While entrepreneurs don’t always have the luxury of moving to a new city in order to start their dream business, knowing which cities are the best for start-ups can still help business owners succeed. If they are close enough to a particularly prominent city to make the move, it might be helpful to consider relocation. If they are far away from an entrepreneurial city, then understanding what makes the city so friendly to new businesses can help them lobby local city councils and politicians to make changes at the local and state level.
Financial website WalletHub regularly studies a variety of major cities around the United States and compiles a list of which cities are friendliest to businesses and employees. Their top cities for starting a business in 2016 include:
Sioux Falls, South Dakota
Sioux Falls, SD scores high on both the costs of starting a business and its overall business environment, but its score for access to resources is only middle of the pack. Sioux Falls currently does not have a state level corporate income tax, which has made it an auspicious home for financial companies like Wells Fargo and Citigroup.
Grand Rapids, Michigan
After scoring in the top 20 for both its positive business environment and business costs, Grand Rapids’ access to resources rank was in the mid-forties. Grand Rapids is known for both its manufacturing companies and its service related businesses; Spectrum Health is the largest employer in the area as of 2016.
Oklahoma City, Oklahoma
Oklahoma City followed the patterns of the two cities on the list in front of it, scoring higher in both business environment and costs than it did in access to resources. The city is home to two Fortune 500 companies: Devon Energy Corporation and Chesapeake Energy Corporation.
Unlike the cities that ranked higher on the list, Lincoln ranked very high for access to resources, which compensated for its more mid-pack ratings in the area of costs. Known as part of the Midwest Silicon Prairie, Lincoln has a number of both manufacturing related and service related businesses within its borders.
St. Louis, Missouri
Like Lincoln, St. Louis scored well on resources access and lower on its business environment. It ranked very well on business costs, however, and actually received the highest ranking in this category of the first five cities featured. There are two Fortune 500 companies located in St. Louis itself, with another seven located within the city’s metropolitan area.
Best Specific Categories
WalletHub also looked at several specific categories for these cities, highlighting those that were doing well already. What cities are doing the best at growing small businesses, offering accessible financing, and have the most affordable office space? WalletHub looked.
Best at growing small businesses?
Grand Rapids won this category. It is generally agreed in economic circles that the needs of small businesses are different than the needs of bigger ones. Since small businesses are so crucial to rebuilding the economy, other cities should look to those that are successful in this area and follow their model.
Most accessible financing?
Small businesses need capital in order to grow, and banks are often known for only being willing to lend money to people and businesses who don’t need it. This is especially important to women and minority owned businesses. For these business owners, the availability of financing might absolutely be a determining factor in where they start their business. Lincoln, Nebraska, had the most accessible financing on the WalletHub list.
Affordable office space?
Many companies these days start up in someone’s living room or garage, with nothing more dramatic than a laptop and an internet connection. Other companies, however, require significant office space. Starting up a company that will have a dedicated customer service phone bank, for example, might require a significant square footage of space. Toledo, Ohio, has the most affordable office space available in the United States.
In order to generate this list, WalletHub started by determining the 150 most populated cities in the United States. They specifically looked at the cities themselves, and excluded the metropolitan areas. They measured each city across the three categories listed above – business environment, cost of doing business, and access to resources. To find out more about the specific metrics that went into each category, and how they were waited, view the full methodology of WalletHub’s study. In general, the business environment was weighted most significantly, with the cost of doing business and access to resources more lightly weighted.
How does your city measure up to WalletHub’s listings?