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If you’ve always dreamed of opening your own business, now may be the time. The entrepreneurial spirit is thriving in the U.S. as historic numbers of Americans start their own companies. In 2023, a record 5.5 million new business applications were filed, according to the U.S. Census Bureau. The trend started in 2020 during the pandemic and has accelerated ever since.

There are many reasons why new business is big business today. For some individuals, the allure of running their own enterprise is a motivation too strong to resist. Others see opportunity created by changing consumer tastes and needs. For yet other people, starting a business may be a way to start over after a job layoff.

Small businesses are the backbone of the U.S. economy, employing 46% of the workforce, according to the Small Business Administration (SBA). But of course, a new business needs to stay in business. And one of the key factors that can help determine its success: Location, location, location.

So then, where is the best place to start a business? In what cities can a new business not only find its footing but go on to flourish?

To discover the answer, SoFi looked at the 50 largest cities across the U.S. with populations of 500,000 or less, and ranked them on eight different criteria, including annual business applications, average cost of office space, unemployment rates, and cost of living. We assessed the criteria for each city on a 10-point scale for a possible total score of 80 points. (See below for the complete details about our methodology.)

What we found was that while businesses are starting nationwide, certain cities across the country seem to be particularly beneficial for new businesses. Read on to learn the 10 best cities to start a business in the U.S.

Key Points

As SoFi analyzed the data about each city, these important findings stood out:

•   The South is a hotspot for new businesses. Three of the top 10 cities on our list are in Florida, and all score high in self employment. Plus, Florida has increasing numbers of businesses owned by underrepresented groups. Atlanta, the Number 3 city overall, has a large population of working age people and ranks high for new business applications.

•   Cold-weather cities are offering new businesses a warm welcome. Minneapolis clinched the Number 2 spot on our list, and St. Paul, Minnesota and Madison, Wisconsin scored in the top 10. All three have large populations of working age people.

•   Texas is poised to become a new-business powerhouse. The Lone Star State has 2 of the top 10 cities on the list — Plano and Irving. Younger people are gravitating to Texas, giving new businesses in these cities plenty of working age adults to employ.

Our Findings

Reviewing the entire list of cities in the SoFi analysis reveals some important, even surprising, information for aspiring business owners. For instance, Miami is the city with the most new business applications and highest level of self employment, while Witchita, Kansas, offers the best prices for office space, and Cleveland has the lowest cost of living.

Check out how other top cities rank when it comes to opening a new business.

Ranking	City	Walkability Score	Cost of Living Score	Office Space Cost Score	Household Income Score	Unemployment Score	New Business Score	Self-Employment Score	Working Age Score	Total Score
1	Miami, Florida	8.85	3.74	0.44	4.46	5.14	10.00	10.00	9.50	52.13
2	Minneapolis, Minnesota	8.16	4.55	4.60	6.21	4.73	3.17	9.71	10.00	51.13
3	Atlanta, Georgia	5.52	4.14	2.65	6.32	4.05	9.75	7.88	9.99	50.30
4	Plano, Texas	4.71	3.43	3.79	8.60	6.22	4.26	8.68	9.21	48.89
5	St. Louis, Missouri	7.59	5.45	5.27	4.31	4.73	3.55	8.22	9.36	48.48
6	St. Paul, Minnesota	8.16	4.85	5.36	5.69	5.27	2.50	6.98	9.25	48.06
7	Orlando, Florida	4.71	4.44	2.88	5.39	5.14	7.05	8.66	9.74	48.01
8	St. Petersburg, Florida	4.94	4.75	3.23	5.72	5.95	5.62	8.77	8.99	47.97
9	Madison, Wisconsin	5.75	4.19	5.10	6.09	7.30	2.31	6.61	9.99	47.34
10	Irving, Texas	5.17	4.60	5.36	6.24	5.81	4.57	5.90	9.31	46.97
11	Lincoln, Nebraska	5.06	5.05	5.79	5.52	6.62	1.94	7.60	9.14	46.71
12	New Orleans, Louisiana	6.67	4.65	4.71	5.10	2.97	5.32	7.85	9.04	46.30
13	Jersey City, New Jersey	10.00	2.78	0.00	7.41	5.00	3.89	7.35	9.86	46.29
14	Lubbock, Texas	4.48	5.35	5.49	4.78	6.35	2.36	8.09	9.34	46.25
15	Omaha, Nebraska	5.52	5.15	5.59	5.71	5.81	2.85	6.58	8.89	46.10
16	Pittsburgh, Pennsylvania	7.13	5.20	4.28	4.90	5.41	2.43	6.61	9.63	45.58
17	Lexington-Fayette, Kentucky	3.91	4.90	5.69	5.38	5.14	2.86	8.31	9.20	45.39
18	Colorado Springs, Colorado	4.14	3.99	4.94	6.43	5.00	4.11	7.61	9.10	45.32
19	Virginia Beach, Virginia	3.79	4.14	4.86	7.12	6.22	3.84	6.12	8.94	45.04
20	Arlington, Texas	4.37	4.70	5.26	5.83	5.14	3.58	6.44	9.21	44.52
21	Tulsa, Oklahoma	4.48	5.45	5.53	4.61	4.46	3.21	7.75	8.80	44.30
22	Gilbert, Arizona	3.33	3.33	2.71	9.37	6.08	3.83	6.65	8.85	44.16
23	Santa Ana, California	7.70	2.27	3.94	6.85	5.27	2.99	5.56	9.42	44.01
24	Reno, Nevada	4.60	3.79	4.41	6.64	5.14	3.55	6.72	9.10	43.95
25	Aurora, Colorado	4.94	3.84	4.40	6.40	5.14	3.77	6.19	9.24	43.91
26	Durham, North Carolina	3.45	4.70	3.63	6.08	5.54	3.61	7.41	9.44	43.85
27	Long Beach, California	8.39	2.07	2.18	6.43	4.05	3.46	7.59	9.60	43.77
28	Chandler, Arizona	4.02	3.59	4.40	8.08	5.81	3.83	4.79	9.20	43.72
29	Anaheim, California	6.44	1.82	4.70	7.20	5.27	2.99	5.88	9.24	43.55
30	Corpus Christi, Texas	4.60	5.25	6.11	5.21	5.14	1.94	6.37	8.85	43.47
31	Tampa, Florida	5.75	4.60	0.23	5.43	4.86	5.61	7.43	9.54	43.45
32	Buffalo, New York	7.70	5.66	6.01	3.76	3.92	2.02	4.90	9.04	43.00
33	Irvine, California	4.94	0.00	2.04	10.00	5.41	2.99	7.89	9.72	42.98
34	Oakland, California	8.62	0.81	0.03	7.68	4.46	2.43	9.40	9.44	42.86
35	Wichita, Kansas	4.02	5.35	6.45	4.94	5.00	2.50	5.75	8.78	42.79
36	Honolulu, Hawaii	7.59	0.66	2.98	6.73	6.35	2.46	7.24	8.74	42.74
37	Raleigh, North Carolina	3.56	4.39	2.40	6.40	5.95	3.95	6.32	9.69	42.65
38	Henderson, Nevada	3.45	4.04	3.55	6.94	4.32	4.45	7.21	8.33	42.29
39	Cincinnati, Ohio	5.63	5.20	6.06	4.00	3.38	3.28	5.20	9.50	42.25
40	Fort Wayne, Indiana	3.68	5.45	6.19	4.74	4.73	2.67	5.83	8.52	41.81
41	Greensboro, North Carolina	3.33	5.30	5.16	4.48	4.19	3.55	6.57	9.20	41.78
42	Anchorage, Alaska	3.56	3.38	2.40	7.79	5.27	2.83	7.05	9.14	41.42
43	Toledo, Ohio	5.29	5.61	6.28	3.69	2.70	2.75	6.25	8.72	41.29
44	Riverside, California	4.94	3.13	4.68	6.79	4.46	2.34	5.33	9.44	41.11
45	North Las Vegas, Nevada	3.91	4.55	4.50	5.84	3.24	4.45	4.11	9.04	39.63
46	Chula Vista, California	5.29	2.12	2.66	8.29	1.62	2.57	6.95	9.14	38.65
47	Cleveland, Ohio	6.55	5.81	5.63	3.03	0.00	3.77	4.87	8.98	38.64
48	Newark, New Jersey	8.74	4.24	3.11	3.78	1.22	4.45	3.89	9.11	38.53
49	Stockton, California	5.06	3.69	5.22	5.82	3.38	2.11	4.44	8.81	38.53
50	Bakersfield, California	4.25	3.89	5.39	6.00	3.51	1.73	4.57	8.61	37.97

The Top 10 Cities to Start Your Own Business

The best cities for new businesses tend to be in the South and Midwest, our research found. But no matter where they are located, each of the cities in our top 10 has attributes that make them great locations for aspiring business owners.

1. Miami, FL

Score: 52.13

This vibrant metropolis combines the perks of big-city life, such as an exciting food and nightlife scene and renowned museums and art galleries, with beautiful beaches and warm, sunny weather. Miami’s population has increased steadily in recent years, making it one of the fastest growing cities in the country. And tourists from around the world flock to this oceanside oasis. In short, there are endless opportunities — and customers — for new business owners in Miami.

In SoFi’s analysis, Miami received top scores for new business applications and the number of self-employed individuals. It also rated highly for walkability and its large working-age population. Not only that, prospective business owners in Miami may be able to take advantage of small business grants in Florida that can help with start-up costs.

2. Minneapolis, MN

Score: 51.13

With its friendly midwestern vibe and cosmopolitan charm, Minneapolis has been experiencing population growth since the pandemic. Despite the cold winters, residents say it offers a good quality of life, access to nature, sporting events, arts and culture, and more. The city is also seeing a surge in new housing and economic development.

In the SoFi study, Minneapolis received a top score for its large working-age population. It also got high marks for the number of self-employed residents and the city’s walkability. Another potential selling point for entrepreneurs: The state of Minnesota works to cultivate small businesses, offering assistance and partnerships through its Office of Small Business and Innovation.

3. Atlanta, GA

Score: 50.30

Atlanta is another one of the fastest-growing metro areas in the country, according to Census Bureau data. The city has seen a boom in businesses opening and relocating there, from major corporations to smaller companies. Atlanta’s lifestyle amenities have flourished as well, making the city a draw for its vibrant entertainment offerings, diverse restaurants, and sporting events.

It’s no wonder then that Atlanta has a robust population of working-age individuals, according to SoFi’s research. It also got a high score in our analysis for new business applications. For entrepreneurs, the city has support networks, incentives, and small business loans that make it an appealing place to set up shop.

4. Plano, TX

Score: 48.89

New businesses are popping up across Plano, making it a welcoming community for those ready to launch their own companies. Located less than 20 miles from Dallas, the city is a family-friendly place to live with easy access to a major metro area. People are drawn to Plano’s parks, cultural events, and restaurant offerings — something new business owners can both enjoy personally and benefit from professionally.

SoFi’s research found that Plano has a large working-age population and a high household income. It also ranks near the top of the list for self-employment. Plus, small business grants in Texas can make Plano a good choice for new business owners.

5. St. Louis, MO

Score: 48.48

Located on the Mississippi River and known for its iconic Arch, St. Louis is actively courting new businesses through incentive programs, tax credits, and enterprise zones. The city has a vibrant start-up scene, with business incubators and accelerators. St. Louis, which boasts a diverse culture, historic neighborhoods, and a fairly affordable cost of living, is a top area for job growth, according to recent data from the Federal Reserve Bank of St. Louis.

Indeed, SoFi’s report found that St. Louis gets high marks for its large working-age population, self-employment score, and household income.

6. St. Paul, MN

Score: 48.06

The state capital of Minnesota, and the other half of the famed “Twin Cities” (along with Minneapolis, the Number 2 city on our list), St. Paul is a mid-sized metropolis with a youthful vibe. There are a number of colleges and universities here, giving the city’s employers access to skilled graduates. In our research, the city ranked high for its large working-age population. In addition, St. Paul offers a number of resources for new businesses, including financial and technical assistance.

7. Orlando, FL

Score: 48.01

Home to Disney World and Universal Studios, among many other theme parks, Orlando is not only a coveted tourist destination but also a cosmopolitan city with a strong arts and cultural scene, good restaurants, and a bustling nightlife.

It also has a variety of employment opportunities to attract workers: Orlando is filled with big companies, such as AAA and Darden Restaurants, and it’s a growing technology hub. As a result, the city has a large working-age population, according to SoFi’s analysis. Orlando is welcoming to new businesses and offers many incentives to entrepreneurs.

8. St. Petersburg, FL

Score: 47.97

This Gulf Coast city is so beloved for its weather that it’s known as Sunshine City. St. Pete is appealing to employees and business owners alike for its working and lifestyle opportunities. Here, you’ll find pristine sand beaches and a walkable city with a dynamic business community. Companies like Raymond James and HSN are located in the city, as are a growing number of new businesses.

St. Petersburg has a booming working-age population and it scores high marks in self employment, the SoFi report found. It also offers tax benefits and incentives to new businesses.

9. Madison, WI

Score: 47.34

This state capital was recently rated the sixth best city in the U.S. to live in by U.S. News & World Report, thanks to its quality of life. Madison has a hot job market and it’s a hub for companies in technology, healthcare, and manufacturing. As a college town — the University of Wisconsin-Madison — it also has a diverse population and a dynamic downtown filled with boutiques, restaurants, bars, and coffee shops.

In SoFi’s report, the city rated highly for its working-age population. The unemployment rate in Madison is fairly low, which also makes it desirable. The city offers programs to help small businesses start and succeed, and there are small business grants in Wisconsin entrepreneurs can explore.

Recommended: Unemployment Rates by City

10. Irving, TX

Score: 46.97

Located near Dallas, Irving combines urban amenities with a suburban feel. It has many perks of city living, such as live music venues, ballet and symphony, art, movie theaters, and restaurants. For nature lovers, Irving has a number of rivers and lakes weaving through it, along with parks and nature trails.

Irving’s economy is strong — major corporations in industries such as technology, finance, and consumer goods are located there. SoFi’s research found that the city has a large working-age population, which can be beneficial to new business owners. Irving also offers incentives and resources for small businesses.

Tips for Small Business Owners

If you’re ready to start a small business, these are some important steps to take to help your venture become a success.

•   Choose the right location for your business.
Do your research to pick an area that best suits your business needs. Consider whether the area has the type of customer you’re targeting, a robust workforce, and real estate and operating costs you can afford.

•   Check out local resources, networks, and programs.
Does the location you’re considering offer incentives and tax credits for new and/or small businesses? The cities on our list do, as do many others. Be sure to check with the chamber of commerce, the city’s SBA office, if there is one, and local economic development centers and business incubators.

•   Find the right financing.
The city or state may offer grants or funding for new businesses — do your homework to find out if they do. Also investigate grants and funding programs from the SBA.

As you’re seeking financing for your small business, you may also want to consider a loan to help get your venture off the ground.

When you’re looking for a loan for your new business, SoFi can help. On SoFi’s marketplace, you can shop top providers to access the capital you need. Find a personalized small business loan option today within minutes.

If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.

With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.

Methodology

To determine the best cities to start a business, SoFi looked at the largest 50 cities across the U.S. with populations of 500,000 or less. (“Population” refers to the city proper and is separate from surrounding urban areas.) SoFi analyzed eight key contributing factors, each assessed on a 10-point scale, in each city for an overall potential score of 80. These factors included:

Walkability

Walkability was determined by reviewing statistics from Walk Score, which were given on a scale of zero to 100. The higher the Walk Score, the higher a city’s walkability score.

Cost of Living

Using Area Vibes, SoFi reviewed the cost of living score — an index score compared to the national average. The lower the cost of living score in a city, the better the score we assigned.

Average Cost of Office Space

Using LoopNet, SoFi assessed all 50 cities using the following filters:

•   Type of space needed: office, retail, or restaurant

•   Number of employees: 10 (which equaled 1250 to 4000 sq. ft. of space)

SoFi averaged the price per square foot per year for the newest 10 results in each city. The higher the average cost, the lower the score.

Median Household Income

Using Data USA, SoFi assessed the median household income for each city. The higher the median income, the higher the score.

Unemployment Rates

Using Area Vibes, SoFi assessed the unemployment rate for each city. The lower the unemployment rate, the better the score.

Annual Business Applications

Using Census Burea data SoFi calculated the percentage of people who applied for a small business loan in the county where each city is located. The higher the percentage of new business applications, the higher the score.

Percentage of Self-Employed People

Using Census Burea data, SoFi calculated the percentage of people in each city who had self-employment income. The higher the percentage, the higher the score.

Working-Age Population

Using Census Burea data, SoFi calculated the percentage of people in each city who were between the ages of 15 and 64. The higher the percentage, the higher the score.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com