Americans are born with an entrepreneurial streak. It’s in our DNA. From the Gold Rush to the Industrial Revolution to the Internet Age, intense periods of innovation have molded our economy and sparked important societal advancements. That said, now is one of the toughest times ever for business owners in the U.S. due to the COVID-19 pandemic, which has made 61 million small-business owners regret starting a business, according to a recent WalletHub survey.
Conditions in the U.S. are improving as people get vaccinated and states reopen, though. In order to help aspiring entrepreneurs — from restaurant owners to high-tech movers and shakers — maximize their chances for long-term prosperity in the wake of the COVID-19 pandemic, WalletHub compared the relative startup opportunities that exist in 100 U.S. cities. We did so using 21 key metrics, ranging from the five-year business-survival rate to COVID-19 cases to office-space affordability.
For a breakdown of smaller markets, check out WalletHub’s Best Small Cities to Start a Business ranking.
Best Places to Start a Business
|Overall Rank||City||Total Score||Business Environment||Access to Resources||Business Costs|
|9||Fort Worth, TX||62.10||4||19||71|
|12||St. Petersburg, FL||61.19||39||53||17|
|16||Colorado Springs, CO||60.64||51||28||24|
|18||Kansas City, MO||60.34||46||63||10|
|26||Long Beach, CA||58.33||14||32||82|
|28||New Orleans, LA||58.15||54||22||41|
|35||Los Angeles, CA||57.75||15||29||85|
|39||San Diego, CA||56.66||12||31||89|
|42||San Francisco, CA||56.10||1||6||100|
|43||Las Vegas, NV||56.03||55||59||42|
|45||San Antonio, TX||55.96||48||52||65|
|46||Fort Wayne, IN||55.86||76||67||5|
|52||San Bernardino, CA||55.51||53||85||28|
|60||St. Louis, MO||54.12||87||40||2|
|62||North Las Vegas, NV||54.04||50||92||47|
|68||Santa Ana, CA||53.22||21||95||81|
|69||Baton Rouge, LA||53.18||81||48||34|
|71||Chula Vista, CA||52.78||22||77||88|
|74||Oklahoma City, OK||52.72||88||36||12|
|78||Virginia Beach, VA||52.09||62||89||52|
|79||El Paso, TX||52.05||82||58||49|
|80||San Jose, CA||52.01||34||12||98|
|83||Corpus Christi, TX||50.82||68||76||60|
|87||St. Paul, MN||48.90||86||51||64|
|98||New York, NY||44.66||90||20||90|
|100||Jersey City, NJ||42.04||95||18||94|
Note: With the exception of “Total Score,” all of the columns in the table above depict the relative rank of that city, where a rank of 1 represents the best conditions for that metric category.
Ask the Experts
As current self-employment figures have shown, an increasing number of Americans aim to become their own boss. To assist them in that goal, WalletHub asked a panel of entrepreneurship experts to share their thoughts on the following key questions:
- What tips would you offer an aspiring entrepreneur?
- Which are some of the biggest mistakes entrepreneurs make?
- Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?
- In the context of the ongoing pandemic, what are the advantages and disadvantages of starting a business in a big city?
- What is the best source of funding for new companies?
- What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?
Ask the Experts
In order to determine the best cities for launching a business, WalletHub compared 100 cities, across three key dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs. Our sample considers only the city proper in each case, excluding cities in the surrounding metro area.
We evaluated the three dimensions using 21 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for startups. Data for metrics marked with an asterisk (*) were available at only the state level.
We then determined each city’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.
Business Environment – Total Points: 50
- Average Daily COVID-19 Deaths in the Past Week per Capita: Double Weight (~8.33 Points)
- Average Daily COVID-19 Cases in the Past Week per Capita: Double Weight (~8.33 Points)
- Length of Average Work Week (in Hours): Full Weight (~4.17 Points)
- Average Growth in Number of Small Businesses: Full Weight (~4.17 Points)
- Startups per Capita: Full Weight (~4.17 Points)
- Average Growth of Business Revenues: Full Weight (~4.17 Points)
- Five-Year Business-Survival Rate*: Full Weight (~4.17 Points)
- Industry Variety: Full Weight (~4.17 Points)
- Entrepreneurship Index*: Full Weight (~4.17 Points)
- Job Growth (2019 vs. 2015): Full Weight (~4.17 Points)
Access to Resources – Total Points: 25
- Financing Accessibility: Full Weight (~3.57 Points)
Note: This metric was calculated as follows: Total Annual Value of Small-Business Loans / Total Number of Small Businesses.
- Venture Investment (amount) per Capita: Full Weight (~3.57 Points)
- Prevalence of Investors: Full Weight (~3.57 Points)
- Human-Capital Availability: Full Weight (~3.57 Points)
Note: This metric was calculated as follows: Number of Job Openings per Number of Civilians in Labor Force minus Unemployment Rate.
- Higher-Education Assets: Full Weight (~3.57 Points)
Note: This metric is based on WalletHub’s “2021 College & University Rankings” ranking of America’s top 1,009 universities.
- Share of College-Educated Population: Full Weight (~3.57 Points)
Note: This metric measures the percentage of the population aged 25 and older holding at least a bachelor’s degree.
- Working-Age Population Growth: Full Weight (~3.57 Points)
Note: “Working-Age Population” includes individuals aged 16 to 64.
Business Costs – Total Points: 25
- Office-Space Affordability: Full Weight (~5.00 Points)
Note: This metric measures the per-square-foot rental cost of commercial office space.
- Labor Costs: Double Weight (~10.00 Points)
Note: This metric measures the median annual income.
- Corporate Taxes*: Full Weight (~5.00 Points)
- Cost of Living: Full Weight (~5.00 Points)
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Ewing Marion Kauffman Foundation, National Venture Capital Association, Yelp, Indeed.com, Tax Foundation, Council for Community and Economic Research, LoopNet, Federal Deposit Insurance Corporation, The New York Times and WalletHub research.