Recent research might surprise you concerning what cities are the top locations for launching a business this year. A new report by personal finance website, WalletHub, evaluated the 150 most populated cities in the U.S; the data was derived from the U.S. Census Bureau, the Bureau of Labor Statistics and the National Venture Capital Association.
According to Inc. reporter Zoë Henry, “The study ranked urban centers–excluding the larger metro areas–using three factors: local business environment (length of the average workweek, revenue growth, industry variety), access to resources (financing and the amount of venture capital investment made per capita), and costs (office space affordability, labor costs, corporate taxes, and cost of living).”
Believe it or not, California and New York did not rank well for new businesses. Out of the two states, Los Angeles comes in at No. 48. Buffalo, N.Y.; Rochester, N.Y.; and New York City, N.Y. rank at Nos. 31, 35 and 89, respectively.
Why? According to analysts, the cost of living in New York and California has skyrocketed, making them extremely prohibitive for new companies. In fact, San Francisco is tied with Washington, D.C. and New York City for the most expensive office space in the U.S. In addition, Fremont, Irvine and San Jose suffer from the highest labor costs.
According to WalletHub the top 10 cities for launching a business in 2016 are:
- Sioux Falls, South Dakota
- Grand Rapids, Michigan
- Oklahoma City
- Lincoln, Nebraska
- Salt Lake City
- Charlotte, North Carolina
- Springfield, Missouri
- Amarillo, Texas
According to the director of the Center for Entrepreneurship and professor of management systems at Ohio University’s college of business, “Being in the right city can really matter…look for a city that is creative, energetic, and livable—the talent you will need to recruit wants to live in those types of places.”
When considering where to start up, you should first consider the industry in which you plan to operate in. For example, ask yourself, what resources will I need access to? Consider Nashville for health care startups. Recently, Nashville has experienced a huge surge in health care technology, which benefits startups who can do business with established players like Hospital Corporation of American, HealthStream and Amsurg.
Trying to secure funding for a startup is no small task. The majority of traditional lending sources will shy away from startups, categorizing them as “high risk”. Thankfully, alternative lenders – like First American Merchant – offer high risk business loans for those that otherwise struggle to secure the working capital they need. As you search for the best location for your startup, don’t forget to also consider what funding option best fits your business’ unique needs.