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Top 10 U.S. Metros to Start a Business

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Editor’s Note: This story originally appeared on Point2.

While it’s more likely for huge multinational corporations to be in the news, the vast majority of businesses in the U.S. are, in fact, small businesses.

Not only that, but the number of startups has steadily increased in recent years. Indeed, more and more former employees are considering going their own way, particularly in a post-pandemic world.

However, opening a small business isn’t always easy.

Besides finding the right niche and obtaining the required funding, it’s essential for prospective business owners to choose the most suitable location. Starting out in a business-friendly environment can make or break any startup.

With that in mind, 42Floors has looked at the best U.S. metros to start a business. Trying to blend an ideal mix of affordability and opportunity, the study examines metros across the country.

Considering everything from startup survival rate to the availability of consulting services and networking opportunities, they’ve arrived at the following top 10 list.

1. Las Vegas

Las Vegas homes
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No longer simply an entertainment hub, Las Vegas has become a veritable center of innovation in recent years. This is partly thanks to business-friendly policies and revitalization efforts introduced over the past decade.

Consequently — and with investment in IT, aerospace, and renewable energy — Las Vegas has recently become home to many small businesses and startups.

Reaching the top spot is even more impressive when you consider that Las Vegas didn’t actually rank No. 1 in any of the metrics studied (besides corporate income tax, which at 0%, was tied with six other metros). Instead, it scored high across all metrics and proves it offers something for every type of small business.

Most notably, an impressive 43% of companies in the metro were established within the past five years, showing that Las Vegas serves as a formidable launch pad for young companies. On top of that, entrepreneurs can enjoy ample opportunities for networking, with 3.3 coworking spaces per 100,000 residents.

Finally, at a little over $40,000 per employee, labor costs here are quite low compared with many other metros studied.

2. Boulder, Colorado

Boulder Colorado
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Enjoying many coworking spaces and new startups, Boulder takes the No. 2 spot. Industry experts claim that 2010 saw Colorado’s population boom, with an influx of new talent looking to escape the high costs and fierce competition of Silicon Valley and other traditional tech hubs.

This allowed the state’s tech sector to thrive, and Boulder was one of the primary beneficiaries. Nowadays, it’s proved itself as one of the best places to start a small business in the country.

Boulder took the top spot for the startup-oriented companies metric, with 15.5% of local companies catering to new businesses. These include consulting firms, law and accounting firms, and advertising agencies.

This enables local entrepreneurs to benefit from expert advice, allowing them to launch successful businesses.

The metro also ranked highest for the number of coworking spaces per 100,000 residents. Not only does this provide local entrepreneurs with plenty of networking opportunities, but it also offers flexible and affordable office space and amenities as and when needed.

Finally, with a regional price parity close to the national average, it’s a far more affordable option than many traditional tech hubs.

3. Austin, Texas

Traffic in Austin, Texas
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In third place, Austin scored 61.23 points. Like Las Vegas, 43% of companies in the metro were established within the past five years, enabling Austin to stand out as the premier hub for startups in the South.

And these companies have an impressive survival rate compared with other metros, with Austin ranking the lowest regarding established exit rate in the top 10.

Plus, with 12.6% of companies in the metro catering to the needs of small businesses, Austin scored third in the metric, ensuring that startups have all the help they need to get their business going.

On top of that, coworking spaces in Austin are widely regarded as some of the most accessible, not to mention innovative, in the country.

With a score of 3.5 coworking spaces per 100,000 residents, there are also plenty of options for entrepreneurs looking for their ideal space and the chance to run shoulders with their contemporaries.

4. Columbus, Ohio

Columbus Ohio
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Columbus is one of just two midwestern metros in the top 10. Benefitting from fantastic affordability, the Ohio metro boasts the lowest office space cost in the ranking, at an average price of $20,861.

It also enjoys the second-lowest regional price parity. And, with 0% corporate income tax, it’s clear why small-business owners looking to keep their costs down would choose Columbus.

The average employee cost is just over $49,000, which sees Columbus come in fifth, yet is still considerably lower than other parts of the country.

But it’s not all about keeping costs down — Arch City also boasts 3.1 coworking spaces per 100,000 residents.

5. Raleigh, North Carolina

Raleigh, North Carolina
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Raleigh and neighboring Durham, which takes the next spot in the ranking, are both situated in the Research Triangle, an innovative high-tech hub in North Carolina.

Despite having the third-highest employee cost in the ranking at $52,323, Raleigh performs well across all metrics, outperforming its neighbor regarding the percentage of young businesses, at 37%.

6. Durham, North Carolina

Durham, North Carolina
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Durham takes the No. 2 spot for its number of coworking spaces, boasting an impressive 4 per 100,000 residents. Otherwise, the metro is more or less evenly matched with Raleigh, scoring better than its North Carolina neighbor at price parity.

7. Provo, Utah

Aerial View of Downtown Provo, Utah
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Provo takes the top spot on the metric for the number of young companies among its businesses, boasting a score of 44.4%.

This indicates that the local economy is open to fresh ideas, making it a good choice for entrepreneurs looking to join a vibrant and diverse business ecosystem.

8. Dallas

Dallas, Texas
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The Nos. 8 and 9 spots are held by Texas metros, with Dallas beating Houston.

This is because it boasts a higher percentage of coworking spaces, while the price of office space in Dallas is considerably lower than in Houston, with an average difference of $1,300 per year for a five-person office.

9. Houston

Houston, Texas
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Although Houston office space is more expensive, the city enjoys the lowest labor costs of all the Texas metros studied, averaging $45,750.

Additionally, the cost of living is 5% lower than in Dallas, more or less on par with the national average. Across the other metrics, Houston matched Dallas fairly well, keeping the two metros just a few points from each other.

10. Indianapolis

Indianapolis, Indiana
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With a healthy number of coworking spaces (3 per 100,000 residents) and the second-lowest established exit rate, Indianapolis comfortably makes the top 10, only slightly trailing the previous two metros.

A low cost of living also ensures Indiana’s state capital remains an attractive option for entrepreneurs.

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