2014’s Best Cities to Start a Business

by John S Kiernan


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.  Such dynamics have played out in recent years, as unemployment hit 10% at the Great Recession’s nadir while the share of the labor force unemployed for more than 26 weeks rose to the highest point in more than 60 years, according to the Center on Budget & Policy Priorities.

Driven by a dearth of traditional job opportunities and a reenergized hesitancy to put one’s fate in the hands of others, somewhere between 10 million and 43 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 you know 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 largest cities in the United States in terms of population.

We did so using 14 unique metrics, ranging from 5-year survival rate and the affordability of office space to the educational background of the local labor force.  You can read more about the metrics and underlying data used to conduct this report as well as our ultimate findings below.

Complete Rankings




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

best cities metrics

Commentary for Select Cities


Jacksonville, FL

As a resident of Jacksonville for the last 29 years, it does not surprise me that the city was selected as the number one city in the United States to start a small business.  With a relatively low tax climate, a workforce that reveals an entrepreneurial spirit, and sizable support from the Chamber of Commerce, the SBA, and an excellent Small Business Development Center at the University of North Florida, local First Coast residents have developed and staffed an ever increasing number of small businesses in industries including restaurants, bars, shops, and other retail and wholesale establishments.

Many of these businesses are also peripherally associated with the large employers like the Port of Jacksonville, the Naval Air Station and the Mayport Naval Base.  However, the primary driver is distance.  The City of Jacksonville and DuvalCounty are one politically and the area covered is about 820 square miles.  Restaurants and stores tend to be regional within the community necessitating multiple franchises and locations for both large and small business firms alike.  Ultimately, Jacksonville has lots of small businesses because we have localized demand for the products these businesses provide.

– Dr. Paul M. Mason: Professor of Economics, University of North Florida


Fayetteville, NC

Small business is at the core of the Fayetteville Renaissance Plan, which is designed to promote economic growth in the city’s center. Judging by the city’s high ranking as a start-up destination, it seems as if the plan is working. Two of the biggest things that Fayetteville has going for it are strong industrial variety (7th nationally) and a deep, relatively inexpensive, and extremely hardworking employee pool.


Augusta, GA

Augusta, GA is best known as the home of Augusta National Golf Club and The Masters, but the city’s economic strength extends far beyond the links. Augusta has the 19th most industrial variety out of the 150 cities that WalletHub analyzed as well as the 16th lowest corporate taxes, the 18th most affordable real estate, and the 20th lowest average income. It makes sense, after all, considering how much free publicity the city gets each year when April rolls around the world’s best golfers make their way up Magnolia Lane.


Jackson, MS

Jackson perhaps does not receive the type of national acclaim that it deserves, at least as far as the public coastal consciousness is concerned. The is a popular business destination due to its combination of abundant labor, low wages, inexpensive office space, favorable corporate taxes, and accessible small business financing.


Memphis, TN

For the past several years, Memphis has experienced a surge in economic activity in several of its neighborhoods, including Downtown, the South Main Arts District, Overton Square, and Cooper-Young. Many of the new businesses that have opened are 'green field' businesses, meaning that they are entirely new operations and are not replacing previous ventures. It appears that local entrepreneurs are recognizing that there is a lot of latent demand in Memphis for new restaurants and stores and that the economy of Memphis is strong enough to support many new entrants. Three major grocery stores have announced significant expansions to their local operations, including Kroger, Whole Foods, and the Fresh Market.

There is palpable excitement in the city, not just from the emergence of new businesses, but also the expansion of infrastructure for cyclists and improvements in our local parks. Having successful sports teams certainly helps as well. Memphis has been named a 'city to visit' by National Geographic magazine and regularly tops list of most-improved cities. The cost of living here is very low and there are still numerous untapped niches in local commerce. Several national firms have established local operations or expanded existing operations, including Sharp, Urban Outfitters, and numerous manufacturing firms. Young people are recognizing that Memphis is a great place to live, work, and really make a difference in the community.

– Dr. Douglas Campbell: Director of The Center for Economic Education, University of Memphis

Expert Entrepreneurship Tips

Colleges and universities are increasingly emphasizing entrepreneurship skills in recognition of global business trends as well as the desire of students to become more economically self-reliant.  WalletHub asked some of the foremost entrepreneurship experts in the world of higher education what advice they would offer an aspiring entrepreneur. Click on the experts’ profiles to read their opinion.


< >

Michael Song

University of Missouri-Kansas City
Michael Song
Follow 5 principles for success:

• Choose business opportunities where people are willing to pay for your products.

• Develop products (better, faster, cheaper & simpler) to provide total solutions to your customer’s problems.

• Tell your customers what you have. Avoid tip-toeing into markets. A market leading product should be launched and actively sold in all markets.

• Make it easy and simple for your customer to get your products.

• Collect money! Pricing is the most important strategy. Charge what it is worth. If you offer the best performance, charge for the best performance.

Ari Ginsberg

Ari Ginsberg
The entrepreneurs that get ahead are the ones that are resourceful. They’re the ones that bootstrap. They’re the ones that do more with less. They’re not just creative in terms of coming up with an idea that no one else has. What really makes entrepreneurs successful is the ability to get it done, and get it done despite all the challenges.

So, No. 1, an entrepreneur needs to know that resources are not the entire answer. Even funders want to see that you’re resourceful – that you’re not just spending the money to get rich, but that you really understand what it takes to build a business.

Ken Pickar

Ken Pickar
Find the best mentor you can, especially one who has ‘been there and done that.’ This will enable you to avoid many common mistakes of start-ups and give you an inspiring example of ‘what it takes.’

Waverly Deutsch

Chicago Booth
Waverly Deutsch
Learn how to sell. As painful a process as it is, selling is the only way for companies to generate sustainable revenue and revenue is the only thing that will keep you company alive over the long term.

Robert F. Chelle

University of Dayton
Robert F. Chelle
Perform extensive market research before you proceed with your idea. Often, your future customers can't understand your product, already have extensive opportunities to purchase a similar product or service or completely disagree with your proposed business model.

Alan Flury

Georgia Tech
Alan Flury
It actually depends on the type of entrepreneurial venture and the background of the entrepreneur. Any of the following might be relevant:

• Choose your co-founders carefully. Think of this union like you may think of a marriage.

• Focus your energies on an industry or business that you clearly understand.

• Validating your product or service concept directly with your target customer is far more important than writing a business plan. Do this first – before you raise funds and hire employees.

And for a lot of people my advice would be: Don’t do it.

Patrick J. Murphy

DePaul University
Patrick J. Murphy
First, don't try to be the artist and the businessperson at the same time. Pick one role, then find your most compatible co-founder.

Second, don't try to separate life and work, especially in the early days of a venture. It's got to be a personal enterprise, at the outset, to be excellent.

Third, take a ‘ready-fire-aim’ approach to entrepreneurial action. Venture growth occurs best via the correction of manageable errors, and errors are vital to adaptivity. People are incredibly resourceful when they need to be. And being resourceful as an entrepreneur is paramount.

Gina Colarelli O'Connor

Rensselaer Polytechnic Institute
Gina Colarelli O'Connor
Assemble a trusted, experiences set of advisors and get going. People think entrepreneurship is risky. It is not. You have to be smart and strategic, and you don’t know what you don’t know, but those who are into it understand risk mitigation and feel in control over their own destiny.

There are tons of opportunities out there these days – ways to change the world for the better, to bring new value to the market. Both entrepreneurship and corporate entrepreneurship are hot. We need to encourage this activity and help both start-ups and companies increase their expertise at how to create new businesses.

Angelo Santinelli

Babson College
Angelo Santinelli
Try to build an experienced board of directors and give them a stake in the company. This would prevent ‘drinking of one's own bath water.’ An independent board can keep everyone honest and focused.

David Deeds

University of St. Thomas
David Deeds
DO YOUR HOMEWORK! Research the market in depth. Figure out who your best customers are likely to be and develop a well-thought-out strategy on how you can reach them and convert them to buyers.



WalletHub used 14 unique metrics to gauge the relative entrepreneurial opportunities that exist in the 150 largest U.S. cities, based on population. These metrics together encapsulate a city’s overall business friendliness by considering the level of overhead involved with opening a business there as well as the level of local business competition, the depth of the talent pool, and the cost of living.

  • Access to Financing (Weight = 1) – Most new companies require bank-provided start-up capital to get off the ground. This metric gauges local lending activity by dividing the total annual value of small business loans in a given city by the number of businesses operating there.
  • Cost of Office Space (Weight = 1) – Even if you start in the proverbial garage, most businesses eventually need professional office space if they are going to grow. As a result, the per-square-foot cost of renting an office is an obvious differentiating factor between cities from an entrepreneurship perspective.
  • Corporate Taxes (Weight = 1) – Three types of state taxes have the most bearing on local businesses: the corporate income tax, the sales tax, and the individual income tax. While these taxes are assessed at the state level, they nevertheless provide a useful point of differentiation between U.S. cities from an entrepreneurial perspective. Certain localities tack on extra charges here and there, but the corporate tax burden still does not vary much by city within a given state. As a result, all of the cities in a given state effectively trade together in the hierarchy of the best and worst cities for corporate taxes.
  • Employee Availability (Weight = 1) – Entrepreneurs ideally want to open up shop where unemployment far exceeds the number of available jobs, as this belies a reliable pool of available talent and enables owners to be selective about who they hire and how much they pay. Employee Availability is equal to the difference between the current number of job openings in a given city and the number of people who are currently unemployed. Given that unemployment percentages typically exceed job opening percentages, lower is better for this metric.For example, if job openings in City A are equal to 2% of its population and unemployment is at 5%, its Employee Availability score would be -3%. City B could also have 2% job openings, but it would be a more attractive destination than City A if its unemployment rate were 10%, for example, making its Employee Availability score -8%. City B will have more job seekers available after current listings are exhausted, after all.
  • Local Cost of Living (Weight = 1) – Local cost of living is important for a few reasons: 1) it affects pricing and margins for companies with a local scope; 2) it dictates the wages one pays their employees; and 3) entrepreneurs are people too, and it will dictate their disposable income. This metric uses the Census Bureau’s Cost of Living Index as a proxy for detailed local cost comparison.
  • Average Annual Salary (Weight = 1) – Most entrepreneurs have big dreams and will need to hire help in order to bring them to fruition. But cost-effective hiring also is a must, as most entrepreneurs have limited financial backing. Cities with relatively low income levels are therefore extremely attractive.
  • Length of Average Workday (Weight = 1) – Entrepreneurship is notoriously grueling work, as small companies must out-hustle the competition in order to maximize limited resources and ultimately become a big company. That’s harder to do when the local workforce is conditioned to punch out the minute the 5pm strikes every day. This metric compares the average amount of time people in each city spend at work, with the longest average workday being the best.
  • Workforce Education Level (Weight = 1) – The most successful entrepreneurs surround themselves with people who fill-in their knowledge gaps and complement their skills. A well-educated workforce is conducive to that objective. In addition, well-educated people are usually better problem solvers and are more professionally polished. This metric compares the percentage of each city’s population that has at least a bachelor’s degree.
  • Entrepreneurial Activity (Weight = 0.5) – Underpinning this metric is the tried-and-true notion that where there is smoke, there is fire. In other words, a city with a high-number of start-ups per capita is likely to have conditions and policies that are conducive to incubating young companies and is therefore a relatively attractive base of operations for aspiring entrepreneurs. Entrepreneurs also enjoy being able to pick the brains of like-minded professionals.However, high levels of entrepreneurship can also be indicative of issues within the local job market or even market dynamics that no longer apply given the current regulatory and economic environment. What’s more, accurate data is not available for all of the cities included in this report and entrepreneurial activity can vary widely between cities in a given state, unlike the corporate tax burden. We therefore assigned this metric a half weight.
  • 5-Year Survival Rate (Weight = 0.5) – Entrepreneurship is all about calculated risk and learning from the past. So, if you want to build a successful business, it’s a good idea to study what other successful business owners have done before you. That includes where they chose to start their journey. Starting your business in a particular city does not itself breed success, but there could be reasons – both tangible and intangible – why certain cities have a long-term reputation as corporate incubators.
  • Number Businesses Per Capita (Weight = 0.5) – On the one hand, a bustling business community belies a strong local economy as well as significant networking and business development opportunities. On the other hand, it could also indicate a saturated market that cannot support too many more new businesses. We therefore assigned this metric a half weight.
  • Real Estate Affordability (Weight = 0.5) – Both you and your employees will need housing. The more affordable the housing, the more disposable income you will have, and the more likely your employees are to be content with their compensation.
  • Industry Variety (Weight = 0.5) – As a business grows, regardless of what industry it happens to be in, the ability to attract talent that is diverse in both skill set and background becomes essential. However, there is also something to be said for the opportunity to assume an unfilled niche in the market. That is why we assigned this metric a half weight.
  • Small Business Friendliness Index (Weight = 0.5) – It is no secret that other studies of this nature have been completed in the past. But, it is important to take third-party research into account in the interest of completeness and objectivity. This metric serves that purpose.

Sources: The data used to compile this report is courtesy of the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, Indeed.com, the Kauffman Foundation, the Tax Foundation, LoopNet, and the Federal Deposit Insurance Corporation.

John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture,…
1462 Wallet Points
There are many reasons Port St Lucie, FL has few businesses. Definitely do your infrastructure homework, for one.
Apr 14, 2014  •  Reply  •  Flag