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These are the best cities in each state to start a new business
Key findings
Entrepreneurship tends to fare better in cities overall: In 2022, about 1.5% of Americans, or 15 out of every 1,000 people, submitted a new business application. While this marks a notable engagement in entrepreneurial activities, business applications across the United States decreased by 6.2% from 2021-2022. However, cities fared somewhat better, where the average decline in business applications during the same period was 5.8%, and the number of business applications per capita surpassed the national average, coming in at 1.7%, or 17 out of every 1,000 people.
Population growth and new business applications are positively correlated: Perhaps unsurprisingly, an analysis of all cities in the U.S. with a population above 50,000 revealed a slight positive correlation between population growth from 2021-2022 and the growth in business applications filed during the same period, Pearson’s r = 0.29. In other words, cities experiencing population growth also saw a rise in new business applications during the same period. However, it is important to note that this correlation does not necessarily illustrate a direct cause-and-effect relationship, and further research may be required to delineate the nuanced dynamics at play.
More business applications, less unemployment: Analysts at Swyft Filings uncovered a slight negative correlation between business applications per capita in 2022 and the unemployment rate in 2023, Pearson’s R = -0.23. While causation cannot be established from a correlation alone, this statistic suggests that cities with an above-average density of business applications filed in 2022 tended to see below-average unemployment rates in the subsequent year.
The best city in each state to start a business
Alabama: Decatur
Alaska: Anchorage
Arizona: Lake Havasu City
Arkansas: Conway
California: Visalia
Colorado: Grand Junction
Connecticut: Hartford
Delaware: Wilmington
Florida: Cape Coral
Georgia: Marietta
Idaho: Twin Falls
Illinois: Bloomington
Indiana: Fort Wayne
Iowa: Dubuque
Kansas: Topeka
Kentucky: Bowling Green
Louisiana: Lafayette
Maine: Portland
Maryland: Frederick
Massachusetts: Worcester
Michigan: Grand Rapids
Minnesota: Rochester
Mississippi: Jackson
Missouri: Columbia
Montana: Billings
Nebraska: Lincoln
Nevada: North Las Vegas
New Hampshire: Nashua
New Jersey: Vineland
New Mexico: Albuquerque
New York: Schenectady
North Carolina: Wilmington
North Dakota: Fargo
Ohio: Toledo
Oklahoma: Lawton
Oregon: Bend
Pennsylvania: Erie
Rhode Island: Warwick
South Carolina: Charleston
South Dakota: Rapid City
Tennessee: Murfreesboro
Texas: New Braunfels
Utah: Provo
Virginia: Newport News
Washington: Spokane Valley
Wisconsin: Oshkosh
Wyoming: Cheyenne
Methodology
To identify the best city in each state to start a business, the data and research team at Swyft Filings ranked cities with a population of 50,000 or more across six key dimensions: new business applications, the cost of doing business, workforce productivity, unemployment rates, crime rates, and population growth. Below is a percent breakdown of how the data from each category factored into the scoring system.
New business applications: 30%
New business applications, both per capita and their year-over-year change, provide a clear insight into the entrepreneurial climate of a city. A high volume suggests a thriving environment that fosters new business initiatives.
Cost of doing business: 15%
The proportion of household expenditures to income is a direct indicator of the affordability of starting and maintaining a business. Cities with lower operating costs may be more attractive to new business owners. Not only do they present fewer financial barriers to entry, but long-term, businesses may find it easier to cover operating costs, reinvest in growth, and withstand financial downturns.
Workforce productivity: 15%
Average weekly wages were used as a benchmark to gauge the productivity and effectiveness of the local workforce. A well-compensated workforce generally indicates a pool of talented professionals, which is crucial for the growth of any new business.
Unemployment rates: 10%
The current unemployment rate and year-over-year change in unemployment were used to evaluate the overall economic health of cities. Low unemployment rates suggest a robust economy and can also mean a competitive job market, which is vital for businesses looking for talent.
Crime rates: 15%
Safety is paramount for any new enterprise, and the local crime rate is a strong determinant of a city’s overall business-friendliness. Cities with lower crime rates offer a more secure environment for businesses, employees, and customers.
Population growth: 15%
The annual growth rate of a city’s population reflects its desirability and potential market size. An upward trend indicates a vibrant community and a potential increase in the customer base, making it an enticing location for new businesses.
Note: Vermont and West Virginia were excluded from the analysis due to insufficient data.
This story was produced by Swyft Filings and reviewed and distributed by Stacker Media.
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