It happens every year. Business publications and retail trade magazines publish their annual “list” editions, where they inform entrepreneurs about the best places to start a business, buy a franchise or get a tax break. According to a recent article in The Fiscal Times, “The 10 Hottest Spots to Start a Small Business,” it is a combination of factors that makes certain metropolitan areas more attractive for business owners. As more Americans are starting businesses than at any time within the past fifteen years, certain cities have emerged as the top spots for running a profitable enterprise.
Rather than listing every resource for finding the best business location, this article will focus on five areas that have a strong economy, growing population and access to a talented and educated workforce. When you learn more about these cities, you will not be surprised to find them packed with like-minded entrepreneurs.
What makes a city among the best places for new business owners? When asked what makes one town more attractive than another, entrepreneurs often cite things like “no corporate income tax,” “low cost of living” and “available office space” but that is just the beginning. The average age, family size and relative buying power of the population can make a city or town attractive to certain types of business concepts too.
Business owners look a lot different than they did 20 years ago. Immigrants play a much larger role in the franchise and retail industry, and early retirees are starting small service-oriented businesses from their homes.
Based on the top 10 metropolitan areas for starting a business in 2011, the Fiscal Times added more commentary to help readers understand the rankings. For example, our “Top 5” list below looks at factors such as population growth, private sector employment and the overall economic strength of the region.
Here is how they rank:
#1 – Austin, TX
Not surprisingly, Austin takes the top spot in the Business Journal rankings for two consecutive years, but it’s not because they are riding on past successes. Austin has actually improved year-over-year in three categories: employment growth, population growth and small business growth. Add to that the fact that Austin’s cost of living falls well below the national average, and they enjoy the benefits of an educated, high-tech workforce. Texas is also known for having no personal or corporate income tax, and other local business taxes are lower than the national average.
#2 – Oklahoma City, OK
Having improved its standing from 15th place in last year’s list to #2 this year, Oklahoma City can attribute much of its success to small business growth. With a growth rate of 0.4 percent, it earned a 3rd place rank in one-year employment growth. Additionally, the state of Oklahoma offers a low cost of living with a high concentration of investment capital from its burgeoning oil and gas industry. A growing number of certified business incubators provide valuable assistance for startups who want to lease affordable office space. In addition to providing numerous resources, the state offers tax breaks for qualified research, development, manufacturing and IT businesses. Local business owners also enjoy the quality of life, cultural activities and revitalized downtown shopping area.
#3 – Charleston, SC
It won’t take much arm-twisting to convince a spouse or business partner to look at Charleston, SC. That’s because in addition to encouraging entrepreneurship through business development courses and networking events, this area boasts incredible beauty and an excellent quality of life. The city of Charleston also provides business incentives like workforce recruiting, reduced startup and operating costs, sales tax exemptions, and more.
#4 – Charlotte, NC
In keeping with its sterling reputation for innovation and business growth, Charlotte NC has also seen dramatic population growth over the past five years. It’s almost as if everyone “discovered” Charlotte at the same time. One local nonprofit, the Business Innovation & Growth Council, has a mission of developing high-growth entrepreneurs, which isn’t difficult for most North Carolinians, but it also possible to get matching fund grants to open a new business in Charlotte. They also have the nation’s lowest effective rates for business taxes and the lowest rates for mandatory expenses like unemployment and workers compensation.
#5 – Seattle, WA
Ever since Seattle became home to one of the world’s most recognizable success stories – Microsoft – several other major technology companies have joined them. Being one of the leading metro areas in research and technology, it’s no wonder that Seattle exudes creativity and innovation, and growth is projected to be 1.4 percent annually over the next two years. Business owners in Washington State pay no corporate or personal income tax, and the state doesn’t tax capital gains. Tax incentives abound for businesses across many categories, including biofuels, research, manufacturing, food processing and aerospace.
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