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BFS Capital Blog

The Best and Worst Cities for Small Business

May 2, 2016

Happy National Small Business Week! Not a mere National Pretzel Day or International S’mores Week, the 53rd annual National Small Business Week is an unofficial holiday designed to get people excited about the longtime backbone of our national economy, the 28 million small businesses. And hopefully, it helps drive some new customers through your doors.

In anticipation of National Small Business Week, the good people at WalletHub did a little research to find which cities are the best and worst to start a small business. The study isn’t meant to praise or bemoan any geographic regions, per se, but more to direct entrepreneurs to the regions where they may find greater chances for success.

How’d They Figure This Out

For large cities, using 2015 data, WalletHub measured two categories: Access to Resources and Business Environment. Access to Resources includes factors like affordability of office space, availability of financing, employee availability and median household income. Business Environment factored in things like taxes, cost of living, average education levels, five-year survival rate, and length of average workday, among others. You can see the whole study here.

For smaller cities (defined as cities with a population of 10,000 to 100,000), WalletHub factored in the same categories as with large cities, but added in Business Costs. Business Costs encompasses things like the cost of office space and taxes, while Business Environment now includes factors like number of startups per 100,000 residents, average revenue per business, industry variety, and a number of growth factors. You can scope all of it out right here.

Some Key Takeaways

While we’ll get you the juicy top and bottom ten cities a little later, there were some interesting trends to note for small businesses in both small and large cities.

  • Retire to Florida, Start a Small Business: While large Florida cities like Miami, Orlando, and Tampa didn’t rank particularly highly for small business, Florida’s smaller cities are far and away the most business-friendly in the nation. Sixteen of the top 101 best small cities for small business were in the Sunshine State. So your dream of getting out of the big city and going snorkeling on the beach is a lot closer than you think.
  • California is Not Ideal for Small Business: Just make sure that beach isn’t in California. When it comes to large cities, the highest ranked city in California is San Bernardino at 73, and everyone’s favorite San Francisco is a distant 150th. However California’s small cities fare even worse: 73 of the bottom 100 cities are in the Golden State, including the bottom 24. So if you had any thoughts of opening a business in Suisun City, abandon them now.
  • The South and Midwest Are Best: For both large and small cities, the southeast and Midwest offered the most business-friendly environments. The 28 best large cities for small business all fall within those regions, from Tulsa to Memphis, New Orleans to Nashville. Rochester, New York was the highest rated city from any other region at 29th. With the exception of Florida cities and Brighton, New York, the same holds true for small cities, with nearly the entire top 80 falling in the southeast or Midwest.
  • Texas is Best for Large Cities: As Texas suburbs become overrun with corporate headquarters, small businesses are popping up all around them. Eight of the top 50 large cities for small business are in Texas, including the highest-ranked major metro area in Houston at 41st.
  • Sioux Falls, South Florida Are Entrepreneurial Hot Spots: Of the five large cities with the most small businesses per capita, four are in South Florida: Miami, Hialeah, Ft. Lauderdale and Pembroke Pines. The only outlier: Sioux Falls, South Dakota, home to the award-winning small business incubator The Bakery, and a city the Huffington Post dubbed “The New SF.” South Florida also swept the top five small cities for startups per capita.

Rankings of the Best and Worst Cities to Start a Small Business

While WalletHub looked at 150 large cities and 1,268 small cities, here are the top and bottom ten in each category.

Best Large Cities for Small Business

  1. Columbus, GA
  2. Greensboro, NC
  3. August, GA
  4. Memphis, TN
  5. Sioux Falls, SD
  6. Jackson, MS
  7. Chattanooga, TN
  8. Springfield, MO
  9. Tulsa, OK
  10. Shreveport, LA

Best Small Cities for Small Business

  1. Deerfield Beach, FL
  2. Cheyenne, WY
  3. Dothan, AL
  4. Clearfield, UT
  5. Inver Grove Heights, MN
  6. La Vergne, TN
  7. Jefferson City, MO
  8. Brighton, NY
  9. North Chicago, IL
  10. Holland MI

Worst Large Cities for Small Business

  1. Anaheim, CA
  2. San Jose, CA
  3. Santa Ana, CA
  4. Oakland, CA
  5. Ontario, CA
  6. Fremont, CA
  7. Yonkers, NY
  8. Garden Grove, CA
  9. Jersey City, NJ
  10. Newark, NJ

Worst Small Cities for Small Business

  1. Moorpark, CA
  2. Belmont, CA
  3. East Palo Alto, CA
  4. Saratoga, CA
  5. Norco, CA
  6. Seaside, CA
  7. Pacifica, CA
  8. Castro Valley, CA
  9. Eastvale, CA
  10. Suisun City, CA

Source: WalletHub

Interestingly enough, availability of financing was a major factor in many of the lower-ranked markets. But it’s also one factor that can be easily mitigated. Even if you live in Chapel Hill, NC, Nashua, NH, Mobile, AL, Mesa, AZ or any of the other cities that ranked near the bottom in that category, you can still get business financing from BFS Capital. And while we can’t control how educated your workforce is or how long the workdays last, as champions of small business, BFS Capital can at least help you get the capital you need to grow your small business.

The theme of this year’s National Small Business Week is “Dream Big, Start Small”. As a small business owner, you have big dreams and we’re here to fund them.