You Won't Believe What City is Ranked Best for Business

Is your startup failing? Locale may be to blame. Here are the best places to launch a startup.
March 07, 2013

Do you believe you live in a city that's great for launching a small business? Does your hometown have an abundance of prospective customers and employees? While these two aspects are helpful for fostering a startup, there's more to it than that. According to a 2013 study by The Business Journals and CNNMoney's analysis of a survey of 6,000 small businesses, the key to making a city the best place for startups appears to be a great support system.

As proof, one unexpected city with a lot of internal support has risen to the top of the best-for-business rankings: Oklahoma City.

Oklahoma City ranks first in the CNNMoney survey and second only to Austin, Texas, on The Business Journals' list. A far cry from Silicon Valley and New York City, other surprising cities that made these "best" lists include Colorado Springs, Colorado; Omaha, Nebraska, and Raleigh, North Carolina.

Oklahoma City’s ranking got a boost by government officials and nonprofit organizations such as i2E, which helps entrepreneurs find startup funds. The city’s government is first in the survey in licensing and regulations, and the state government’s CareerTech training system offers small-business employees free classes. 

The Consistent Winner: Austin

While Oklahoma City may be an unlikely victor, Austin, which has topped the The Business Journals' list for four consecutive years, is hardly a surprise.

"The biggest assets to Austin’s economy, in my opinion, are its network of helpers and support systems,” Austin Business Journal editor Colin Pope wrote about why Austin ranked first once again on The Business Journals' best cities list.

Pope added that Austin’s quality of life, educated workforce and low business costs are crucial to the city’s success, but the “secret” that makes Austin number-one is its extensive networks. Though many equate Austin with SXSW, Pope cites the annual Relationship & Information Series for Entrepreneurs (RISE) event in May, a week-long free event that hosts dozens of seminars that attract hundreds of successful people from numerous professions, including financiers and marketers, who “share their advice, success and horror stories” with thousands of prospective and current entrepreneurs.


 

Role of Recession and the Government

Austin and Oklahoma City weathered The Great Recession well because of relatively strong local economies, but some cities moved up on the lists because of strong government action. Denver wasn’t on “best cities” lists three years ago, but it rose to third on The Business Journals' list because the recession spurred city officials to create startup assistance programs and incubators for small businesses. It also changed the procedures for licenses and permits so small businesses can be launched more expeditiously, wrote Denver Business Journal editor Neil Westergaard.

Meanwhile, Raleigh’s leaders created a small-business loan fund for entrepreneurs who couldn’t get loans from banks, helped small businesses create employee incentive programs and find inexpensive, shared office space, and “even hired an innovation and entrepreneur manager last fall to be a liaison between the community and the city,” Triangle Business Journal editor Sougata Mukherjee wrote.

Proactive government has also helped Colorado Springs, which has a fast-track licensing program for “promising employers,” according to CNNMoney. It has assisted Raleigh as well, whose officials have undertaken “several initiatives” to help entrepreneurs, Mukherjee wrote.
 

Startup Cities to Watch

Other top cities on The Business Journals list were Durham, North Carolina; Salt Lake City; Seattle; Houston; New York City and San Jose, Calif., based on, among other things, the number of small businesses per 1,000 residents, how fast the number of small businesses is growing and businesses’ growth rate. 

CNNMoney's list, “7 Most Business-Friendly Cities,” is based on a survey by Thumbtack.com and the Kauffman Foundation. Its criteria includes how easy it is start a business, the job market and how much government helps entrepreneurs. 

Atlanta, Dallas, Denver and Seattle are also on Kiplinger’s list of “10 Great Cities for Starting a Business.” One common denominator between these four cities is strong performances of incubators that help startup companies. The incubator at Atlanta’s Georgia Tech University has helped more than 130 high-tech startups, while Dallas County Community College has a 30,000-square-foot incubator that houses up to 50 small businesses. Seattle’s University of Washington has a 23,000-square-foot incubator that will house up to 25 startups by 2014.

Read more about startup culture.

Martin has written and edited for 30 years. He's written thousands of business, news, sports, tech and features articles for newspapers and businesses. Martin blogs via Contently.com.

Photo: John R Rogers/flickr