America has become the veritable poster child of the startup era. It’s hard to look at the surge of self-made billionaires across all industries within the US and their humble startup beginnings and not feel a certain amount of awe. Things around here show no sign of slowing down, and as the “land of opportunity,” it’s unfair to only crown major metro areas across the country as the best places to find it.

Though it is true that when it comes to places rich with business growth and opportunity, small cities don’t generally come first to mind. But avoiding the chaos and competition of large cities and planting your roots in a quieter, yet equally industrious pocket of the country puts your business in a uniquely advantageous position. After some generous research and a bit of computing on our part, we found that the smaller the city, the more room there is to grow.

Data factors examined

So how did these cities win the top spots? It’s all about the numbers. Verizon gathered data from nearly 300 cities across the country, focusing on certain factors that would categorize them as “small” (sorry, no Silicon Valley on this list) without dipping below the mark to “town” status (no one-horse situations, either). These elements also indicated the financial climate of each city and an overview of its demographics. Such factors included:  

Population: According to the US census, the population of a city must fall between 50,000 to 75,000 people to be considered a “small city.” Most of the spots in the top ten hit the high end of the scale, but still manage to balance out the urban stride with a more hometown vibe.  

Education: Or, more precisely, higher education. We studied the percentage of the population over 25 years old who have received a bachelor’s degree or higher from an accredited university or college.

Travel time to work: We looked at the average total travel time it takes working individuals 16 years and older (who do not work at home) to reach work from their residences every day. This takes into account the time spent carpooling, waiting for public transportation, and navigating traffic.

Income per capita: For this particular study, mo’ money = mo’ problems. To hit the small biz sweet spot, the average cumulative income of residents in the cities was taken into account. That number reflected the city’s workforce being paid fairly and labor costs still being manageable for employers.  

Broadband access: The internet is kind of important nowadays. In fact, it’s pretty crucial to most business operations. So we determined the access each city has to internet running at speeds of at least 10 Mbps download time and 1 Mbps upload time.

Loans per capita: New businesses can rarely get up off the ground without a business loan. It’s usually one of the first things checked off a startup’s to-do list. With this in mind, how easy is it to get a loan in your city?

Tax scores: Typically, lower taxes provide a better environment in which to establish a new business. We accessed the Tax Foundation’s 2018 State Business Tax Climate Index and determined how tax-friendly each city we researched proves to be.

 

Top 10 cities


1. Portland, Maine

With a population on the lowest end of the top 10 spectrum, Portland certainly proves itself as the scrappy small city contender. Tucked in the far northeast corner of the US, this city enjoys a lucrative port close to Boston and an incredibly low unemployment rate. Folks generally spend less than twenty minutes traveling to work, and nearly half the population holds a bachelor’s degree. If there’s any indication as to the city’s personality, its seal depicts a phoenix rising from the ashes—so it’s safe to say that Portland rolls with the punches and is determined to come out on top. Like we said before—scrappy.

2. Weston, Florida

Switching gears from the far North to the deep South, the sunshine state is filled with small city gems like Weston. Being  #8 among the top 100 safest cities in the country is reassuring for a fledgling business; it wouldn’t do to get robbed your first week in town (or at any other time). This is also the most educated city in the top 10, with nearly 60% of the population holding at least a bachelor’s degree. So Weston has got a lot going for it, and people are taking notice. The only downside to setting up shop here is the commute to work, which runs at about half an hour, but hey—you’re not far from the beach and the Everglades are basically in the city’s backyard, so let’s call it even.

3. Missoula, Montana

Some would think it a little out of the way for starting a business, but Missoula is enjoying a fast trend upward in its population and economy. As home to the University of Montana, it boasts a fairly educated crowd, and has one of the lowest average commute times at just 15 minutes. Montana is also an extremely tax-friendly state, making it a prime spot for small businesses to take off. Heavy retail and service markets boost the local economy, attracting more and more small startups and lending a small-town flavor to the “Hub of Five Valleys.” Plus, it’s probably one of the most picturesque cities on the list. Would you just look at those mountains?!

4. Southfield, Michigan

It shouldn’t come as a surprise that as part of the Detroit metro area, Southfield’s economy benefits from the automotive industry. Beyond that, however, is ample opportunity for small businesses to grow like crazy. And they certainly are—business owners in Southfield are benefitting from a work travel time of less than half an hour and a respectable amount of education (approximately 37% of the population has bachelor’s degrees). And finding a niche among rolled steel manufacturers and auto products isn’t as hard as it may seem.

5. Delray Beach, Florida

There’s more of a draw to this city than its spread of sunny beaches along the southeastern coast of the state. Not quite as high on the education scale as Weston but higher than Kissimmee, Delray Beach is a happy Floridian medium with the shortest average commute time between the three cities. It enjoys a thriving industry of restaurants, nightclubs, retail shops, and art galleries, which is important to keep in mind when considering where to put your business’s roots down. And hey, the beach might not be the most important thing, but a beach day every now and then definitely couldn’t hurt.

6. South Jordan, Utah

A stone’s throw from the Great Salt Lake and in full view of the Oquirrh Mountains, this piece of the Salt Lake metro area is more populous and educated than Delray Beach, but with a lower income per capita. With a decent work travel time (about 25 minutes, most likely to downtown Salt Lake City), South Jordan is becoming a booming tech industry hotspot, with software companies growing from the seeds of startup ventures into impressive enterprises. The tax and loan outlook in the city is far from dismal as well; Utah is known for its affordability, and the large outdoor industry lends adventure and versatility to the local economy. Backpacking in the summer and skiing in the winter? Sign us up.

7. Kissimmee, Florida

Be warned—small businesses in Kissimmee will have to compete with Disney for employees. Orlando might not be far away, as evidenced by the 29 minute work commute time, but hundreds of businesses thrive throughout the city. With extensive internet access and a population hitting over 71,000, Kissimmee provides plenty of clientele and an ideal environment for small businesses. And who wouldn’t want to live in a city so friendly-sounding? Its very name is a hoot—“Pucker up and Kissimmee!”  

8. Rochester Hills, Michigan

What does Rochester Hills have in common with Southfield? Commute time, population, and their big brother city, Detroit. Something this city can claim that Southfield can’t? It’s the hometown of Madonna. Checkmate. If that’s not enough to back up how legit this place is, then how about over half the population sporting bachelor’s degrees? Or perhaps the highest income per capita out of the top 10? Or the beautiful lakes that surround the state? No? We get it. Madonna’s more than enough.

9. Rapid City, South Dakota

It may come as a surprise, but Rapid City holds the highest population on the list. It couldn’t have anything to do with those four guys carved into the side of a rock… could it? Thanks to them and Crazy Horse Memorial, tourism is the main source of income for many folks in the city, so small businesses tend to dominate the economic landscape. South Dakota is probably the most tax-friendly state included in the top 10, providing an easy process for those businesses to get off the ground. On the lower end of education and income per capita, Rapid City makes up for it with a genuine vibrancy, a rustic, old-western feel, and a work commute of under 15 minutes.

10. Bismarck, North Dakota

Wrapping up the list is the lone state capital in the top 10. Bismarck may seem like it’s in the middle of nowhere, but nothing could be further from the truth. It’s actually one of the fastest growing cities in the nation, and has better access to the internet than most of the other cities listed. Though its population is on the small side when it comes to capital cities, it holds its own in the small city category with nearly 73,000 residents. Education here has the edge on Rapid City by about 4%, and and getting a loan shouldn’t give you much trouble, which is good news for Bismarck businesses.

 

The top 50 startup-friendly cities:

  1. Portland, Maine
  2. Weston, Florida
  3. Missoula, Montana
  4. Southfield, Michigan
  5. Delray Beach, Florida
  6. South Jordan, Utah
  7. Kissimmee, Florida
  8. Rochester Hills, Michigan
  9. Rapid City, South Dakota
  10. Bismarck, North Dakota
  11. Daytona Beach, Florida
  12. Broomfield, Colorado
  13. Lauderhill, Florida
  14. Evanston, Illinois
  15. Alpharetta, Georgia
  16. Redondo Beach, California
  17. Wilmington, Delaware
  18. Eau Claire, Wisconsin
  19. Rockville, Maryland
  20. Logan, Utah
  21. Greenville, South Carolina
  22. Flagstaff, Arizona
  23. Walnut Creek, California
  24. Mansfield, Texas
  25. Maple Grove, Minnesota
  26. St. Charles, Missouri
  27. St. Cloud, Minnesota
  28. Georgetown, Texas
  29. Eagan, Minnesota
  30. Appleton, Wisconsin
  31. Schaumburg, Illinois
  32. Palo Alto, California
  33. Laguna Niguel, California
  34. Lehi, Utah
  35. Pawtucket, Rhode Island
  36. Novi, Michigan
  37. Cheyenne, Wyoming
  38. Homestead, Florida
  39. North Port, Florida
  40. Corvallis, Oregon
  41. Waukesha, Wisconsin
  42. Missouri City, Texas
  43. Waltham, Massachusetts
  44. Sarasota, Florida
  45. Lafayette, Indiana
  46. Medford, Massachusetts
  47. Redlands, California
  48. Gaithersburg, Maryland
  49. Canton, Ohio
  50. Taylorsville, Utah

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