Best Cities for Business

While it might sound sensible to assume that most private-sector workers in the U.S. work for large multinational companies, it’s actually small businesses that employ more than half of Americans. Not only do small businesses employ more people but they continue to recruit new employees by creating 64% of new jobs in the last 15 years. It’s also safe to say that the spirit of entrepreneurship is alive and well with 27 million Americans starting or running a new business.

All new business owners have to grapple with difficult decisions — and one of the biggest decisions is location.

We compiled economic, labor, and educational statistics to create a ranking of the best cities in the U.S. for business. Different factors hold different weights of importance for business outlook. 

Check out our guide on How to Start a Business

The business outlook for each city was measured as a function of:

• Number of establishments
• Number of paid employees
• Annual payroll
• The proportion of 18 to 24-year-olds with less than high school education
• Growth in the number of establishments between 2011 and 2016
• Growth in the number of employees
• Growth and annual payroll
• Population 16 and older with earnings
• Median earnings 

More information about our methodology is available below.

Best Cities for Business

Methodology

We used secondary, publicly available data sources in our project. We used the American FactFinder service at the U.S. Government’s Census data website. Rather than assigning equal weights to each factor, we assigned variable weights.  This allowed us to weigh some factors are more important than others.

• Number of establishments: How many other businesses are operating in the city? This can be a solid indicator of how thriving the local business community is.
• Number of paid employees: Does this city have a high population of working people? Compare this to the total population and a picture of unemployment becomes clear.
• Annual payroll: How much are businesses paying people in the city? If it’s too high it might be difficult for a new business to compete, too low and it might show that highly qualified people have moved away.
• 18 to 24-year-olds with less than high school education: A poorly educated workforce will have a negative weight and make finding suitable employees difficult.
• Growth in the number of establishments between 2011 and 2016: Is this city a business hotspot or in decline? A strong business community helps new businesses thrive.
• Growth in the number of employees: Taking into account whether businesses are growing can be a great indicator of the economic health of a city.
• Growth and annual payroll: If payroll is growing then the business is growing. However, if payroll is growing too fast then there may be underlying issues of increasing cost of living.
• Population of 16 and older with earnings: Combining the statistics of high school graduates with the number of people above 16 earning can help entrepreneurs figure out if a city has the right people to grow their business.
• Median and mean earnings: How much can employees expect to earn in a business? This metric allows new business owners to figure out if they can afford to hire a top team in the city.