4 Great Cities for Starting a Business

If you’re hoping to start your own business, finding the right place to set up shop is a critical first step. To give budding entrepreneurs a jump on the competition, we scoured the country for ten startup-friendly cities.

First, we looked for metropolitan areas with high concentrations of small businesses. Then we scanned for places with low living costs, specifically for self-employed people, as measured by the Council for Community and Economic Research. Some pricier areas still made the cut because they offer advantages, such as large pools of highly skilled workers, that might outweigh the expense.

Next we screened for an educated workforce to ensure you’ll have plenty of promising job applicants when you’re ready to hire. Finally, we looked for areas that tend to receive a lot of start-up investment dollars and offer low business costs.

Take a look at our list of ten of the best cities for entrepreneurs.

Dallas

Metro area population: 6.5 million

Number of small businesses per 100,000 people: 2,015.1

Cost of living for self-employed: 0.6% below U.S. average

Percentage of labor force with bachelor’s degrees: 27.9% (U.S. average: 22.9%)

Standout start-ups: biotech company Kewl Innovations (focused on diabetes treatment), gift card retailer CardLab, software company Newton Insight

Not everything’s bigger in Texas. Take taxes. In the Kosmont-Rose Institute Cost of Doing Business Survey, both Dallas and neighboring Fort Worth ranked among the 20 least-expensive cities in the West in 2012, based on a basket of costs, including property taxes, sales tax, business license fees and utilities taxes. Dallas also has no personal income tax, occupation tax or wage tax.

It’s no wonder 20 Fortune 500 companies, including AT&T and Southwest Airlines, choose Dallas for their stomping grounds (cowboy boots optional). But budding entrepreneurs need not feel dwarfed by these corporate behemoths. Nearly 80% of Dallas businesses officially weigh in as small (technically with fewer than 500 employees, but typically with 20 or fewer). And they employ nearly 40% of the area’s workforce.

The smallest of small businesses — “microenterprises” with five or fewer employees — can get help from the Business Assistance Center program, which provides resources, workshops and one-on-one counseling to future CEOs. Start-up accelerator Tech Wildcatters offers its mentorship program and up to $25,000 in seed money to select companies. And the Dallas County Community College District provides a 30,000-square-foot business incubation center that can house up to 50 small-business owners, who share the costs.

Kansas City

Metro area population: 2.0 million

Number of small businesses per 100,000 people: 2,296.4

Cost of living for self-employed: 0.6% below U.S. average

Percentage of labor force with bachelor’s degrees: 30.5%

Standout start-ups: mobile apps Leap2 and EyeVerify, real estate software developer ShownHome

With its growing tech community, you might think this area more Oz than Kansas these days. In recent years, a colorful crowd of start-ups has been taking advantage of the region’s lower costs and gathering in what’s been aptly dubbed the “Silicon Prairie,” which includes Omaha, Des Moines and Kansas City. Kansas City, however, offers an added technological draw that exists nowhere else: Google Fiber’s ultra-high-speed network, first implemented in November 2012. (Another exclusive offering: unbeatable Kansas City-style barbecue.)

To harness this truly unique opportunity for innovation, Kansas City, Mo. — the city straddles the Missouri-Kansas border — has developed a strategic initiative called LaunchKC, which will roll out a number of developments in hopes of attracting and nurturing tech entrepreneurs. On its to-do list: reduce costs for starting new businesses, create a wireless district in the downtown area and establish a collaborative space for tech professionals.

For local resources that already exist, tap into the Kansas City Startup Village. The community of entrepreneurs has plugged into Google’s superfast Internet speeds and invites others to join their shared offices and living spaces at little or no cost. Plus, a number of business incubators, including BetaBlox and Think Big Partners, offer mentorship programs, access to facilities and networking opportunities. Think Big also offers investment funds.

Atlanta

Metro area population: 5.4 million

Number of small businesses per 100,000 people: 2,275.3

Cost of living for self-employed: 1.7% below U.S. average

Percentage of labor force with bachelor’s degrees: 31.6%

Standout start-ups: biotech company Cell Constructs, investing software company Lucena Research, app developer TripLingo

This Southern belle knows how to court the entrepreneurial spirit. Back in 1886, it was the birthplace of Coca-Cola, whose products have fueled many a creative mind ever since. And more than hometown loyalty has kept Coke’s headquarters in Atlanta, alongside the likes of AT&T, UPS and Delta. The city boasts the world’s busiest airport, and execs enjoy a quality culture scene led by the High Museum of Art, fine dining options and an active nightlife.

Another entrepreneurial draw: Despite its big-city appeal, Atlanta offers small-city living costs. And according to consulting firm KPMG, business costs are 3.8% below the national average. Plus, the area’s 57 colleges and universities provide a deep pool of young skilled workers.

Campuses also offer support and resources for local innovators. Georgia Tech’s start-up accelerator, the Advanced Technology Department Center, has helped launch more than 130 tech companies since 1980 with its mentoring program, networking events and other services. Georgia State houses CollabTech, a business incubator with nearly 14,000 square feet of lab space and offices, access to equipment and technology, and an on-site facility manager.

Beyond school grounds, Hub Atlanta offers co-working spaces as well as a network to connect entrepreneurs and potential investors. And funds are flowing into Atlanta at a healthy rate. In the first nine months of 2012, the metro area raised more than $196 million in investment funds, according to the National Venture Capital Association.

Denver

Metro area population: 2.6 million

Number of small businesses per 100,000 people: 2,691.5

Cost of living for self-employed: 3.8% above U.S. average

Percentage of labor force with bachelor’s degrees: 34.6%

Standout start-ups: foodie app Forkly, eco-friendly boutique retailer Beautifuli.com, mobile application builder AppIt Ventures

The mile-high city provides stable ground (and beautiful scenery) for aspiring impresarios with lofty business goals. After all, small businesses with fewer than 50 employees make up 95% of the area’s economy. Despite a slightly higher than average cost of living, Denver scores favorably on the Kosmont-Rose Institute Cost of Doing Business Survey. And according to consulting firm KPMG, business costs are 1.6% below the national average across industries — and are particularly low, at 8% below average, for corporate services such as insurance.

Denver’s economic development office encourages small-business growth with its JumpStart Biz Plan Awards. All applicants receive feedback and advice on how to plow ahead, and winners collect $50,000 cash, plus legal counsel and tax, accounting, marketing and social media services. Winners also get a one-year membership in tech start-up community Galvanize, as well as an office in its 30,000-square-foot workspace.

In addition to a highly educated workforce — one in three workers has a BA or higher — the Denver area also boasts a fair share of the nation’s start-up investment dollars, having received more than $192 million in venture capital last year through the third quarter.

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