What are the Best and Worst Cities to Start a Business in 2018?

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Small businesses play an invaluable role in America’s economy, making up over 99 percent of all firms within the nation, according to the Small Business Administration. While small businesses are prevalent, choosing to launch one is no small feat; only about one third of all establishments survive ten years or longer. Choosing where to start a new business can have an impact on how well a company performs. RewardExpert –a free service that helps users take full advantage of credit card and travel rewards – today released its ranking of 2018’s Best and Worst Places to Start a Small Business.

By analyzing 177 metropolitan areas based on 30 data indicators, this report determines which places across the country give small businesses and startups the best chance to survive and succeed, and which ones will present most challenges.

“Starting a small business is a daunting venture. I’ve been an entrepreneur for about two decades and have experienced many pitfalls and successes,” says RewardExpert CEO and co-founder Roman Shteyn. “Knowing the advantages and obstacles of the market in which you’re starting your business is imperative to your long-term success. This ranking informs entrepreneurs of which locations across the country are friendliest to small businesses.”

The three best places to start a small business are:

  • Denver-Aurora-Lakewood, Colorado – One of the fastest growing metropolitan areas, with its population projected to grow 1.65 percent per year, Denver is an attractive location for individuals and businesses alike. Colorado, moreover, has attracted substantial venture capital investment, with 128 deals worth a total of $670,000,000 made between 2010 and 2016.
  • Boston-Cambridge-Newton, Massachusetts – The second-place Boston metropolitan region is an obvious choice for startups. The Boston metro area ranks in the 87th percentile for startup growth and number of startup companies (only 1.7 percent of all businesses are startups).
  • Bridgeport-Stamford-Norwalk, Connecticut – Adjacent to the New York City metropolitan area, this coastal Connecticut strip is a smart choice for businesses that require space to grow.
    While home values are higher here than anywhere else,  housing and office space in Connecticut remains inexpensive for those willing to live and/or work in the city of Bridgeport.

The bottom three places for starting a small business are:

  • Charleston-North Charleston, South Carolina – The Charleston, South Carolina, metropolitan area comes in as the number one least-favorable place to start a small business for a number of reasons. The area business ownership rate is below average, in the 8th percentile, with a very low percentage of startups (0.89 percent), and a below average five-year survival rate of 48.32 percent.
  • Florida Panhandle Region (Tallahassee-Pensacola, Florida) – The Florida Panhandle region, including both the Tallahassee and Pensacola metropolitan regions, is the second least-favorable location for small businesses — and the absolute least favorable one for startups, which make up only 0.86 percent of all businesses. Population growth is sluggish, at a 0.875 percent annual growth rate. Furthermore, median household incomes and net worths are well below average, ranking in the bottom third nationally.
  • Inland Empire and Bakersfield, California (Bakersfield-Riverside-San Bernardino-Ontario, California) – Outside of the Bay Area and the Los Angeles-San Diego corridor, California presents a rather inhospitable climate for small businesses and startups alike. Of the three regions that rank third through fifth least propitious, Bakersfield and the Inland Empire region takes the cake. Small business density is below average, and those startups that launch here fail more frequently than average, with a five-year survival rate of only 47.25 percent.

“While large corporations rule the stock market, small businesses and startups are the biggest drivers of our economy. They create job opportunities across the country and provide local communities with economic growth and innovation,” says Shteyn. “As citizens we should support local businesses in return.”

The cities and metropolitan areas in the report were evaluated on numerous data indicators divided into nine broad categories, including office space; demographics and diversity; education; income and assets; retail market; transit and commute; housing; taxes; venture capital; and the standing of startups and small businesses.

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