20 Best and Worst Cities in the U.S. to Start Up Small Business

Some people dream of starting their own business. It means making their own rules and doing things on their own terms. Nothing is more liberating than becoming your own boss. However, of course, it isn’t as simple as just that. A new start up business takes a lot of planning and responsibility. It can be quite stressful, especially getting started. You have to figure out exactly how to start a business and come up with some small business ideas to incorporate.

After you figure out how to start a business, and come up with some small business ideas, then there are some other basic factors you’ll want to check out. One main factor that you want to consider with a new start up business is figuring out the best location to establish your new business. In general, there are a few main aspects to consider when exploring which locations bring about the most promising prospects. You’ll want to consider: cost of living, startup density, and employment growth. That’s why there is this list of the ten best, and worst, cities to establish a new start up business. First, we’ll take a look at the ten best cities to check out for starting a small business.

Top 10 Best Cities to Start a Small Business

1. Austin, Texas

Rate of new entrepreneurs: 0.56 percent
Opportunity share of new entrepreneurs: 81.29 percent
Startup density: 104.5
Cost of Living: 117.40
Projected job growth: 43.13 percent

Austin, Texas is the best city to take your small business ideas to, as you can see from the data. So, on your list for how to start a business, be sure to include starting your business here, because it’s likely to have the most success. Another thing to keep in mind is cost of taxes. In Texas, the effective tax rate for federal taxes is 12.75%. The average annual income in Texas is usually in the $56,000 range. That means federal taxes would cost $7,139 annually, and FICA would have a rate of 7.65%, which would cost $4,284 annually. Between both amounts, the total cost would be $11,423 in taxes annually, because there are no state taxes.

2. Miami, Florida

Rate of new entrepreneurs: 0.52 percent
Opportunity share of new entrepreneurs: 77.69 percent
Startup density: 107.8
Cost of living: 122.8
Projected job growth: 38.12 percent

Second on the list is Miami, Florida. The results of the data make this South Florida location one of the most desirable for a new start up business. One other thing Florida has going for it is a lower tax rate than Texas. The effective tax rate is 11.49%. However, the average income is a little lower than Texas, averaging around approximately $50,800. This means that federal taxes would cost $5,839 annually. FICA has a rate of 7.65%, which would cost $3,886 annually. Between both amounts, the total cost would be $9,725 in taxes annually, because there are no state taxes.

3. Denver, Colorado

Rate of new entrepreneurs: 0.37 percent
Opportunity share of new entrepreneurs: 84.53 percent
Startup density: 92.3
Cost of living: 127.5
Projected job growth: 39.88 percent

Denver, Colorado is also on the list. The data illustrates how it makes a good option for where you can start your new business. As far as taxes are concerned, Colorado has the highest federal tax rate of 14.44%. Simultaneously, it has a better rate of annual income set approximately at $65,000. As a result, $9,839 would be paid annually on the federal level. With a FICA rate of 7.65%, it would cost $4,973 annually towards that. This would all result in a total of $17,371 in taxes annually. The reason is because Colorado has the downside of including state taxes, which are at the rate of 4.63%, costing an additional $3,010 annually towards that.

4. Dallas, Texas

Rate of new entrepreneurs: 0.33 percent
Opportunity share of new entrepreneurs: 80.74 percent
Startup density: 94.2
Cost of living: 95.2
Projected job growth: 42.29 percent

It looks like Texas has yet another hot spot on the list for new entrepreneurs to check out. Dallas has a triple threat going on with the data results. So, it’s worth it to consider investing your small business ideas in this location. Then, like it was mentioned before with taxes in Texas, the total cost is $11,423 annually out of the average $56,000 approximate annual income.

5. Kansas City, Missouri

Rate of new entrepreneurs: 0.31 percent
Opportunity share of new entrepreneurs: 77.27 percent
Startup density: 83.6
Cost of living: 87
Projected job growth: 42.81

Kansas City, Missouri is really bringing something special to the table with its combination of data. This make it seem like yet another promising option on the list. Then, taking into account taxes, the annual federal tax rate is 11.55%. The average annual income in Missouri is approximately $51,000. This results in the cost of federal taxes to be $5,889 annually. Then, FICA has a 7.65% rate, which would cost $3,902 annually. Included with that is a state tax rate of 3.98%, which costs $2,031 annually. Therefore, the total cost is $11,821 annually.

6. San Antonio, Texas

Rate of new entrepreneurs: 0.33 percent
Opportunity share of new entrepreneurs: 87.93 percent
Startup density: 87.2
Cost of living: 93.2
Projected job growth: 39.97 percent

Texas really seems to be the place to be when you are figuring out how to start a business. San Antonio is yet a third location in Texas that is a great option to consider when creating a new start up business. As far as taxes, we already know the $11,423 total cost deducted from the average annual income of approximately $56,000.

7. Los Angeles, California

Rate of new entrepreneurs: 0.53 percent
Opportunity share of new entrepreneurs: 75.96 percent
Startup density: 92.3
Cost of living: 166.2
Projected job growth: 37.25 percent

Even though Los Angeles has the drawback of being expensive to live in, it also has the bonus of having a couple other qualities going for it, as the data indicates. Those two valuable attributes tend to make the cost of living worth it. Then, looking at tax costs, the annual federal rate of taxes is 14.76%. The average annual income for California is usually approximately $67,000. This means that federal taxes would cost $9,889 annually. In addition to that, the FICA rate of 7.65% annually adds another cost of $5,126 annually. Then, another $3,271 cost annually towards a state tax rate of 4.88%, bringing the total tax cost to be $18,225 annually.

8. San Diego, California

Rate of new entrepreneurs: 0.39 percent
Opportunity share of new entrepreneurs: 81.75 percent
Startup density: 95.9
Cost of living: 166
Projected job growth: 39.54

California has another city on the list. San Diego has pretty much the same cost of living that Los Angeles does, which works against it. However, don’t be quick to sell this one short. Once you see the rate of business owners, and size of the community of entrepreneurs, then you may deem this one your choice for where to launch your start up business. Again, as far as taxes go, usually $18,285 total income tax is paid annually out of the average annual income of approximately $67,000.

9. Houston, Texas

Rate of new entrepreneurs: 0.4 percent
Opportunity share of new entrepreneurs: 78.93 percent
Startup density: 92.6
Cost of living: 102.3
Projected job growth: 36.68 percent

Once again, it looks like Texas is dominating the list with a fourth city that is one of the most desirable locations for taking your small business ideas. While it does have one factor going against it, it manages to salvage it with a couple other decent qualities demonstrated in the data. It makes this a promising choice for where to start your new business.

10. Columbus, Ohio

Rate of new entrepreneurs: 0.33 percent
Opportunity share of new entrepreneurs: 80.5 percent
Startup density: 66.2
Cost of living: 84.3
Projected job growth: 39.51 percent

Lastly in the list of the top ten most desirable locations for starting a new small business is Columbus, Ohio. While it is lacking in one aspect, it certainly accommodates it by offering a couple other great qualities. As far as taxes, the federal annual tax rate is 11.81%. The average annual income for Ohio is approximately $52,000. So, that means federal taxes cost $6,139 annually. Then, the FICA annual rate is 7.65%, which would cost $3,978 annually. In addition to that, there is state tax with a rate of 2.36%, which would cost $1,225 annually. With a bit of local tax included, the total cost of taxes is $11,589 annually.

Average Numbers

Average Rate of new entrepreneurs for best cities: 0.41 percent
Average Opportunity share of new entrepreneurs for best cities: 80.66 percent
Average Startup density for best cities: 91.66
Average Cost of living for best cities: 116.19
Average Projected job growth for best cities: 39.92 percent

Conversely, there are some locations that are less desirable for investing your small business ideas. Just because they are populated, and are even well renowned cities in general, doesn’t make them a good choice for a startup business. So, now, we’re going to take a look at the top ten worst cities to start a small business in.

Top 10 Worst Cities to Start a Small Business

1. Milwaukee, Wisconsin

Rate of new entrepreneurs: 0.13 percent
Opportunity share of new entrepreneurs: 71.81 percent
Startup density: 60.7
Cost of living: 84.1
Projected job growth: 35.15 percent

First on the list is Milwaukee, Wisconsin. Despite its great cost of living appeal, it doesn’t live up to the hype in the department of job growth and with not having very much entrepreneurship available too. This is definitely one location to cross off your list if you’re looking to start your own successful business, as it is the worst place to do so.

2. Detroit, Michigan

Rate of new entrepreneurs: 0.24 percent
Opportunity share of new entrepreneurs: 71.77 percent
Startup density: 71
Cost of living: 72.9
Projected job growth: 30.87 percent

Another one at the top of the list to avoid is Detroit, Michigan. Even though it has the lowest cost of living so far in this overall list this doesn’t salvage it. It’s the worst in regard to projected job growth, and it also is very sparse as far as its number of entrepreneurs.

3. Virginia Beach, Virginia

Rate of new entrepreneurs: 0.23 percent
Opportunity share of new entrepreneurs: 83.34 percent
Startup density: 68.1
Cost of living: 110.2
Projected job growth: 35.64 percent

With the lowest rate of business owners on the list, which definitely doesn’t help its standing, Virginia Beach also is dragged down by its fairly low rate of new entrepreneurs.

4. Las Vegas, Nevada

Rate of new entrepreneurs: 0.39 percent
Opportunity share of new entrepreneurs: 77.34 percent
Startup density: 120.7
Cost of living: 104.5
Projected job growth: 39.87 percent

This next one may be a bit of a surprise, but apparently Las Vegas isn’t very promising when trying to apply your small business ideas in a location. It does have its startup density going for it. Unfortunately, that isn’t enough to suffice. It has the lowest business survival rate, as well as established small-business density. Both of those reasons make it one of the least desirable locations for starting a small business.

5. Seattle, Washington

Rate of new entrepreneurs: 0.26 percent
Opportunity share of new entrepreneurs: 78.63 percent
Startup density: 85
Cost of living: 176.5
Projected job growth: 39.38 percent

Just when you thought San Diego, and Los Angeles, were the most expensive cities, Seattle takes the cake in that department along with the worst cost of living in the overall list. As if that wasn’t bad enough, it definitely doesn’t make up for it with its low rate of entrepreneurs and poor chance of business survival rating. This is definitely a city that you will want to avoid when starting a new business.

6. Pittsburgh, Pennsylvania

Rate of new entrepreneurs: 0.13 percent
Opportunity share of new entrepreneurs: 69.45 percent
Startup density: 57.2
Cost of living: 88
Projected job growth: 36.10

Even though Pittsburgh has the highest business survival rate, and established small-business density, on the list, its failing point is its lack of an entrepreneurial community. In fact, its rate of new entrepreneurs is practically nonexistent and is the lowest one on the overall list. That’s too bad, because it seems to have some promising attributes, including it’s fairly affordable in the cost of living aspect.

7. Jacksonville, Florida

Rate of new entrepreneurs: 0.17 percent
Opportunity share of new entrepreneurs: 86.16 percent
Startup density: 89.4
Cost of living: 92
Projected job growth: 39.21 percent

Jacksonville is almost in the same boat as Pittsburgh as far as its lack of having much of a rate of new entrepreneurs. It’s the second lowest in the overall list. In addition to that, it also has a faltering business survival rate. Even though it has a good status as far as opportunity share of new entrepreneurs this can’t salvage things. Overall, it’s still a poor choice of location for people looking to start a new business.

8. Orlando, Florida

Rate of new entrepreneurs: 0.21 percent
Opportunity share of new entrepreneurs: 77.08 percent
Startup density: 105.5
Cost of living: 96.3
Projected job growth: 41.02 percent

Orlando’s startup density can make you start to look its direction and consider the possibilities with your small business ideas. However, after looking at its scarce business survival rate, and low rate of new entrepreneurs, you begin to realize those factors completely overshadow the startup density aspect – reasons enough to cross it off the list.

9. Philadelphia, Pennsylvania

Rate of new entrepreneurs: 0.22 percent
Opportunity share of new entrepreneurs: 75.86 percent
Startup density: 69.7
Cost of living: 99.5
Projected job growth: 37.47 percent

Philadelphia doesn’t seem to really have much of anything going for it in terms of being a good location for settling down with your small business ideas. With everything being low in regards to its rate of new entrepreneurs, startup density, and rate of business owners, it’s probably best to look the other way.

10. Minneapolis, Minnesota

Rate of new entrepreneurs: 0.18 percent
Opportunity share of new entrepreneurs: 73.41 percent
Startup density: 72.5
Cost of living: 109.4
Projected job growth: 38.78 percent

Minneapolis has one of the lowest rates of new entrepreneurs. Plus, its startup density, and rate of business owners, is anything but impressive. Unfortunately, this city is just another one on the list that is better off forgotten.

Average Numbers

Average Rate of new entrepreneurs for worst cities: 0.22 percent
Average Opportunity share of new entrepreneurs for worst cities: 76.49 percent
Average Startup density for worst cities: 79.98
Average Cost of living for worst cities: 103.34
Average Projected job growth for worst cities: 37.34 percent

As you can see, it’s important to do your research to be informed about different decisions that can affect the outcome of how successful your new business is. After all, sometimes, many new entrepreneurs invest everything they have as far as their small business ideas, and even money. That’s why it’s crucial to try to set yourself up to be successful.

If there is anything you take away from these lists, it should be that location can really make a difference in terms of being successful as far as starting a new business. Some cities do offer more qualities than others. At the end of the day, you just have to decide which risks are worth it and weigh out the positive and negative aspects. Then, you can try to make the best decision that will hopefully lead to you having the business that you’ve always wanted.