Starting a small business and eventually making it big has long been synonymous with the American Dream. In fact, during 2018/19, 62% of adults viewed entrepreneurship as a promising career path. Fast forward to 2023, and this belief translated into action for many, with a record-breaking 5.5 million new business applications filed across the country. But let’s face it, starting a small business is no small feat, and finding just the right spot to set up shop can make all the difference.
With this in mind, we set out to find the top U.S. cities where aspiring business owners can thrive in 2024. To do so, we analyzed 136 cities across various key metrics, including GDP, number of business applications, labor costs and more.
Southern Comfort for Entrepreneurs: 14 of the Top 20 Cities for Small Businesses are Below the Sun Belt
When it comes to the best cities for small businesses, the South clearly stands out. With 14 out of the top 20 cities hailing from below the Mason-Dixon line, places like Miami, Orlando, and Austin are sizzling hot for startups.
Out West, cities like Denver and Salt Lake City are making a strong case for small business success, and it’s no surprise that the top small business hotspot also comes from this region.
1. Scottsdale, AZ – 73.75 points
The city’s GDP skyrocketed between 2018 and 2022 by 38%, signaling a strong and expanding economy in the area. Scottsdale, AZ, has been recognized in the past as one of the fastest growing startup cities in the U.S. and it continues to keep its status in 2024, leading the pack of cities for small businesses.
Additionally, more than 16% of business owners are self-employed, the second-highest share in the nation, just behind Miami. The city’s strategic location near Phoenix, combined with its low disaster risk and excellent infrastructure, makes it an attractive place for both new and established businesses to thrive.
2. Miami, FL – 73.37 points
Business is booming in Miami, which ranks second on our list. The city paves the way in the number of business applications per 100,000 residents, with an impressive 5,320. As a result, self-employment is highly prevalent in the area, with close to 18% of its workforce owning businesses.
The cost of living index of 118.2 puts living expenses in Miami at over 18% higher than the national average. Despite this higher cost, the relatively low labor costs of $34,934 make it financially easier for entrepreneurs to operate their businesses. This combination allows them to invest more in their ventures and seek out new opportunities, making Miami an appealing place for business despite the overall higher living expenses. Furthermore, its low corporate tax rate combined with a strong GDP growth of 32%, makes Miami a top spot for startups in sectors like finance, tech, and logistics.
3. Atlanta, GA – 70.89 points
Sitting at #3 in our ranking, Atlanta isn’t just a hub for southern hospitality—it’s also a powerhouse for small businesses, boasting a coworking space density of 23.8 per 100,000 residents, the highest in the nation. Coworking spaces are a game-changer for small startups, offering cost-effective, flexible work environments that can easily scale up or down as business needs evolve. This allows entrepreneurs to focus on growth without the pressure of long-term leases and overhead costs.
The city’s workforce is highly educated, with nearly 40% holding a bachelor’s degree, and its labor costs, though higher at $53,170, support a diverse economy that spans technology, media, and logistics. The city’s GDP growth rate of 25% and a low unemployment rate of 5.8% make it a prime spot for entrepreneurs looking to capitalize on a booming market.
4. Orlando, FL – 70.39 points
Orlando’s business scene is as eclectic as its theme parks, with a business application rate of 3,698 per 100,000 residents — the fourth-highest in the nation . The city’s cost of living is moderate at 99.9, and its labor sits at $39,148. Orlando’s focus on tech and creative industries, along with a strong GDP growth rate of 35%, makes it a booming ground for new ventures, strengthening its position as a top city for small businesses.
5. Austin, TX – 70.12 points
Austin’s reputation as the “Silicon Hills” is well-deserved, given that the city has the eight-strongest business application rate of 2,772 per 100k residents. Austin’s workforce is highly educated, with nearly 40% of its population holding a bachelor’s degree. Labor costs are relatively high at $50,676, but the city makes up for it with a low unemployment rate of 4.4% and the highest GDP growth rate nationwide - of 46% - making it an ideal place for both startups and small businesses to thrive.
6. Tampa, FL – 70.11 points
Tampa follows closely behind Austin, missing the 5th place by a hair. The city’s laid-back coastal vibe is matched by a dynamic business environment, featuring 42 coworking spaces and a cost of living index of 96.9, below the national average. Labor costs are moderate at $42,514, making it an attractive location for small businesses. With a business application rate of 2,944 per 100,000 residents (overtaking Austin in this category) and a GDP growth rate of 36%, Tampa is the perfect place for entrepreneurs seeking a balance between lifestyle and business opportunities.
7. Fort Lauderdale, FL – 70.06 points
Fort Lauderdale offers more than just sun and sand — it’s also a hotspot for small businesses, with a self-employment rate of 15%, ranking 4th nationwide, and 25 coworking spaces to support its entrepreneurial community. The cost of living is higher at 118.6, but labor costs are reasonable at $43,432. With a GDP growth of 32% and a focus on industries like marine, tourism, and tech, Fort Lauderdale is a compelling choice for entrepreneurs looking to dive into new opportunities.
8. Boise, ID – 69.79 points
Boise is quickly becoming a top city for small businesses, offering a low cost of living (104.1) and affordable coworking prices, with an average of $255 per month. The city’s unemployment rate is a low 3.8%, and its self-employment stands at a solid 11%. Boise’s tech sector is growing, and with a 41% GDP growth rate and strong community support, it’s an appealing destination for entrepreneurs looking to grow in a dynamic and supportive environment.
9. McAllen, TX – 68.84 points
McAllen stands out for its affordability, boasting the lowest cost of living index among the top cities at 82.0. The city also has a high self-employment rate of 14.7%, ranking 5th nationwide. Despite lower labor costs of $30,597, McAllen’s strategic location near the U.S.-Mexico border drives a unique business environment, particularly in logistics and retail. With a business growth rate of over 13% and a close to 28% GDP increase, McAllen is a rising star for small businesses looking to tap into both U.S. and international markets.
10. Huntsville, AL – 68.51 points
Huntsville is reaching new heights, not just in aerospace but also in business success. Huntsville’s unemployment rate of only 4.6% and labor costs of $38,946 make it an attractive option for small businesses. The city’s high-tech focus, a self-employment rate of a little over 8%, and a 31% GDP growth rate create a stable and supportive environment for entrepreneurs looking to make a mark in tech and research industries. And it seems that new businesses that set up shop in Huntsville are here to stay since Alabama boasts one of the best survival rates in the nation.
11. Provo, UT – 68.45 points
Ranked #11, Provo's picturesque backdrop is home to a flourishing business community. The city is a hotspot for entrepreneurs, offering some of the most affordable coworking options in the country at under $300 per month. With the lowest labor costs in the nation at $16,820 and a robust 4.4% unemployment rate, Provo boasts a strong and stable job market. The city’s impressive over 6% self-employment rate and a staggering almost 46% GDP growth highlight its dynamic entrepreneurial environment, making it an ideal destination for those seeking both innovation and a high quality of life.
12. Allen, TX – 68.11 points
Ranked 13th, Allen is making significant strides in the business world with a strong self-employment rate of 12%. Although labor costs are relatively high at $62,758, the city’s proximity to Dallas and exceptional quality of life make it an attractive location for startups. With a GDP growth of more than 33%, Allen’s supportive business climate and expanding opportunities are driving the success of small businesses in this thriving community.
13. Cape Coral, FL – 68.06 points
Cape Coral’s unique landscape of canals and waterfront properties is paralleled by a high self-employment rate of 14%, ranking 6th nationally. The city’s cost of living index is 105.7, and labor costs are $39,129. With a business application rate of 2,748 and a GDP growth rate of 34%, Cape Coral is a vibrant community for businesses in real estate, construction, and tourism.
14. Wilmington, NC – 67.96 points
Wilmington’s charm is backed by solid business credentials, with a labor cost on the lower end, of $34,430 and a great cost of living index of 95.8. The city’s self-employment rate of nearly 14% and great coworking prices provide an appealing environment for startups. With a 36% GDP growth rate and a focus on creative and technology industries, Wilmington is a great place for entrepreneurs looking for a supportive and dynamic community.
15. Denver, CO – 67.70 points
Denver’s vibrant business ecosystem is reflected in its high density of coworking spaces (12.1 per 100.000 residents) and a diverse economy. While labor costs are on the higher side at $54,195, Denver’s GDP growth rate of 34% and strong business networks offer plenty of opportunities for small businesses to thrive. The city’s active lifestyle and strategic location as a gateway to the Rockies make it a top choice for entrepreneurs looking to blend business with adventure.
Nashville ranks 16th with 2,360 business applications per 100,000 residents and a 37% GDP growth rate, closely competing with Austin's vibrant business scene.
Ranked 17th, Oklahoma City boasts 1,913 business applications per 100,000 residents and a GDP growth rate of 19%, surpassing Jacksonville’s economic expansion but falling short of Miami’s growth.
At 18th place, Jacksonville’s 2,619 business applications per 100,000 residents and 13.5% GDP growth position it strongly against similar cities like Orlando, though it still lags behind in overall business density.
Ranked 19th, Gilbert has 2,044 business applications per 100,000 residents and a GDP growth rate of almost 14%, competing with Scottsdale’s dynamic economy while offering a more suburban, family-friendly environment.
Salt Lake City rounds out the top 20 with 2,261 business applications per 100,000 residents and a GDP growth of 6.1%, showcasing a strong business climate similar to Provo’s, though it trails in economic growth compared to other tech-driven hubs.
Methodology:
For this report, we developed a comprehensive scoring system to evaluate and rank cities based on their attractiveness for small businesses. The metrics were weighted according to their importance in fostering a conducive environment for entrepreneurship and business growth.
The total score was derived from the following data points and their respective weightings:
- Growth Rate of Business Applications: The compound annual growth rate of business applications from 2018 to 2023, highlighting the long-term trend of entrepreneurial activity in the area. Direct, 15 points. Source: Business Formation Statistics, Census.gov.
- Percentage of Self-Employed Business Owners: Reflects the entrepreneurial spirit of the city. A higher percentage of self-employed individuals indicates a thriving small business community. Direct, 15 points. Source: Census Bureau.
- GDP Growth: Shows the economic growth of the metropolitan statistical area (MSA), indicating a healthy economic environment conducive to business expansion. Direct, 10 points. Source: BEA.
- Labor Costs: Indicates the median earnings for the workforce, impacting hiring costs and business operations. Lower labor costs can be advantageous for startups with tight budgets. Indirect, 10 points. Source: Census Bureau.
- Cost of Living Index: Reflects the overall affordability of the city, influencing business expenses and quality of life for entrepreneurs and employees. Indirect, 10 points. Source: C2ER Q1 2024.
- Unemployment Rate: A measure of the city’s job market health. A lower unemployment rate suggests a stable economic environment, which is favorable for small business growth. Indirect, 10 points. Source: Census Bureau.
- Percentage of Population with a Bachelor's Degree or Higher: Represents the availability of a skilled workforce, essential for knowledge-based businesses and innovation-driven sectors. Direct, 10 points. Source: Census Bureau.
- Average Coworking Space Prices: Assesses the affordability of coworking spaces, crucial for startups and small businesses looking to minimize costs. Indirect, 5 points. Source: CwC.
- Coworking Spaces Density: Represents the availability of flexible workspaces per 100,000 residents, highlighting the city's support for small businesses and freelancers. Direct, 5 points. Source: CwC.
- Number of Business Applications: Represents new business formation rates, with a higher number indicating a strong entrepreneurial ecosystem. Direct, 5 points. Source: Business Formation Statistics, Census.gov.
- Labor Force Participation: The percentage of the population actively participating in the labor market, indicating the availability of potential employees for small businesses. Direct, 5 points. Source: Census Bureau.
Each metric was carefully selected and weighted to reflect its impact on the small business landscape.
