories if one knows where to look.

In order to help aspiring entrepreneurs, from restaurant owners to high tech movers and shakers, maximize their chances for long term prosperity, WalletHub analyzed the relative start-up opportunities that exist in the 150 most populated U.S. cities. We did so using 13 unique metrics ranging from 5 year survival rate and the affordability of office space to the educational attainment of the local labor force. Our findings, as well as expert commentary and a detailed methodology, can be found below.

Overall Rank
City
"Access to Resources" Rank
"Business Environment" Rank
1
Shreveport, LA
6
13
2
Tulsa, OK
18
1
3
Springfield, MO
1
70
4
Chattanooga, TN
2
65
5
Jackson, MS
4
72
6
Sioux Falls, SD
39
2
7
Memphis, TN
14
39
8
Augusta, GA
15
21
9
Greensboro, NC
31
11
10
Columbus, GA
26
19
11
Fort Wayne, IN
10
74
12
Amarillo, TX
22
38
13
Columbus, OH
27
30
14
New Orleans, LA
23
41
15
Birmingham, AL
11
79
16
Wichita, KS
8
88
17
Grand Rapids, MI
17
64
18
Laredo, TX
21
56
19
Winston-Salem, NC
33
23
20
Nashville, TN
56
3
21
Oklahoma City, OK
43
14
22
Brownsville, TX
13
87
23
Lubbock, TX
19
68
24
El Paso, TX
29
46
25
Toledo, OH
4
119
26
Louisville, KY
32
48
27
Fayetteville, NC
41
26
28
Montgomery, AL
20
77
29
Rochester, NY
3
127
30
Omaha, NE
48
16
31
Baton Rouge, LA
33
57
32
Knoxville, TN
35
54
33
Corpus Christi, TX
40
43
34
Lincoln, NE
30
60
35
Reno, NV
42
42
36
Kansas City, MO
51
22
37
Stockton, CA
9
112
38
Indianapolis, IN
45
47
39
Tallahassee, FL
24
91
40
Spokane, WA
12
115
41
Houston, TX
70
5
42
Lexington, KY
53
33
43
Salt Lake City, UT
69
8
44
Cincinnati, OH
36
76
45
Mobile, AL
47
59
46
Fresno, CA
16
120
47
Milwaukee, WI
7
144
48
St. Louis, MO
57
45
49
Dallas, TX
70
15
50
Richmond, VA
50
75
51
Colorado Springs, CO
68
29
52
Des Moines, IA
28
111
53
Norfolk, VA
72
37
54
Port St. Lucie, FL
46
100
55
Little Rock, AR
36
117
56
Detroit, MI
25
132
57
Virginia Beach, VA
82
12
58
Jacksonville, FL
66
58
59
San Antonio, TX
75
27
60
Arlington, TX
85
10
61
Newport News, VA
63
66
62
Charlotte, NC
94
6
63
Fort Worth, TX
77
31
64
Huntsville, AL
62
81
65
Buffalo, NY
38
130
66
Honolulu, HI
79
51
67
Tucson, AZ
44
131
68
Boise, ID
80
55
69
Tampa, FL
84
35
70
Atlanta, GA
107
6
71
Albuquerque, NM
64
97
72
Madison, WI
58
109
73
San Bernardino, CA
52
128
74
Akron, OH
54
126
75
Irving, TX
110
9
76
Garland, TX
101
34
77
Chesapeake, VA
91
44
78
Las Vegas, NV
74
88
79
Orlando, FL
90
52
80
Modesto, CA
55
136
81
Bakersfield, CA
87
62
82
Cleveland, OH
49
144
83
St. Petersburg, FL
85
71
84
Chicago, IL
60
137
85
Grand Prairie, TX
106
25
86
Cape Coral, FL
73
105
87
St. Paul, MN
59
143
88
Los Angeles, CA
81
96
89
Minneapolis, MN
64
134
90
Durham, NC
113
17
91
Austin, TX
114
20
92
Phoenix, AZ
97
69
93
Plano, TX
125
4
94
Henderson, NV
108
40
95
Aurora, CO
94
83
96
Worcester, MA
67
140
97
Overland Park, KS
109
53
98
Baltimore, MD
78
121
99
Aurora, IL
83
113
100
Anchorage, AK
105
80
101
Moreno Valley, CA
87
108
102
North Las Vegas, NV
100
95
103
Denver, CO
122
24
104
Sacramento, CA
99
97
105
New York, NY
102
93
106
Raleigh, NC
125
18
107
Mesa, AZ
103
99
108
Miami, FL
93
115
109
Philadelphia, PA
60
148
110
Fort Lauderdale, FL
115
73
111
Pittsburgh, PA
89
141
112
Santa Rosa, CA
97
129
113
Glendale, AZ
117
85
114
Tempe, AZ
119
84
115
Boston, MA
96
142
116
Tacoma, WA
103
134
117
Hialeah, FL
91
147
118
Riverside, CA
112
109
119
San Diego, CA
127
78
120
Rancho Cucamonga, CA
132
67
121
Fontana, CA
116
104
122
Chandler, AZ
141
31
123
Gilbert, AZ
141
36
124
Long Beach, CA
123
102
125
Seattle, WA
129
93
126
Huntington Beach, CA
145
49
127
Irvine, CA
146
49
128
Santa Clarita, CA
136
82
129
Glendale, CA
134
88
130
San Francisco, CA
143
61
131
Scottsdale, AZ
150
27
132
Vancouver, WA
121
124
133
Pembroke Pines, FL
138
86
134
Washington, DC
133
101
135
Providence, RI
75
149
136
Peoria, AZ
148
63
137
Oxnard, CA
123
125
138
Oceanside, CA
130
107
139
Portland, OR
119
139
140
Chula Vista, CA
128
122
141
Anaheim, CA
131
118
142
San Jose, CA
140
103
143
Santa Ana, CA
118
146
144
Oakland, CA
134
114
145
Ontario, CA
136
123
146
Fremont, CA
149
92
147
Yonkers, NY
144
106
148
Garden Grove, CA
139
133
149
Jersey City, NJ
147
138
150
Newark, NJ
111
150

 

 

 


ASK THE EXPERTS

As current self employment figures have shown, an increasing number of Americans aim to become more economically self reliant by working for themselves. To assist them in that goal, WalletHub asked some of the foremost entrepreneurship experts what advice they would offer an aspiring entrepreneur. Following are the observations of one business expert and his response to: What tips would you offer an aspiring entrepreneur?


Wade T. Brooks

Executive Director of the Angel Investment Fund and Contributing Assistant Professor of Entrepreneurship at Willamette University, Atkinson Graduate School of Management


What tips would you offer an aspiring entrepreneur?

Entrepreneurship is hard and there will be numerous challenges, long days, and difficult decisions. Passion for your industry, solution, and team will be critical to maintaining focus and pushing through those tough times.

Write down an inventory of your skills, resources and contacts. You’ll find that list to be longer than you thought. Use them as your foundation.


How important is the city an entrepreneur picks to start a new company?

The city isn’t as important as the local contacts and resources you have. If you move to a new city to start a company, and have few if any contacts, that will be a real challenge. As your business grows and you get a foothold you might consider a new location that is closer to your largest customers, financiers, or an industry hub. One caveat, if you get accepted into Y-Combinator you should relocate for that opportunity. (Many experts disagree greatly with this perspective and believe that a city is an important factor in the future success of an entrepreneur. - Editor).

There are a few places with exceptional startup infrastructures including startup communities with incubators, accelerators, labs, etc., in addition to access to capital through local angles, angel groups, and venture funds. My most highly recommend city is Portland, Oregon which is currently booming and not as competitive as Silicon Valley, but of course I’m biased. Others that come to mind include Austin, Seattle, Cambridge, Denver, etc. It’s a much longer list than it used to be.

Also, depending on what your product/service is, I wouldn’t rule out an international location where labor may be less expensive. Access to capital will be more constrained and exit opportunities limited but it’s becoming a more connected global marketplace and countries such as Chile and New Zealand have started to cater to entrepreneurs and angel investors.


DEFINITION of ‘Angel Investor

An investor who provides financial backing for small startups or entrepreneurs. Angel investors are usually found among an entrepreneur’s family and friends. The capital they provide can be a one time injection of seed money or ongoing support to carry the company through difficult times.


Which are some of the biggest mistakes entrepreneurs make?

The biggest mistake I consistently see is not talking to customers early and not taking their feedback. This doesn’t mean you should chase every opportunity, but you should reassess your solution, business model, and financial model when confronted with large resistance from customers or slow adoption.

Selling is hard. Selling starts with talking to customers and being told no. No one likes rejection, it stings no matter who you are, but if you’re doing it correctly you should be getting good data from those interactions. That data should help you create a better product/service. As you hone your solution, and better identify your market, it will get easier. If rejection is hard for you turn it into your success. Set a goal to get 10 noes every day and accomplish your goal. Again, make sure you’re learning why potential customers are saying no, this is invaluable data. (Many financial experts would disagree with this concept. A well planned, sophisticated, professional plan will be met with respect and interest by other business men. - Editor).


Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

This isn’t something I chase. I look for folks that are hard workers, that know their industry inside and out, that have experience and contacts in their field, and can create their own future. You have to have a passion to make the dream the reality. It doesn’t matter if that’s in genetics, nanotechnology, 3D printing, geolocation, cryptocurrency, alternative energy, cyber security, or disrupting the way houses are built.


What is the best source of funding for new companies?

If you are looking to get outside investment, and I hope you don’t need to, but if you do, your company will have to meet three key criteria:

1. Scalable - you can make money while you sleep.

2. Durable - your company can withstand market competition as it grows.

3. Sellable - there needs to be active acquirers for companies like yours.

Without all three of those it’s hard to get anything beyond friend and family money.

The best money you can get is money you’ve generated through sales. I’ve founded companies that grew organically on their own earnings and ones that have had multiple financing round. There is nothing quite like the freedom of running a shop that you own 100%. Still, that isn’t always an option.

There is a natural progression when raising money and it’s true in almost all cases:

1. Savings, Credit Cards, Refinance (5k-200k)

2. Friends, Family, Fools (10k-500k)

3. Local Angel Investors/groups (25k-3M)

4. Angle Funds (100k-1M)

5. Seed Stage VC funds (250k-3M)

6. VC Funds (1M-50M+)


What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

The big three are money, infrastructure and tax incentives.

Money

The city/state is typically a poor investor as their main goal, employment, is not aligned with the goals of early stage companies, doing the most with the least. However, in Oregon, the state has invested in a number of existing privately run angel funds and that has provided much needed capital to early stage companies. This is a model that should be emulated.


Infrastructure

Discounted physical space, access to university resources and labs, high speed Internet, community support for entrepreneurship, top tier education at all grade levels, a good tax structure that keeps both companies and successful cashed out entrepreneurs in the community and reinvesting.


Tax Relief

Angel investing and early stage investing can be increased by providing tax breaks, credits and incentives. A number of states have passed, or are working on passing, this type of legislation.

 

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