There are plenty of surveys that rank the best cities for entrepreneurs in general, startups or high-tech businesses. But what if you’re a minority entrepreneur looking for the best place to set up shop, move or expand? Forbes recently released a study that might be helpful in making your decision.
Chapman University Fellow Joel Kotkin, demographer Wendell Cox and researcher Erika Ozuna studied minority, immigrant entrepreneurs and uncovered some surprising results, which Kotkin reported in Forbes. For instance, do you think of minority populations as being largest in urban environments? Then you might expect places like New York City or San Francisco to rank high on the list of best cities for minority entrepreneurs. Not the case. In fact, the study found, minority entrepreneurs today flock to suburban regions, primarily in the South and Southwest.
While not all minority entrepreneurs are immigrants, of course, many are. Others find a niche in serving immigrants of their own minority group—so knowing where immigrants and immigrant entrepreneurs are settling can be a good guide to where some minority entrepreneurs will find fertile ground for their businesses. Here are some of the other trends the Forbes study found:
Immigrant populations—and minority self-employment—are exploding. For instance, the top city on the list, Atlanta, has long been known for its high percentage of African-American entrepreneurs. But Atlanta’s Latino population surged by 101 percent in the first decade of the 21st century, while its Asian population rose 74 percent. In fact, almost all of the top cities on the list—including No. 2 Baltimore and No. 3 Nashville—saw huge growth in the number of immigrant entrepreneurs.
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Affordable housing is key. Since many immigrants prefer a single-family home to an urban apartment, affordable homes are a big factor in attracting immigrant entrepreneurs. Where immigrants settle, minority entrepreneurs follow to serve their needs with retail shops and professional services, says one real estate developer cited by Forbes.
Commercial space matters, too. Where housing is affordable, commercial real estate often is as well, making it easier for immigrant and minority entrepreneurs to take advantage of opportunities. Strip malls with low rents provide good spots for new entrepreneurs to gain a foothold.
Cities are too expensive and burdensome. You won’t find many strip malls in New York City or San Francisco, which is part of the reason these often-touted entrepreneurship centers didn’t fare well as havens for minority entrepreneurs. San Francisco, despite its high-tech allure, ranked No. 35, Boston No. 45, San Jose No. 46, San Diego No. 48 and Chicago No. 50. And the place most of us think of first when we think of minority or immigrant business owners, New York City, came in at a humble No. 39.
High rents, utility prices and other costs associated with urban centers are part of the reason these cities aren’t attracting minority entrepreneurs, according to the study. Bigger cities are also more likely to have myriad regulatory hurdles. “Entrepreneurs [in New York] face incredible burdens when they start and try to grow a business,” says one expert cited.
Minority entrepreneurs not welcome? Also near the bottom of the list were struggling “rust belt” cities such as Detroit (No. 47), Cleveland (No. 51) and Milwaukee (No. 52). Economic stagnation hinders business creation in these regions—and for immigrant or minority entrepreneurs, there can also be cultural prejudices against outsiders that make the regions less than appealing.
Census data cited by Forbes suggests this is slowly starting to change, however. Minorities are increasingly moving to the suburbs and to regions that have traditionally been dominated by whites. As minorities become a larger share of the U.S. population, attitudes toward minority and immigrant entrepreneurs in these areas will inevitably change.
Helping the change along, immigrants continue to be a huge driver of entrepreneurship; in fact, Forbes cites a Kauffman Foundation study that found the rate of entrepreneurial activity among immigrants increased substantially—from 0.51 percent in 2009 to 0.62 percent in 2010—at the same time it declined for people born in the U.S. As America looks to small business for job creation, minority and immigrant entrepreneurs will play an increasingly important role.
The Forbes survey paints a fascinating picture of where the future of entrepreneurship is heading. Read the full ranking of the top 52 cities for minority entrepreneurs, plus a more detailed analysis.