Are You in the Right City to Start (or Grow) a Business?

Which U.S. cities are the most and least hospitable to small business entrepreneurs?
April 16, 2012

Which U.S. cities are the most hospitable to small business entrepreneurs?

G. Scott Thomas, the On Numbers columnist at The Business Journals, analyzed small business in 100 metropolitan areas and named Austin the top spot for small business for the third year in a row. (Scott defined small business as any private-sector employer with fewer than 100 workers.)

Thomas's rankings are based on a six-part formula that includes five-year population growth, one- and five-year private-sector employment growth, number of small businesses per 1,000 residents, one-year change in that concentration and one-year growth in the number of small businesses. The 2012 rankings are based on 2009 data, the latest year for which figures are available from the U.S. Census Bureau.

Why Austin?

Austin's number of small businesses increased 0.4 percent from 39,180 in 2008 to 39,350 in 2009. That was the biggest gain by any market. All but three of the 100 metropolitan areas actually suffered losses.

"Austin is known for its small business drive," Thomas writes, noting its city council recently approved a resolution to allow its inhabitants to work with the Austin Independent Business Alliance on some of the goals outlined in its Local Business Manifesto.

In second place was Raleigh (seventh on last year's list), which is part of the Research Triangle. North Carolina's government also has a reputation for offering incentives to businesses to start or relocate in the state.

Third was Oklahoma City (second place on last year's list). Houston jumped from 18th in the rankings to fourth, and Salt Lake City leaped from 26th to fifth.

The five worst metropolitan areas were Modesto; Augusta, Ga.; Riverside-San Bernardino, Calif.; Lakeland; and Sacramento.

Phoenix suffered the worst decline, falling from 34th on last year's list to 89th on this year's list. Syracuse fell from 25th to 72nd, and Augusta was close behind, falling from 56th to 99th.

San Francisco-Oakland was the biggest gainer, rising from 61st to 18th.

San Jose, the unofficial capital of Silicon Valley, was 8th on the list, up from 20th last year. And New York has the nation's largest concentration of small businesses with more than 520,000. The city ranks 9th on the list.

To see all the results, click here.

Do you agree with your city's ranking? Why or why not?

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