Best Places for New Businesses - 2019 Edition
Starting a new business can be a daunting venture. It always carries risk, and no matterhow prepared you think you are, success isn’t a guarantee. There are some places in thecountry, though, that are more hospitable to new businesses than others. To find the cities whereentrepreneurs should think about starting their business ventures, SmartAsset analyzed the dataand found the cities that are best for new businesses.
Specifically, we analyzed 50 metro areas across the following metrics: new businesses as apercentage of total businesses, startup early survival rate, percentage of all businesses thatbreak even or make profit, percentage of all businesses ceasing operations because of finances,percentage of businesses with a loan from a bank or financial institution and percentage ofbusinesses getting $100,000 or more from a bank or financial institution. For details on ourdata sources and how we put all the information together to create our final rankings, checkout the Data and Methodology section below.
- Western and Southern metro areas populate the top 15.According to Census regional divisions, six of our top 15 metro areas are in Southern states.Five of our top 15 metro areas are in Western states.
- A lot of startups have the potential to succeed.Though long-term success is not guaranteed and results vary by state, an average of almost 80%of startups survive their first year, according to data from the Census Bureau.
- Kansas City, MO-KS
The Kansas City metro area leads this list. About 85% of startups in Missouri survive theirfirst year, the highest rate in our study. This metro area also has the third-highest percentage ofall businesses with a loan from a bank or financial institution, at approximately 19%. Newbusinesses represent 5.3% of all businesses in the metro area.
- Nashville-Davidson—Murfreesboro—Franklin, TN
The Nashville, Tennessee metro area takes the No. 2 spot on our list. It sees only about 1% ofbusinesses closing because of finances, tied for the third-lowest rate in the study. It has thesecond-highest percentage of all businesses receiving a business loan from a bank or financialinstitution - at approximately 20% - and the third-highest percentage of businesses receiving atleast $100,000 from a bank or financial institution, at a little more than 17%.
- Memphis, TN-MS-AR
The list moves across the Volunteer State to the Memphis, Tennessee metro area, which alsoincludes parts of Mississippi and Arkansas. The Memphis metro area leads both banking metrics inthis study – about 23% of businesses received a loan from a bank or financial institution, andalmost 18% of businesses received at least $100,000 from a bank. The Memphis metro area doesn’trank very well for new businesses as a percentage of total businesses, however, as just 4.1% ofall businesses are new.
- Minneapolis-St. Paul-Bloomington, MN-WI
The Minneapolis metro area, which also includes Twin City St. Paul and Bloomington in Minnesota,as well as parts of Wisconsin, takes fourth place. The startup early survival rate in Minnesota is83.9%, the third-highest rate for this metric in the study. The Minneapolis metro area also ranksthird overall in terms of the percentage of all businesses that at least break-even, with almost85% of businesses there meeting that benchmark.
- Louisville, KY-IN
The Louisville metro area, which spans parts of Kentucky and Indiana, places fifth on our listof the top 10 places for new businesses. Louisville places in the top 10 in four different metrics:almost 84% of all of its businesses in 2016 at least broke even, only about 1.1% of its businessesthat year had to cease operations because of finances, more than 18% of its businesses received aloan from a bank and approximately 16% of its businesses received at least $100,000 from a bank orother financial institution.
- Milwaukee-Waukesha-West Allis, WI
The Milwaukee-Waukesha-West Allis, Wisconsin metro area comes in at No. 6. Almost 18% of allbusinesses in the area had at least $100,000 from a bank or financial institution, thesecond-highest rate in this study. The metro area has the fourth-lowest percentage of businessesceasing operations for financial reasons, 1.2%. Additionally, around 4.3% of the businesses in theMilwaukee metro area are new businesses.
- Portland-Vancouver-Hillsboro, OR-WA
The Portland, Oregon metro area, which also includes parts of Washington State, is seventh. Thismetro area ranks 11th overall for percentage of new businesses, at 5.7%. Portland ranks firstoverall for percentage of all businesses breaking even, at 85.3%, and is tied for the third-lowestpercentage of all businesses closing because of financial reasons, at 1%.
- Riverside-San Bernardino-Ontario, CA
The metro area around Riverside, California includes San Bernardino and Ontario, and rankseighth in our study on the best places for new businesses. California boasts a startup survivalrate of 82.3%, the fifth-best in this study. This metro area ranks in the top 20 of the study forthree metrics: new businesses as a percentage of all businesses, at 5.2%; percentage of allbusinesses that had profits or broke even, at 82.6% and percentage of all businesses that receivedat least $100,000 from banks and other financial institutions, at 14.1%.
- Boston-Cambridge-Newton, MA-NH
The Boston-Cambridge-Newton, Massachusetts-New Hampshire metro snags the ninth spot in our list.It has a state startup survival rate of 82.7%, the fourth-highest of all 50 metro areas in ourstudy. While it does not score well for new businesses as a percentage of all businesses(at 3.4%, it ranks in the bottom 10 for this metric overall), it still ranks in the top half of thestudy for four of the other five metrics we considered.
- Charlotte-Concord-Gastonia, NC-SC
The final metropolitan area in our top 10 is Charlotte-Concord-Gastonia, North Carolina-SouthCarolina. Around 6.3% of the businesses in the area are new, the fourth-highest rate for thismetric in the study. The Charlotte metro area ranks 13th overall for percentage of businesses thatreceived $100,000 or more from banks and other financial institutions, at 14.8%, and ranks 21stoverall for percentage of all businesses that had profits or broke even, at 82.5%.
To find the best places in America to start a new business, we analyzed data for the 50largest metro areas across the following metrics:
- New businesses as a percentage of total businesses. Data comesfrom the Census Bureau’s 2016 Annual Survey of Entrepreneurs.
- Startup early survival rate (by state). Data comes from theCensus Bureau’s 2016 Annual Survey of Entrepreneurs. This metric counts all thestartups that survive at least one year.
- Percentage of all businesses that had profits or broke even. Datacomes from the Census Bureau’s 2016 Annual Survey of Entrepreneurs.
- Percentage of all businesses ceasing operations because offinances. Data comes from the Census Bureau’s 2016 Annual Survey ofEntrepreneurs.
- Percentage of all businesses with a business loan from a bank or financialinstitution. Data comes from the Census Bureau’s 2016 Annual Survey ofEntrepreneurs.
- Percentage of all businesses receiving a loan of at least $100,000 from abank or financial institution. Data comes from the Census Bureau’s 2016 AnnualSurvey of Entrepreneurs.
First, we ranked each metro area in each metric. We then found the average of all rankingsfor each metro area, giving each metric equal weight except for the two relating to bank loans,which each received a half weight. We used that average ranking to find the final scores foreach metro area. The metro area with the highest average ranking received a score of 100, whilethe metro area with the lowest average ranking received a score of 0.
Tips on Managing your Money
- Smart business advice. If you are looking to start a newbusiness, consider working with a financial advisor.SmartAsset's free toolmatches you with financial advisors in your area in 5 minutes. If you’re ready to bematched with local advisors that will help you achieve your financial goals,get started now.
- Budgeting is key. A budget can help you put aside money to investin a small business, if you want to. Use a comprehensive budget calculator to see howyou can optimize your savings.
Questions about our study? Contact us at firstname.lastname@example.org
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