Best and Worst Cities for Small Business Success

If your own your business, or looking to start one, then this list of the best and worst cities for small business owners is a must read. While small-business confidence rebounded this July from a 15-month low, some cities make it difficult for entrepreneurial businesses to grow. The results come from technology market place Thumbtack, and use responses from 17,633 small businesses across the United States. The vast majority of the businesses were small service businesses with five or fewer employees. The survey looked at 95 cities, ranked on 11 standards including, “training programs and overall regulations.”

California and New York are definite startup hotspots, but both states ranked as the fourth and fifth worst states for small business because of the difficult climate. Thumbtack Chief Economist John Lieber explained that, “the climate for small businesses in both states is very difficult due to [the] burden of regulations, state government, and tax climate.” Additionally, states and cities were judged based on training availability to help small-business owners learn how to run a business and adhere to local policies. Lieber said, “These small businesses, because they’re so small, really value direct support from a city or a state.” The worst states for small businesses were Rhode Island, Illinois, Connecticut, California and New York. Additionally, the worst cities were Hartford, Conn., Albuquerque, New Mexico, Buffalo, N.Y., New Haven, Conn., and Providence, Rhode Island.

Tax regulations and labor regulations were also important factors for evaluating state friendliness. Cities were also judged for their website experience, with easy-to-use websites boosting a city’s rank by simplifying an owner’s access to information. Lieber explained that, “Whether or not a city or state is viewed as friendly to small business is important for its economic welfare. A friendly city will not only attract more small businesses, but in the event of an economic downturn, more of its local workers will be able to make money by starting a small business. Less friendly cities are more dependent on large employers and could suffer more in an economic downturn. That can hurt the city in the long run.”

The best states for small-businesses were Texas, New Hampshire, Utah, Louisiana and Colorado. The best cities for small-businesses were Manchester, New Hampshire, Dallas, Texas, Richmond, Virginia, Austin, Texas, and Knoxville, Tennessee. Some of the other factors considered were a city or state’s relative, “ease of starting a business, ease of hiring, health and safety, employment, labor, hiring, tax code, and zoning.”

If you are considering starting a business, talk to financial advisor to develop a plan for moving forward. Understanding your state or city’s opportunities and challenges is an important part of the process—just like developing your business plan, budgeting for supplies, planning your retirement, and setting goals. If you want to investigate the small-business culture in the United States, check out the Thumbtack survey here: If you want to start your financial planning, contact an expert at Apex Financial Advisors today.