A new report has identified the 10 best cities in the USA for young entrepreneurs, as well as the worst. With layoffs looming at multiple companies, it’s a good bet that entrepreneurship is going to grow. For example, bankrupt fabric retailer Joann is closing 800 stores, potentially impacting nearly 20,000 employees. DOGE cuts have already eliminated thousands of jobs, including 2,800 workers at the Department and Health and Human Services. Within the Department of Agriculture, 4,200 employees have been terminated, according to New York Magazine. More cuts for the 2 million Federal Workers are underway. If necessity is the mother of invention, these economic initiatives are giving birth to entrepreneurs, gig workers and founders. Creativity, it seems, is what the future of work demands. For employees turning into entrepreneurs, these top 10 cities provide advantages for starting your own business. Read on to the end to find out the worst cities for entrepreneurs, as the rankings in the tank may surprise you.
Southern States Take the Lead for Entrepreneurs
Matthew Woodward, a spokesperson for Search Logistics (sponsor of the survey), says that “Cities in southern states, such as Florida, North Carolina, and Texas tend to be some of the best for young entrepreneurs. Many of these [states] have a lower cost of living and are therefore more affordable options.” The study evaluated a variety of factors, including the price of a workspaces in office facilities, state income tax rate, per capita personal income, housing, groceries and average internet speeds. So how can you thrive, as an entrepreneur?
On the top of the list for starting a business is Jacksonville, Florida. Jacksonville ranked best in terms of cost of living, and other key cost factors, cited in the survey. According to Apartments.com, housing costs in this north Florida city are 11.5% below the national average. And as your grandpa in Coral Gables will tell you, there’s no state income tax in the state of Florida. Coming in second was west coast (of Florida) favorite, Tampa.
Three of the top 10 cities are located in Texas, a state that is often cited as entrepreneur-friendly. With fewer regulatory burdens than in other states, and no state income tax, several major cities in the Lone Star State offer affordable options for entrepreneurs. In the study, Fort Worth, Houston and San Antonio all landed in the Top 10. Over the last seven years, an eye-popping 209 corporations have relocated to Texas, according to reports in Forbes. Recently, Apple CEO Tim Cook announced that the business-friendly climate of Houston has led to a planned manufacturing facility for the Space City, as part of a $500 billion domestic expansion for the iPhone maker. And Elon Musk has multiple interests in the state, including a 600-acre SpaceX Starlink manufacturing facility. His other interests, located in Texas, include The Boring Company (his tunneling firm) and soon-to-be X headquarters. Legal filings indicate that Musk’s interests will bring massive growth and new employees to Bastrop County, located just east of Austin.
Other top tier cities for entrepreneurs include: Indianapolis (at #3, the top-ranked northernmost city on the list), Baltimore, Philadelphia and Raleigh, North Carolina.
Surprising Results: the Worst Cities for Entrepreneurs
Surprisingly, some of the “famous name” cities for entrepreneurial growth actually appeared at the bottom of the list. “Cities in states on the West Coast, such as California, are some of the worst for young entrepreneurs. Many of these ranked poorly in terms of tax, minimum wage, and cost of living, although they typically had a high per capita personal income. These may seem like the most lucrative choice, but it can be risky for those with new businesses that are not yet established.”
The reason these famous names aren’t ranked in this game is due to prohibitive costs of living. Period. However, housing costs are not necessarily a prediction of entrepreneurial success – although they might affect your burn rate. The entrepreneurial infrastructure and cultural mindset of cities like New York (ranked #1 as the best of the worst) and San Francisco (#2) can’t be denied. Many of the most successful entrepreneurs and companies have started in the Bay Area, or NYC, so what’s really going on here? With 47 Fortune 500 companies, plus some organizations known as Wall Street and the New York Stock Exchange, New York reigns supreme as the nation’s business powerhouse. As the song says, “If you can make it there…”
Notice that while the survey evaluates tax structures and cost of living, it doesn’t take into consideration the economic support system that is woven into the fabric of Silicon Valley – where two major low-ranked cities (San Francisco and San Jose) are located. Plus, cost of living is only one aspect of a state’s advantages (or disadvantages, as the case may be). Get out the sodium chloride as you read this list, so you can take it with a grain of salt:
Worst Cities for Entrepreneurs / Ranked
- New York
- San Francisco
- San Diego
- San Jose
- Sacramento
- Seattle
- Washington, DC
- Portland, Oregon
- Los Angeles
- Chicago
For entrepreneurs starting a new business, statistics and research may not tell the whole story. People who live in New York or Portland might tell you that starting a business isn’t just about the cost of housing, or what it costs to hire employees. And the study doesn’t talk abou the cost of relocation, just so that you can capitalize on the advantages identified in the survey. And, to be fair, living in another state might put you in a bad state of mind – and then, how are you going to get down to business? For entrepreneurs, finding a balance and a support system for your innovation is where you will find the greatest business value.