“Location, location, location” is a familiar real estate mantra and for good reason. It’s why a 2,500 square foot home in Waco, TX costs $250,000 and that same home in Orange County costs $1.5 million. There are many factors to consider when choosing residential real estate, but what should you think about when looking for the perfect spot for your small business?
Kiplinger, a company that focuses on personal finance advice and business forecasting, recently published a list of the ten best cities for entrepreneurs to base their startups in. With attributes such as a strong community of established small businesses, low cost of living, well-educated workforce, and low unemployment rates, these indicators were evaluated to measure a healthy local economy. There were, however, two major cities, known for their startup communities, that were noticeably omitted from the list: New York and San Francisco. “Not only are they among the most expensive U.S. cities to live in, but California and New York state offer two of the three worst business tax climates in the country.”
So here is the list of the top ten cities for entrepreneurs to establish a business in and why Kiplinger picked each of these cities:
10) Columbus, OH – “Business-minded Buckeyes do well in Ohio’s capital. Many Fortune 500 companies, including American Electric Power and Nationwide Mutual Insurance, are based in Columbus. But don’t let the big guys intimidate you: The city is home to 19,341 companies with just one to four employees, compared with an average of just 9,611 small businesses for all metro areas in the U.S.”
Moreover, housing costs are 20.3% lower than the national average for self-employed workers.
9) Denver, CO – “A whole lot of entrepreneurs have already figured out that the mile-high city provides stable ground (and beautiful scenery) for lofty business goals. Denver boasts the greatest number of small businesses per 10,000 people on this list. And 58.5% of all its establishments have just one to four employees, compared with 54.6% for the U.S.”
Denver also boasts that business costs are 1.6% below the national average and also offers financing programs that provide up to 50% of a project’s costs if you set up shop in specific parts of town.
8) Indianapolis, IN – “Indianapolis sports a burgeoning startup scene with an exceptionally low price tag. Not only does it offer affordable living costs, the Indiana capital’s business costs are also low, at 3.8% below average, according to KPMG. Plus, the Tax Foundation ranks Indiana among the 10 states with the best business tax climate. The state plans to lower its corporate income tax rate to 6.5% on July 1, 2015. The rate was 8.5% as recently as 2012.”
7) Des Moines, IA – “Living costs are low across the board, but housing is particularly cheap, at 16.9% below the national average for self-employed workers. The Iowa capital city’s median home value is $118,600, which is $62,800 less than the national median… Living costs are low across the board, but housing is particularly cheap, at 16.9% below the national average for self-employed workers. The Iowa capital city’s median home value is $118,600, which is $62,800 less than the national median.”
6) Salt Lake City, UT – “Young entrepreneurs may be particularly drawn to Salt Lake City, one of our best cities for new college graduates. After all, it has a median age of 30.9 years old, 6.3 years younger than the national median. That youthfulness may be helping to propel the growing tech community. Google Fiber may also have something to do with it. The ultra-high-speed broadband network has already broken ground in Provo, about 45 miles south of Salt Lake. And the capital city itself is on the short list to be next.”
5) Austin, TX – “Austin, with $362 million worth of venture capital invested during the first half of 2014, was among the top 10 metro-area destinations for VC money, according to the National Venture Capital Association.” Also, “Austin offers a rare opportunity for the technologically inclined as a construction site for Google Fiber. Tech start-ups can connect with each other, as well as investors and potential partners, through business incubator and accelerator Capital Factory. Some of the benefits of joining the group include introductions to potential mentors (who are successful entrepreneurs), exposure to investors and access to coworking spaces.”
4) Tulsa, OK – So what does Tulsa offer? “The second-most affordable city on this list offers particularly cheap housing, with costs a whopping 34.5% below average for self-employed workers. The median home value is just $121,700 in the city (versus $181,400 for the U.S.). Tulsa is also an affordable big city for renters; the average two-bedroom, two-bathroom apartment costs $592 a month, or $328 less than the national average.
“More than 12,700 small businesses are in Tulsa. In a cozy metro area with less than a million people, that concentrated presence means small businesses make a big impact on the local economy. According to the Tulsa Regional Chamber, small businesses create two-thirds of all the new jobs in the region and post an annual payroll of $1.4 billion.”
3) Nashville, TN – “The biggest advantage to setting up shop in Nashville is its affordability. The Music City offers low living costs, and its business costs are equally affordable. According to KPMG, business costs are 5.1% below the national average across industries—and are markedly low for corporate services such as financial firms, at 13.2% below average.”
2) Omaha, NE – “One of our 10 cheapest cities you’d actually want to live in, Omaha offers local residents and business owners rock-bottom living costs and is the most affordable city on this list. Business costs are a steal at 5.7% below the U.S. average, according to KPMG. They’re particularly favorable for financial services firms, at 15.2% below average.”
1) Oklahoma City, OK – “Oklahoma City is home to more than 18,600 small businesses, nearly double the national average for all metro areas. It also sports the second-highest number of small businesses per 10,000 people on this list. Oklahoma’s ‘quality jobs’ incentive programs offer cash back to companies for creating new positions that pay better than the county’s average wage… One of its initiatives, GrowOKC Fund, targets existing small businesses based in the capital city. It provides selected entities with investments of $100,000 to $250,000 to fuel their growth.”
Are you inspired and ready to pick up and find a new city to kick off your startup in? Contact UpCounsel business attorneys and tax attorneys to legally tie up loose ends in one state and to determine if your new potential location really is the best option for your business.