Which Metro Areas Are Best for New Entrepreneurs and Startups?

Updated: June 13, 2024

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The entrepreneurial spirit drives job creation and wage growth by introducing innovation and increasing competition. Startups are a significant source of new jobs, with new business establishments creating approximately 3 million jobs in 2019. More recent data shows that business startups surged post-pandemic, leading to the creation of more than 5 million new businesses in 2023 and reflecting their crucial impact on the economy.

MoneyGeek analyzed and ranked 168 U.S. metropolitan areas to determine the best metro areas for startup success. Our analysis focused on the best metropolitan areas for self-employed individuals and small business owners, considering factors such as self-employment rates and income, business success and access to funding. We learned that metros in the South and West tend to offer the best climate for startups and small businesses.

KEY FINDINGS
  • As the second-largest metro area in the U.S., Los Angeles ranks No. 1 for entrepreneur and startup success. More than 11% of LA’s working population is self-employed, and nearly a third of businesses are three years old or younger.

  • No Midwestern metro area lands in the top 50. This region's highest-ranking metro area, Sioux Falls, South Dakota, takes the No. 57 spot, which holds the seventh-highest rate of new businesses studywide.

  • Self-employed households earn the highest annual income in Bridgeport, Connecticut ($71,188).

  • Nationally, the average loan size for an SBA-backed 7(a) funding is $479,685, while for the 504 funding, that figure is more than double at $1,083,622 for the fiscal year 2023.

Best Metros for Starting a Business

The Los Angeles metro area ranks No. 1 for entrepreneurs and startup success. Eleven percent of the population is self-employed, and self-employed households earn an average annual income of $53,421, the 21st-highest in the study. North Port, Florida, and Austin, Texas, follow with self-employment rates above 8% and self-employment household incomes over $48,000.

Additionally, entrepreneurs in Austin and other Texas metros (Dallas and Wichita Falls) at the top of the list benefit from higher-than-average loan amounts for both 7(a) and 504 SBA-backed loans. The Lone Star state ranks No.6 for 7(a) and No.3 for 504 loans in terms of average loan amounts ($687,993 and $1,570,801, respectively). No other state whose metros rank in the top 10 studywide offers higher averages.

TOP 15 RANKING METROS FOR STARTUP SUCCESS
Overall Rank
Metro Area
Self-Employment Rate (%)
Avg. Self-Employment Household Income

1

Los Angeles-Long Beach-Anaheim, CA

11.3%

$53,421

2 (Tie)

North Port-Sarasota-Bradenton, FL

8.3%

$48,027

2 (Tie)

Austin-Round Rock-Georgetown, TX

13.1%

$54,480

4

Dallas-Fort Worth-Arlington, TX

8.6%

$50,899

5

Charleston-North Charleston, SC

9.2%

$48,349

6

Wichita Falls, TX

8.8%

$64,530

7

Spokane-Spokane Valley, WA

8.2%

$63,990

8

Fayetteville-Springdale-Rogers, AR

10.4%

$51,971

9

Miami-Fort Lauderdale-Pompano Beach, FL

14.0%

$47,159

10

San Diego-Chula Vista-Carlsbad, CA

9.7%

$55,355

11

Durham-Chapel Hill, NC

7.8%

$50,293

Self-Employment Trends

The five metros with the highest self-employment rates all rank in the top 50 overall. The Naples, Florida, metro area barely has the highest number of self-employed persons relative to its entire population (15%), followed closely by another Sunshine State metro, Miami, at 14%.

The top-ranking metro for self-employment income is Bridgeport, Connecticut, the only metro with a self-employed household income over $70,000. The San Jose, California, and Bowling Green, Kentucky, areas follow with average self-employed incomes of $68,762 and $66,975, respectively.

Metros With the Highest
Self-Employment Rate
1. Naples-Marco Island, FL: 14.9%
2. Miami-Fort Lauderdale-Pompano Beach, FL: 14.0%
3. Kingston, NY: 13.3%
4. North Port-Sarasota-Bradenton, FL: 13.1%
5. Wilmington, NC: 13.0%
Metros With the Highest Self-Employment
Annual Avg. Household Income
1. Bridgeport-Stamford-Norwalk, CT: $71,188
2. San Jose-Sunnyvale-Santa Clara, CA: $68,762
3. Bowling Green, KY: $66,975
4. Wichita Falls, TX: $64,530
5. Spokane-Spokane Valley, WA: $63,990

Business Environment Trends

Dover, Delaware, has the highest percentage of businesses that are three years old or younger (40%). But in the last two years, the number of established businesses (those operating for 11 years or longer) has decreased by 28%. Dover is the only metro in the top five with a significant number of new businesses that has also seen a significant decline in business longevity.

Ranking eighth-best studywide, the Fayetteville, Arkansas, metro area has the highest two-year growth in established businesses (67%), followed by Jackson, Mississippi (58%) and Charlotte, North Carolina (55%).

Metros With Highest Percentage
of New Businesses
1. Dover, DE: 39.7%
2. Las Vegas-Henderson-Paradise, NV: 35.6%
3. Austin-Round Rock-Georgetown, TX: 34.6%
4. Orlando-Kissimmee-Sanford, FL: 34.3%
5. Miami-Fort Lauderdale-Pompano Beach, FL: 32.9%
Metros With Highest 2-Year Change
in Established Businesses
1. Fayetteville-Springdale-Rogers, AR: 66.5%
2. Jackson, MS: 57.7%
3. Charlotte-Concord-Gastonia, NC-SC: 54.5%
4. Punta Gorda, FL: 51.7%
5. Oshkosh-Neenah, WI: 46.0%

Worst Metros for Startup Success

Entrepreneurs may find it harder to establish a successful new business in the metros that ranked lowest in our study. Fourteen of the worst 20 metros are in the Midwest, including the two worst-ranking (South Bend, Indiana, and Saginaw, Michigan). Although the self-employment rate in the bottom 10 metros is roughly 4% less than in the top 10, the average income is only $18,000 less annually.

The number of new businesses is close to zero in three of the bottom 10 metros. In the other bottom 10 areas, the only one where new business growth exceeds 11% is Manchester, New Hampshire (19%). When considering longevity, the picture gets worse — the number of established businesses (operating for 11 years or longer) has declined by 18% on average in the same areas, with Bloomington, Illinois, experiencing a 46% decline.

WORST 15 RANKING METROS FOR STARTUP SUCCESS
Overall Rank
Metro Area
Self-Employment Rate (%)
Avg. Self-Employment Household Income

168

South Bend-Mishawaka, IN-MI

5.4%

$30,912

167

Saginaw, MI

6.6%

$29,113

166

Manchester-Nashua, NH

5.8%

$32,431

165

Dayton-Kettering, OH

6.8%

$38,731

164

Toledo, OH

6.8%

$33,352

163

Allentown-Bethlehem-Easton, PA-NJ

6.5%

$39,920

162

Bloomington, IL

5.4%

$41,795

161

Springfield, IL

5.7%

$41,909

160

Green Bay, WI

7.0%

$36,219

159

Canton-Massillon, OH

7.3%

$34,780

158

Appleton, WI

6.3%

$38,015

Expert Insights

To get more context about the startup landscape in the U.S., MoneyGeek sought the expertise of business consulting experts. Here are their insights.

  1. What trends or shifts have you observed in the distribution of successful entrepreneurial ventures across the country?
  2. How do differences in regional industry strengths influence the types of startups that thrive in particular cities?
  3. What is the single most important piece of advice you can give to potential or “just starting out” entrepreneurs?
  4. In your opinion, how much risk is too much risk as an entrepreneur? How much is too little?
Inbar Madar
Inbar MadarCEO and Business Consultant at M.I. Business Consulting
Christian Muntean
Christian MunteanPresident at Vantage Consulting

Essential Finance Tips for the Self-Employed

Following these key tips can help self-employed individuals and small business owners thrive. From handling taxes and insurance to securing financing and managing cash flow, these practical insights can support your entrepreneurial success.

    tax icon

    Understand self-employment taxes

    Knowing how to calculate and pay your taxes as a self-employed person is essential to avoid penalties and stay compliant with IRS regulations.

    healthInsurance icon

    Choose the right health coverage

    Explore your options for a self-employed health insurance plan that suits your needs and budget.

    insurance2 icon

    Insure your business

    Protect your business with the right self-employed business insurance coverage, including general liability, property and professional liability insurance.

    loanPro icon

    Use business loans wisely

    If you need financing, explore your options for startup funding, like SBA loans, and understand the terms before committing. Consider different funding options, such as business credit cards and loans, to determine what works best for your needs.

Methodology

To rank the best metros for startup success, MoneyGeek analyzed Census data from the American Community Survey (ACS) and Annual Business Survey, as well as data from the U.S. Small Business Administration. We ranked metros based on six factors:

Self-employed population (full weight): The proportion of self-employed people within a city's total population, as reported by the 2022 ACS, the most recent data available. Nationwide, an average of 9% of people are self-employed.

Annual average self-employment household income (full weight): This is the aggregate self-employed income for households divided by the number of households with self-employed members.

New business rate (full weight): The percentage of businesses operating for three years or less as a percentage of all businesses in the area.

Two-year percentage change in established businesses (full weight): This is the percentage change between 2019 and 2021 for businesses that have been in operation for 11 years or longer.

Average loan size for 7(a) loans (half weight): This is the average dollar amount granted in loan approvals. A 7(a) loan is an SBA-backed loan that helps small businesses with working capital, equipment or debt refinancing. Data comes from the SBA’s 7(a) & 504 Lender Report, which is at state-level and is for fiscal year 2023. The national average is $479,685.

Average loan size for 504 loans (half weight): This is the average dollar amount granted in loan approvals. A 504 loan provides SBA-backed funding for small businesses to purchase real estate or equipment. Data comes from the SBA’s 7(a) & 504 Lender Report, which is at state-level and is for fiscal year 2023. The national average is $1,083,622.

Each metro was ranked in every metric. We then used the rankings to calculate a final ranking score through a weighted average. The metro area with the highest final ranking score ranks as the best metro for startup success.

Full Dataset

Below is the data that informed our analysis. Key indicators like earnings, business environment and access to funding contribute to understanding the economic profile of self-employed Americans.

Rank
Metro Area
Self-Employment Rate
% of Self-Employed in Own Incorporated Business
% of Self-Employed in Own Unincorporated Business
Avg. Self-Employment Household Income
% of Businesses That Are New Businesses
2-Year % Change in Established Businesses
Avg. Loan Size for Approved 7(a) Funding
Avg. Loan Size for Approved 504 Funding

1

Los Angeles-Long Beach-Anaheim, CA

11.3%

44.9%

55.1%

$53,421

30.0%

1.6%

$594,690

$1,261,864

2 (Tie)

North Port-Sarasota-Bradenton, FL

13.1%

53.6%

46.4%

$54,480

31.7%

4.1%

$482,707

$1,092,948

2 (Tie)

Austin-Round Rock-Georgetown, TX

8.3%

48.0%

52.0%

$48,027

34.6%

4.1%

$687,993

$1,570,801

4

Dallas-Fort Worth-Arlington, TX

8.6%

41.0%

59.0%

$50,899

32.8%

1.0%

$687,993

$1,570,801

5

Charleston-North Charleston, SC

9.2%

44.0%

56.0%

$48,349

30.0%

8.5%

$545,768

$1,224,643

6

Wichita Falls, TX

8.8%

24.8%

75.2%

$64,530

11.8%

21.3%

$687,993

$1,570,801

7

Spokane-Spokane Valley, WA

8.2%

44.4%

55.6%

$63,990

27.5%

3.7%

$595,331

$1,178,194

8

Fayetteville-Springdale-Rogers, AR

10.4%

29.5%

70.5%

$51,971

16.2%

66.5%

$651,809

$1,105,125

9

Miami-Fort Lauderdale-Pompano Beach, FL

14.0%

54.7%

45.3%

$47,159

32.9%

2.5%

$482,707

$1,092,948

10

San Diego-Chula Vista-Carlsbad, CA

9.7%

45.1%

54.9%

$55,355

29.9%

-3.7%

$594,690

$1,261,864

11

Durham-Chapel Hill, NC

7.8%

50.2%

49.8%

$50,293

24.0%

40.8%

$671,165

$1,177,658

About Anja Solum, CEPF


Anja Solum, CEPF headshot

Anja Solum is a certified educator in personal finance and the Data Journalism Manager at MoneyGeek. For over six years, she has produced data analyses and studies for agency and in-house teams across multiple verticals.

Solum holds a bachelor's degree in communication arts from Florida International University. She's passionate about using data to tell compelling, informed stories that empower readers.


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