15 Top American Cities to Start a Business in 2018

Bit by the entrepreneurial bug? You’re not alone: the majority of North Americans dream of starting a business one day.

It’s easier said than done, though. First, you need to know the business you want to start. Then, you need to decide where to open up. When starting a business, location is just as important as the industry you go into. Here are the best North American cities (as deemed by top various sources*) to start a business in 2018, and the criteria used to research and create this list. The results may surprise you.

The Criteria:

  • Market conditions & demand: population is robust, location density, number of households, average & median household income, average household net worth, consumer spending, cost of living insights, market demand for your service or product.
  • Business environment & resource access: small business market friendliness, growth in small business, labor costs, cost of living, permits, taxes, funding opportunities, and economic conditions.

1. Atlanta

Prestigious business experts at Forbes, Entrepreneur Magazine, Inc. Magazine and more consider Atlanta among the best places for entrepreneurs. It has one of the lowest costs of doing business in the country, and ranks in the top 25 metros for access to credit. Cost of living in Atlanta is slightly higher than the national average, but it is also among the top 10 areas of concentrated wealth in the U.S. The city ranks 12th on the Kauffman index; the startup growth rate is at a whopping 112%. Atlanta is also listed as 38th on the Global Cities Index and 7th for American Cities of the Future.

2. Austin

Austin is known as a thriving, forward-thinking economy, and is considered one of the top cities for quality of life. Even though Austin is the 11th largest city in the country, it still has the appealing characteristics of a smaller town: quality healthcare, low crime rates, affordable housing, and outstanding schools. Austin also has a low cost of living, though this is on the rise. Personal income has grown in Texas in recent years and unemployment is low. The household income in Austin is the same as the national average but, thanks to low startup costs, it is rated as a top city to launch a business. Austin ranks #9 on FDi Intelligence: American Cities of the Future 2017-2018 in the Top 10 Major Cities category and at #10 for Economic Potential.

3. Chicago

Chicago is fast becoming an entrepreneurial hub for the next wave of business owners. The city offers an innovative mentality, low cost of living and high potential for business growth. Chicago also recently outranked New York City and Silicon Valley as the U.S. startup region with the highest venture capital returns. The Windy City was named second on CNBC’s list of the top 25 places to launch a business in 2015, and is among the top five “boom cities”. But the Chicago core isn’t the only prime location for new businesses in Illinois; the city’s suburbs are rated among the best places for entrepreneurship in the state.

4. Dallas – Fort Worth

With one of the strongest economies in the country, a low cost of living, and a highly educated population, Dallas-Fort Worth is one of the best areas in the U.S. to start a business. It consistently tops the charts as a business friendly location and one of the best places to live. On the Kauffman Index, this area ranks 11th with a startup growth rate of 77.4%. Dallas-Fort Worth also score well below other major cities for the cost of doing business: in Dallas, it is 7% less expensive to start and operate a business. That’s because major expenses like rent, the cost of living, and labor costs are lower here than the national average.

5. Denver

In 2016, Denver was ranked the number one best place to live in America; in 2017, it came second. This is also an attractive place to start a business (particularly for young entrepreneurs), thanks to high access to small business loans and a low cost of doing business. It is ranked highly on many lists for its business friendly economy and affordability. Colorado is one of the fastest growing states in America; the rate of startup growth in Denver alone is 74.9%. On the list of America's Cities of the Future, Denver ranks 7th overall for Economic Potential, and 5th for Human Capital and Lifestyle. The unemployment rate is one of the lowest in the country.

6. Houston

Houston is the 6th largest cities in the United States and the largest in Texas. For the 12th year running, Texas tops the charts as the best state to start a business — and Houston is one of the top cities at both the state and national level. It has been ranked by many (from Thumbtack to Entrepreneur Magazine to CNBC) as an ideal location to start a business, and is also considered one of the best metros for young entrepreneurs. On the Kauffman Index, Houston Metro ranks 19th. The rate of startup growth sits at 78.3%. The median household income in Houston is higher than the national average, the cost of living lower, making it an ideal place to put down entrepreneurial roots.

7. Kansas City

The cost of living in Kansas City hovers around the national average. In comparison to the state’s two larger cities — Wichita and Overland Park — this makes Kansas City one of the most affordable cities in Kansas. As a startup hub, Kansas City ranks high. It is considered one of the best places to live in America and has benefited from a strengthening economy in recent years. Kansas City also ranked as the 32nd best large city to start a business in 2017. This economic stability and startup growth will make Kansas City a top place for entrepreneurship this year.

8. Los Angeles

Los Angeles was recently named the 10th top city in America for job growth, and California is ranked in the top five states for startups. The city offers many incentives for entrepreneurs, making this an ideal place for business ownership. From an economic standpoint, Los Angeles is the 8th largest in the world (third in the U.S.). It also ranks as one of the top 20 Global Financial Centers. Personal income has grown in the last few years, and consumer spending is higher than the national average. Despite a relatively high cost of living, Los Angeles is one of the top cities for startups in America. Los Angeles is also among the top “boom cities”.

9. Nashville

Music City has recently been described as a southern boomtown: as of 2017, it has the third fastest growing economy in the United States. The Kauffman Index of Growth Entrepreneurship 2017  ranks Nashville number 4 on its list, up one place from the previous year. Additionally, the rate of startup growth (how much a startup has grown five years after founding) is 95.6%. The U.S. Census Bureau reports Nashville’s net population increases, on average, by 100 people a day. Because of this growth, Nashville recently beat out Memphis as the largest city in Tennessee. Nashville is also said to have the strongest housing market in the U.S., and construction has been booming in recent years. The city has become the number one metro area for professional and business service jobs in America.

10. Philadelphia

Compared to other major cities in the northeast region, Philadelphia offers aspiring entrepreneurs a host of attractive perks: lower labor costs, inexpensive cost of living, and high median household income. This means residents have more disposable income to spend on home services, making this a smart financial choice for starting a business in this industry. Ranked 24th by the Kauffman Index, Philadelphia Metro has a startup growth rate of 69.0%. The economy has been particularly strong in recent years: the job market has expanded, adding 40,000 positions in the past five years. In 2016, Philadelphia outperformed the nation as a whole in job growth for the first time since the Great Recession.

11. Portland

Portland, a diverse cultural hub in the Pacific Northwest, is consistently ranked one of the country’s best places to live. This has lead to an influx in the population as people flock to this westcoast haven. Cost of living is high from a national standpoint, but reasonable among neighboring west coast cities. Among its many accolades, Portland ranks first on Forbes 2017 list of Best Places for Business and Careers; 10th on the list of Top 10 Major Cities of the Future for Economic Potential and fourth for Human Capital and Lifestyle; and second on the Fiscally Fit Cities Report. Portland is 21st on the Kauffman Index, with a startup growth rate of 93.8%.

12. San Antonio

Texas has long been considered one of North America’s most business-friendly economies. Entrepreneurs benefit from a low tax burden, low cost of living, and low cost of running a business. These factors appeal to younger entrepreneurs who typically lack startup capital, earning San Antonio the title of fourth best city for millennials. People starting businesses in San Antonio can look forward to a strong future: the city was ranked 10th for strategy on the FDI Intelligence’s list of Major American Cities of the Future. The Kauffman Index ranks San Antonio at number 14, with the rate of startup growth at 88.4%. Job growth is consistently strong and unemployment rates are lower than average. Thumbtack says San Antonio is the third most business-friendly city in the U.S.

13.Salt Lake City

As the capital city of Utah, Salt Lake City is the place to start, move, or expand your business, and ranks highly in many top publications. Business Insider ranks Salt Lake City #2 on The 16 Best Big Cities for Starting a Business in 2017 and Thumbtack gave it an A ranking for Business Friendliness. The Salt Lake City Department of Community and Economic Development provides services to support the creation and retention of businesses. Salt Lake City was one of the top ten hottest housing markets in 2017 and ranked #1 City for millennial homebuyers. It has a booming economy and commercial development is strong. Salt Lake City is among the lowest unemployment rates in the country and the median household income was above the national average in 2016.

14. Seattle

Seattle was the fastest growing American city in 2016. It was ranked the sixth best place to live, 3rd on Forbes Best Place for Business and Careers, and sixth on the 2017 ACBJ Economic Index. The economy here is booming: the rate of job growth in Seattle has outpaced the growth of the country since 2011. The cost of living in Seattle is higher than average, but quality of life has risen accordingly. As a Fiscally Fit city, Seattle ranks 8th for its access to investors and life insurance coverage, and for quality of life as a whole.

15. St. Louis

Despite having a lower than average median household income, St. Louis is still rated as an affordable place to live and start a business, cost of living is 6% lower than the national average. Unemployment rates in St. Louis are low and the economy is going strong. It has received many accolades for being a hub for business startups, one of the best places to live, and is among the fastest growing cities. St. Louis is in a period of entrepreneurial growth, with a thriving ecosystem of startups and higher than average access to capital.

If you’re interested in starting a business in home services, we’re here to help you get started. Contact us today to learn more about franchising opportunities with O2E Brands.

* O2E Brands is not responsible for the information and/or claims made by sources included in this post.