The least risky US cities to start a business – Forbes
Entrepreneurship in the US appears to be in a good place.
In the Global Entrepreneurship Monitor 2022/2023 report from Babson College, the US’ total entrepreneurial activity (TEA) rate – the percentage of 18 to 64-year-olds who own or manage an established business – stood at 19.2%, up from 16.5% a year prior.
It’s also encouraging to see the entrepreneurial gender gap (male TEA to female TEA) has been closing in recent years, from six percentage points in 2017 to just two last year.
Overall, established business ownership (EBO) in the US stands at 9.2%, which ranks 11th in the world.
This begs the question: where exactly is the best city in the States to start a business?
In an attempt to find out, Forbes Advisor analysed data for 92 of the most populated US cities, assessing them across 12 metrics that reflect business risks.
Metrics included GDP growth rate, the living wage, state corporate taxes, property crime rate and population growth.
The outcome was a list featuring the most and least risky cities for small businesses in 2023.
Texas: A hub for entrepreneurship
Of all US states, Texas is comfortably the standout performer according to Forbes’ research.
The Lone Star State has eight of the top 15 best cities to start a small business, with four located in the Dallas-Fort Worth metropolitan area which offers low corporate taxes, high economic growth rates and low property crime.
Ranking as the best city for entrepreneurship is Plano, largely thanks to its particularly low property crime (17 crimes per 1,000 residents), a higher-than-average median household income (US$95,002 a year) and the fact there is no state-level corporate tax.
Interesting, despite being in the same state, second-placed Laredo scores well in altogether different metrics from a business ownership perspective. The southern Texas city has a lower-than-average living wage (US$15.83 an hour), a higher-than-average economic growth rate (2.4%) and a low minimum hourly wage (US$7.25).
Entrepreneurs should consider North Carolina
North Carolina is the other state to perform particularly well in Forbes’ study, with three cities in the top five least risky places to start a business.
Raleigh’s positive economic growth percentage (3.4%) and population growth (2.64%) secures it a third-placed finish, aided by low rates for state corporate tax (2.5%) and property crime (22 crimes per 1,000 residents).
Neighbouring city Durham achieves similar scores for various metrics, but has slightly more property crime and a marginally lower median household income. Fifth-placed Charlotte – comfortably the state’s biggest city by population – is boosted by strong population growth (2.58%) and GDP growth (2.5%).
At the other end of the scale, California is well represented in the list of most risky cities for small businesses, with eight in the top 15. The majority of these are within the Los Angeles metropolitan area and rank highly when it comes to corporate taxes, living costs and natural disasters that could negatively impact a young venture.
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