20 Cities Where Small-Business Owners Are Thriving

Some cities, like San Francisco, are synonymous with startups. But, does that mean you’re resigned to living in the Bay Area if you’re interested in starting a new business?

In reality, there are plenty of other cities across the U.S. where entrepreneurs are thriving. To pinpoint those places, GOBankingRates used data from the Kaufman Index of Startup Activity to determine which cities provide the most promising environment for entrepreneurs, including the rate of new entrepreneurs, startup density and a variety of other factors that usually indicate a strong environment for small businesses.

If you have the entrepreneur bug but aren’t sure how to proceed, an essential step is nailing down which city will allow your company to thrive. So, you should give your ideas room to grow by choosing one of the best cities to start a small business.

Data is accurate as of Feb 19th, 2019, and is subject to change

20. Cincinnati

• Rate of new entrepreneurs: 0.30% of the adult population in a given month
• Startup density: 61.6 startups for every 1,000 businesses

In Cincinnati, 300 out of every 100,000 adults starts a business in any given month. And, out of every 1,000 firms, nearly 62 are new businesses. Cincinnati has several startup accelerator programs and incubators — such as The Brandery, Minority Business Accelerator, and Hamilton Mill — which provide funding and support for entrepreneurs.

19. Atlanta

• Rate of new entrepreneurs: 0.43% of the adult population in a given month
• Startup density: 89.9 startups for every 1,000 businesses

Atlanta has the fifth-highest rate of new entrepreneurs among the cities on GOBankingRates’ list, with 430 out of every 100,000 adults starting a new business in any given month. The city has fostered entrepreneurship through startup incubators, support networks and resources such as the Advanced Technology Development Center.

18. Riverside, Calif.

• Rate of new entrepreneurs: 0.36% of the adult population in a given month
• Startup density: 92.4 startups for every 1,000 businesses

This Californian city has a greater startup density than more than half of the other cities on this list. Entrepreneurship in Riverside gets a boost from ExCITE, a partnership between the University of California, Riverside; the city and county of Riverside; and private industries. This startup accelerator helps new technology businesses through funding, professional resources and access to lab space and specialized equipment.

17. San Jose, Calif.

• Rate of new entrepreneurs: 0.26% of the adult population in a given month
• Startup density: 86.9 startups for every 1,000 businesses

New entrepreneurs account for just 260 of every 100,000 San Jose residents in any given month. The city ranks among the lowest rates of new entrepreneurs on GOBankingRates’ list despite its reputation for being one of the premier startup spots in the country.

However, this Silicon Valley burg had the highest opportunity share of new entrepreneurs — or the percentage of people starting businesses because they saw a market opportunity — at 90.2 percent.

16. Columbus, Ohio

• Rate of new entrepreneurs: 0.28% of the adult population in a given month
• Startup density: 66.2 startups for every 1,000 businesses

Ohio’s capital and largest city is also a great place to consider starting your new business: Another GOBankingRates study named Columbus one of the candidates to become the next Silicon Valley. Support from corporate, community and private-sector organizations has helped fuel this growth. In particular, startup accelerator Rev1 has fostered new businesses in Columbus through funding and other resources — it’s part of why more than 66 of every 1,000 businesses in this city is a startup.

15. Boston

• Rate of new entrepreneurs: 0.33% of the adult population in a given month
• Startup density: 68.2 startups for every 1,000 businesses

In Boston, 330 out of every 100,000 adults start a new business in any given month. The city has several startup accelerators — such as MassChallenge — that provide resources and funding to help entrepreneurs launch and grow businesses. The successful startup sector might be leaving behind a decent chunk of the population, though: Boston is one of the places in America with the most income inequality.

14. San Francisco

• Rate of new entrepreneurs: 0.37% of the adult population in a given month
• Startup density: 86.5 startups for every 1,000 businesses

San Francisco is a hotbed for entrepreneurship and known for startups such as Airbnb, Uber, Twitter and Pinterest. In this Bay Area city, 370 out of every 100,000 adults start a new business in any given month, and nearly 87 out of every 1,000 companies are new businesses. However, San Francisco doesn’t rank higher on GOBankingRates’ list because it has the highest cost of living compared to the other cities in this study.

13. New York

• Rate of new entrepreneurs: 0.41% of the adult population in a given month
• Startup density: 86.5 startups for every 1,000 businesses

The biggest city in the U.S. has one of the highest rates of new entrepreneurs. In New York, 410 out of every 100,000 adults start a business in any given month. And, the city has plenty of startup accelerators that help entrepreneurs get their businesses off the ground. The New York City Economic Development Corporation offers lots of programs geared toward entrepreneurs.

12. San Antonio

• Rate of new entrepreneurs: 0.38% of the adult population in a given month
• Startup density: 87.2 startups for every 1,000 businesses

In the second-largest city in Texas, 380 out of every 100,000 adults start a new business in any given month. Startups can take advantage of co-working spaces such as Geekdom, which also provides funding for entrepreneurs. Groups such as Launch SA also provide workshops, support and resources for startups.

Not only does the thriving small-business economy mean a lot of people are earning more, but you can also get more bang for your buck in San Antonio: It’s one of the cities where your paycheck stretches the furthest.

11. Portland, Ore.

• Rate of new entrepreneurs: 0.26% of the adult population in a given month
• Startup density: 82.8 startups for every 1,000 businesses

Portland’s startup scene has been thriving thanks to the availability of venture capital through groups such as Portland Seed Fund. Plus, area schools — like Portland Community College — offer programs that foster entrepreneurship, Inc. reported. Out of every 100,000 adults in Portland, 260 start a new business in any given month.

10. Orlando, Fla.

• Rate of new entrepreneurs: 0.25% of the adult population in a given month
• Startup density: 105.5 startups for every 1,000 businesses

Orlando lands halfway on this top 20 list despite having the lowest level of new entrepreneurs. With 105.5 startups for every 1,000 businesses, the city has the second-greatest startup density in the study. Pair that with the largest year-over-year increase in employment from November 2017 to November 2018, and it should be clear why Orlando ranks as highly as it does.

9. Kansas City, Mo.

• Rate of new entrepreneurs: 0.37% of the adult population in a given month
• Startup density: 83.6 startups for every 1,000 businesses

In Missouri’s largest city, 370 out of every 100,000 adults start a new business in any given month. Entrepreneurs in Kansas City get help launching their businesses from groups such as Kansas City Startup Village and LaunchKC.

8. Houston

• Rate of new entrepreneurs: 0.4% of the adult population in a given month
• Startup density: 92.6 startups for every 1,000 businesses

The largest city in Texas is actively trying to increase its startup population to diversify its economy. Station Houston has been playing a big role in encouraging entrepreneurship there. Launched in 2016, this startup accelerator offers a co-working space, mentorship, resources, and funding for entrepreneurs.

7. Los Angeles

• Rate of new entrepreneurs: 0.56% of the adult population in a given month
• Startup density: 92.3 startups for every 1,000 businesses

Along with Miami, Los Angeles has the highest rate of new entrepreneurs — a fact that’s all the more impressive when you consider that L.A. has the second-largest population in the country. In fact, one section of the Los Angeles area has been dubbed Silicon Beach due to the high number of tech startups.

6. Phoenix

• Rate of new entrepreneurs: 0.38% of the adult population in a given month
• Startup density: 92.1 startups for every 1,000 businesses

In Arizona’s capital and largest city, 380 out of every 100,000 adults start a new business in any given month. The opportunity share of new entrepreneurs is approximately 87.15 percent, meaning small-business owners see significant market opportunity in Phoenix. Helping drive this are groups such as the Greater Phoenix Economic Council and Arizona Commerce Authority, which have helped encourage entrepreneurship in the city.

5. Denver

• Rate of new entrepreneurs: 0.39% of the adult population in a given month
• Startup density: 92.3 startups for every 1,000 businesses

Denver is one of just seven cities in GOBankingRates’ study where more than 7 percent of the adult population are business owners, and it appears to be adding new entrepreneurs all the time with another 0.39 percent of the population starting a new business in any given month.

4. San Diego

• Rate of new entrepreneurs: 0.49% of the adult population in a given month
• Startup density: 95.9 startups for every 1,000 businesses

San Diego tops California’s better-known entrepreneurial hot spots — such as San Francisco and San Jose — thanks to its rate of new entrepreneurs. Organizations like StartUp San Diego and venture capital groups such as Seed San Diego are helping promote entrepreneurship in the city.

3. Dallas

• Rate of new entrepreneurs: 0.37% of the adult population in a given month
• Startup density: 94.2 startups for every 1,000 businesses

Organizations such as The Dallas Entrepreneur Center have provided co-working spaces and support for entrepreneurs. And, startup accelerators — such as Tech Wildcatters — provide funding for promising new businesses. It’s all part of a Texas economy that is especially friendly toward small-business owners.

2. Miami

• Rate of new entrepreneurs: 0.56% of the adult population in a given month
• Startup density: 107.8 startups for every 1,000 businesses

Miami, along with Los Angeles, has the highest rate of new entrepreneurs, but the Florida city’s smaller size allows it to claim this study’s highest startup density — pushing Miami to the No. 2 spot overall. Organizations such as Endeavor Miami are helping startups grow, and angel investor groups such as Miami Angels are funding entrepreneurs.

1. Austin, Texas

• Rate of new entrepreneurs: 0.51% of the adult population in a given month
• Startup density: 104.5 startups for every 1,000 businesses

Austin has the third-highest rate of new entrepreneurs as well as the third-greatest startup density, both of which help counterbalance the fact that it has the lowest percentage of total firms that are small businesses. Another benefit of living and working in this city is that you might have an easier time attracting young talent due to the robust housing market: Austin is one of the best cities for millennial homebuyers.

In Which State Are Small-Business Owners Thriving?

The perception that California is a major startup hub is supported by GOBankingRates’ data, with one out of every five cities in this study coming from the Golden State. However, if you’re searching for the top state for startups, look no farther than the Lone Star State. Although Texas only placed four cities on this list, all but one finished in the top half — and at No. 16, Houston just missed the mark — plus two of the top three cities are in Longhorn country.

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Methodology: These findings are the result of a GOBankingRates study of eight factors affecting startups in major metropolitan areas of the U.S. The study assessed the following: (1) rate of new entrepreneurs, sourced from 2017 Kauffman Index of Startup Activity data; (2) opportunity share of new entrepreneurs, sourced from 2017 Kauffman Index of Startup Activity data; (3) startup density, sourced from 2017 Kauffman Index of Startup Activity data; (4) rate of business owners, (5) survival rate of new businesses, and (6) established small-business density, all sourced from the 2017 Kauffman Index of Main Street Entrepreneurship. Each Kauffman metric corresponded to a year, so to get a more inclusive picture, the three-year average for each metric was calculated. Additional factors: (7) cost of living and (8) projected job growth, sourced from Sperling’s Best Places. Once the information was collected, it was assigned a ranking between 0.00 and 1.00. Scores for each category were weighted equally, then added together for a total ranking. Cities with lower scores were considered the most favorable for starting a business. Data is accurate as of Feb 19th, 2019, and is subject to change

About the Author

Joel Anderson

Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor.

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