Building a Small Business? We Found the 10 Best Cities for Entrepreneurs
For aspiring entrepreneurs with dreams of starting their own business, the mind tends to go to one region in particular.
You know which one I’m talking about — it’s the one that goes hand in hand with the idea of startups: Silicon Valley.
Sure, Silicon Valley might have been a good place to start a business — especially one of the tech variety — once upon a time. But now, the reality is that the cost of living there has become so outrageous that talent can’t flourish unless it’s being backed by (at least) a six-figure income.
Impossible living conditions shouldn’t smother the entrepreneurial spirit. So, in the spirit of National Entrepreneur Month, we decided to round up a list of cities that are not only hotbeds for entrepreneurship but are actually affordable.
Using data from the U.S. Census Bureau, the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis, we considered the following factors of the 100 most populous metropolitan areas:
- Share of entrepreneurs.
- Share of female entrepreneurs.
- Earnings of self-employed workers.
- Number of new small businesses started (latest data from 2014).
- Change in new small businesses between 2004 and 2014.
- Cost of living.
- Unemployment rate (latest data from September 2018).
The 10 Best Cities for Entrepreneurs and Startups
Maybe you already live in one of the cities that made our list. If so, it might be time to seriously consider moving forward with that dream of owning your own bakery. And if your city didn’t make the cut, keep these places in mind if you ever decide to relocate for business purposes.
St. Louis, Missouri
Earnings: $56,905
Change in new small businesses: 51%
Share of entrepreneurs: 2.9%
Unemployment rate: 2.9%
St. Louis is home to blues music, good barbecue and that famous arch — maybe you’ve heard of it. It’s also appealing for new businesses and entrepreneurs, considering the city has seen a whopping 51% change in new small businesses over a decade.
The city also clocks in with prices about 6% below the national average and came in second on our list of the best cities for tech jobs that are actually affordable!
Colorado Springs, Colorado
Earnings: $67,804
Change in new small businesses: 8.7%
Share of entrepreneurs: 4.3%
Unemployment rate: 3.6%
Denver might get a lot of love and attention, but if you drive about an hour south to Colorado Springs, budding business owners can find a more attractive option. The unemployment rate there is equal to the national average, but the city boasts a high share of entrepreneurs and high average earnings for self-employed workers.
The Colorado Springs Chamber and EDC acts as a good local resource for small business owners and aspiring entrepreneurs. And fun fact: Some of the first GPS technology was developed in Colorado Springs! Big shoes to fill — no pressure.
Boise, Idaho
Earnings: $50,719
Change in new small businesses: 11.8%
Share of entrepreneurs: 4.6%
Unemployment rate: 2.1%
The capital of Idaho joins our list with a 12% change in small businesses between 2004 and 2014. Boise also has the lowest unemployment rate of the cities on our list, well below the national average of 3.7%.
The U.S. Small Business Administration has a Boise district office for local entrepreneurship resources, and Boise State University houses the Idaho Small Business Development Center.
Sarasota, Florida
Earnings: $60,884
Change in new small businesses: 9%
Share of entrepreneurs: 6.4%
Unemployment rate: 2.8%
Dreaming of starting your own business and spending your off time lounging on the beach? You’re in luck, because Sarasota, Florida, made our list with a 9% change in new small businesses over a decade.
Sarasota County’s Office of Business and Economic Development offers step-by-step information for small business owners, whether it’s helping them get established, relocate or expand. An insider tip from Alex Mahadevan, our data journalist who grew up in Sarasota: The HuB, a coworking space for creatives and entrepreneurs, is worth checking out.
Austin, Texas
Earnings: $62,511
Change in new small businesses: 25.2%
Share of entrepreneurs: 3.7%
Unemployment rate: 2.9%
Are you surprised to find Austin on our list? Probably not, considering the Texas capital seems to pop up on “Best Places to Live” lists pretty regularly.
Austin is one of the fastest-growing cities in the nation, attracts a high number of young grads and saw a 25% increase in small businesses between 2004 and 2014.
Lexington, Kentucky
Earnings: $76,113
Change in new small businesses: 23.6%
Share of entrepreneurs: 3.7%
Unemployment rate: 3.3%
Thoroughbreds aren’t the only things winning blue ribbons in this Kentucky city. Lexington makes the cut as one of the best cities for entrepreneurs due to a high percentage of new businesses and the second-highest average earnings for self-employed workers on our list.
Aspiring entrepreneurs can check out the Kentucky Small Business Development Center for information and resources. Who knows? You could be the next Colonel Sanders.
Miami, Florida
Earnings: $50,712
Change in new small businesses: 12.4%
Share of entrepreneurs: 6.7%
Unemployment rate: 3.2%
Two things that are hot in Miami: the weather and the entrepreneurship scene. This South Florida city has seen a rise in small business and has a high density of entrepreneurs, earning the top spot on our list when it comes to the share of entrepreneurs.
Similar to Sarasota’s HuB, CIC Miami is a coworking office space that fosters the entrepreneurial spirit and is worth looking into for resources or networking purposes.
Kansas City, Missouri
Earnings: $61,008
Change in new small businesses: 19.8%
Share of entrepreneurs: 3.2%
Unemployment rate: 2.8%
One of life’s biggest frustrations is that part of Kansas City is in Missouri and not, well, Kansas — but that’s just my opinion. My personal feelings aside, Kansas City earns a spot on our top 10 list thanks to an almost 20% change in small businesses over a decade and its low unemployment rate.
And for entrepreneurs with a soft spot for technology, Kansas City is an even more attractive option. The city snagged the number one spot on our list of best affordable tech cities.
Provo, Utah
Earnings: $60,390
Change in new small businesses: 2.7%
Share of entrepreneurs: 4.7%
Unemployment rate: 2.8%
If there’s one thing to take away from all of this, it’s don’t sleep on Utah. With an overall population just over 3 million, the Beehive State’s cities are regularly found on “best cities” lists — including some of our own.
In addition to being one of the best cities for entrepreneurship, Provo also saw a 4% uptick in income in 2017, thanks to a healthy retail trade.
Salt Lake City, Utah
Earnings: $78,169
Change in new small businesses: 1.9%
Share of entrepreneurs: 4.1%
Unemployment rate: 3%
What did I say about Utah? Last but certainly not least, Salt Lake City makes our list of entrepreneur cities with a 4.1% share of entrepreneurs in the state’s most populous metro area, and the highest average of earnings for self-employed individuals.
Salt Lake City also graced some of our other lists, thanks to its 2.6% growth in hourly pay and 3.5% income growth.
Kaitlyn Blount is a former staff writer at The Penny Hoarder. Alex Mahadevan is a former data journalist at The Penny Hoarder.
