Best U.S. Cities to Start a New Small Business

October 16, 2020
Aerial over Piedmont Park with Atlanta, GA Skyline

In times like these, a new small business needs every advantage possible. Even with lots of hard work and careful planning, many small businesses fail to survive long enough to establish themselves and build a customer base. 

Money is always going to be tight at the beginning. You can’t carve out a market niche for your business without investment, but you’re not likely to earn significant or regular revenue until you’ve got more of a following. Anything that can decrease your costs or increase your exposure to customers will greatly benefit your company. 

One of the factors that can make a big difference in your business’s early life is the city where you’re located. Some cities in the United States are simply better environments for growing small businesses. 

What Makes a City Good for Small Business? 

A lot goes into making a city a good place for small businesses. Part of it is the culture. Is there space for new businesses? Are people interested in trying new things and working with small businesses instead of larger corporations? Do officials working in the city try to be helpful and welcoming to new businesses?


Many cities put policies in place specifically to attract new businesses. They may offer financial incentives or reduce the barriers to entry for new businesses by easing regulations. Cities more amenable to small businesses will make licensing simple and easy, and there won’t be too many complicated regulations new businesses have to find their way through. 

Top 10 Cities

The Thumbtack Small Business Friendliness Survey polls business owners in cities across the country each year to determine how different cities rank in terms of their small business environment. The results vary from year to year, but some of the cities consistently rank at the top. 

Manchester, New Hampshire

Manchester has regularly ranked as one of the top cities in friendliness and ease of entry for small businesses. Its rank has started to drop slightly in the 2019 survey, as its grade for ease of hiring has plummeted. It still ranks very high in terms of tax code and regulations. Business owners consistently say it is very easy to handle the registration and licensing required to start a business there. 

Atlanta, Georgia

On the other hand, the city of Atlanta has consistently improved in the rankings and now has one of the top scores. Employment laws and regulations have steadily become simpler for small businesses, and the government has encouraged industry growth. Business owners complain about insufficient opportunities for education and networking through the local and state governments.

Austin, Texas 

Austin is one of several Texas cities that frequently makes some of the top grades on the survey. The Texas state government and various municipalities do everything they can to make cities attractive to entrepreneurs and investors. Austin is especially well known for its thriving and positive business culture.  

Nashville, Tennessee

Nashville is another top scorer. While some survey respondents note that the city can be somewhat difficult for new businesses to find a foothold in, the city and culture are very friendly to businesses and entrepreneurs. In the most recent year of the survey, however, Nashville’s grade has begun to slip.

Houston, Texas

Houston is another city where business owners benefit from relatively friendly state and local regulations and the lack of state income tax. While hiring can be difficult, and the government can make it complicated for new businesses to file, it is overall a very friendly environment for businesses.  

Denver, Colorado

After some years of not scoring very well, Denver has shown significant improvement and now ranks as one of the most friendly cities for small businesses, according to the survey. Denver is a growing city, becoming more and more popular for young people and new businesses.   

Oklahoma City, Oklahoma

While the market may not be as strong as in some up-and-coming cities, Oklahoma City still scores very high across the board in its friendliness to small businesses. With low barriers to entry and friendly government agencies, it’s a good place for local entrepreneurs.

Fort Worth, Texas

While the small business ratings in Dallas have fallen sharply in the last few years of surveys, Fort Worth stays strong with very positive rankings from local business owners. It’s a fast-moving market, and hiring can be frustrating, but you can count on local officials to try to make it as easy as possible.

Jacksonville, Florida

Florida is another state very friendly to businesses, and small business owners and entrepreneurs in Jacksonville say that local agencies are very friendly to new businesses. While government websites and their efficiency leave something to be desired, the local government does its best to make things simple. 

Columbus, Ohio

Columbus ranks very high in overall friendliness ratings, and business owners give it great ratings in almost every category in the 2018 survey. However, some entrepreneurs say that Columbus regulations are easier for mid- to large-sized businesses and can be occasionally overwhelming for small new entries to the market.  

What is the Best City to Start a Business?

When it comes down to it, there is no one perfect city to start your business in. A lot depends on what you need and what kind of business you’re going to run. You want to be in a place with the kind of talent you need and the sort of customers who will need you. 

All of these cities listed above have various features that can make a city good for business, but it’s up to you to figure out what is ideal for your small business. It’s not a simple thing to uproot you and your family and move to another city, and you never know if the move would be worth it. For many business owners, the best option is simply to make the best out of your current location. 


If you’re especially mobile or already looking to make a move somewhere, then you might as well consider small business rankings as you relocate. Remember that relocating your business is a lot of work. If you’re already established in one place, you’re going to need to begin almost from the beginning in terms of licensing if you move from one state to another. 

You may also need to replace employees and equipment. Not every part of your business might be fully mobile. Make sure this is really what you want to do before committing to relocating to start a new business

Giving Small Businesses a Chance

A friendly business environment only goes so far when it comes to giving your business an edge. To survive and thrive as a small business, you need to be perfectly informed about your company’s finances. When an opportunity for growth appears, you need to be ready to invest in it, which means controlling your cash flow. 

If you need help planning your business’s future or setting up efficient bookkeeping practices, consult with a professional accountant. Find out what you can be doing to make your business more efficient and more likely to last.


This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.