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The Cities With The Lowest Business Costs

by | 9:19 am

Where to start your business based on three key dimensions: business environment, access to resources and business costs.


Approximately 15 million people, or 10% of the labor force, work for themselves. When deciding where to start a business, various factors are considered, including the availability of talented employees and cost of office space. WalletHub analyzed the 150 most populated U.S. cities and ranked the top 10 Overall Cities to start a business:

1. Oklahoma City, OK

“The ease of getting a business started here is another big sell,” said Susan Urbach, director of the University of Central Oklahoma Small Business Development Center. “You can file all the paperwork online or head downtown and get it all done in a single morning.”

2. Salt Lake City, UT

“EBay, Google, and others have massive call centers here because of this language capability that’s not found many other places, especially towards the center of the country,” said John Richards, founder of Salt Lake City incubator Boom Startup. “So you have an affordable workforce that has a lot of loyalty to their employer and they have a lot of language skills.”

3. Charlotte, NC

The state of North Carolina offers tax credits, funds and grants, and among the nation’s lowest effective business taxes and lowest mandatory expenses such as workers’ compensation and unemployment.

4. Tulsa, OK

Tulsa has 26.29 small businesses for every 1,000 residents – nearly 10 percent above the national average. Like Oklahoma City, there are tax breaks for qualified manufacturing, research and development, and computer/data processing companies.

5. Grand Rapids, MI

Amway heir Rick DeVos wants to make Grand Rapids, Michigan, a start-up magnet: “DeVos launched a $15 million investment fund called Start Garden, which will invest $5,000 in each of two business ideas every week.”

6. Durham, NC

Raleigh-Durham has four startup accelerators: Joystick Labs focuses on the area’s gaming community; Launchbox Digital is a standard franchised incubator; and Bull City Forward and Durham Coworking are local efforts. Research Triangle Park (RTP) is also home to tech giants IBM, Cisco, Nortel, Sony Ericsson, and GlaxoSmithKline.

7. St. Louis, MO

Jack Dorsey, the Twitter co-founder, calls St. Louis his hometown and launched his latest effort, credit card processing startup Square, with a St. Louis-based co-founder. “To the question of what makes St. Louis great for startups, first of all the cost of doing business in St. Louis is unbelievable,” said Keith Alper, CEO of Creative Producers Group.

8. Austin, TX

“Texas is one of the few states with no individual or corporate income tax, which is another benefit,” said Michele Skelding, SVP of global technology and innovation at the Austin Chamber of Commerce. The cost of living in Austin is below the national average, and the University of Texas and high-tech industries offer innovation and a largely educated workforce. It is also the “Live Music Capital of the World,” home to the international South by Southwest festival and many musicians, artists, and writers.

9. Amarillo, TX

“There’s a lot of opportunity and there’s a lot of first Amarillo hasn’t had yet like larger more metropolitan market. Here, you can start up a French restaurant and be the first person to do that. It’s not too hard if you have a good business plan to go and get yourself a loan and some capital and get in the game,” West Texas A&M University Assistant Economics Professor Dr. Neil Meredith said.

10. Sioux Falls, SD

Credit business costs that are 26 percent below the national average, and the economy is expected to expand 4.1 percent annually over the next five years. Like Texas, South Dakota does not levy individual or corporate income taxes.

To compile these rankings, WalletHub ranked cities based on three key dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs.

Business Environment included such considerations as the length of the average work week, the average growth in the number of small businesses, and the five-year business survival rate.

Highest Average Growth in Number of Small Businesses

  1. Grand Rapids, MI
  2. Charlotte, NC
  3. Winston-Salem, NC
  4. Austin, TX
  5. Laredo, TX

Access to resources was measured by such factors as financing accessibility, prevalence of investors and share of college-educated population.

Most Accessible Financing (six-way tie)

  • Lincoln, NE
  • Laredo, TX
  • Madison, WI
  • Lubbock, TX
  • Amarillo, TX
  • Salt Lake City, UT

Business costs were calculated on factors, including office-space availability and cost of living.

Cheapest Office Spaces

  1. Toledo, OH
  2. Moreno Valley, CA
  3. Springfield, MO
  4. Colorado Springs, CO
  5. Columbus, GA
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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