Best cities for young entrepreneursRichard Barrington
While many recent graduates are looking for a job this time of year, some young adults would rather write their own ticket than rely on an employer to appreciate their talents.
For young entrepreneurs looking to start a business, it's important to recognize that location can make or break you. That's why MoneyRates.com studied a combination of factors to identify the best cities to start a business for young entrepreneurs.
What follows are the ten best places for young entrepreneurs to start a business these days. (Note that the Census Bureau often lumps nearby cities together into a single metropolitan area, which is why multiple cities are listed for many of the rankings.)
Determining the best places to start a business
How can you tell which are the best cities for startups?
While much depends on the nature of the business you want to launch, certain common denominators affect all types of business startups. We found these factors to be conducive to getting a new business off the ground -- growth, affluence, a readily available talent pool and a favorable business tax environment.
With this in mind, MoneyRates looked at data from the Census Bureau and the Tax Foundation to determine its list of the best cities for entrepreneurs 2018:
- Population growth rate
Fast-growing areas create demand for goods and services and are generally indicators of prosperity. MoneyRates used the 25 fastest growing metropolitan areas in the U.S., according to the Census Bureau, as its starting point and then narrowed the field down based on the other criteria.
- Educational attainment
MoneyRates ranked each area based on the percentage of the population holding at least a bachelor's degree according to Census Bureau data. This represents both a good talent pool for a growing business to draw from and an affluent market for the startup's goods or services.
- Affluence among young adults
To determine how well young adults were faring in each metropolitan area, MoneyRates also looked at Census Bureau data regarding the proportion of 18- to 24-year-olds that earn at least three times the poverty level. This indicates both how favorable local conditions are to young adults and the prosperity of the local youth market.
- Business tax conditions
MoneyRates.com used the Tax Foundation's rankings of how favorable state business taxes are to rank the tax environment faced by businesses in each city.
The rankings of each metropolitan area across all four criteria were averaged to determine the best cities to start a business in 2018.
1. Provo/Orem, Utah
Located on the shore of Utah Lake and home to Brigham Young University, this metropolitan area combines for a population of just over 600,000. That's changing, though, as this is one of the ten fastest growing areas in the country.
After tying for second in last year's ranking of best cities for young entrepreneurs, Provo/Orem took the top spot this year. Along with its strong growth rate, Provo/Orem has a high percentage of its population with a bachelor's degrees, and Utah's business tax environment is rated as the ninth-most favorable in the United States.
2. Raleigh, North Carolina
A variety of studies have found Raleigh among the best cities in the United States for everything from food to driving. Now it can add being one of the best cities for young entrepreneurs to the list, having placed second in this ranking this year and last. At 47.2 percent, the proportion of adults in Raleigh with at least a bachelor's degree is extraordinarily high, topping all the cities in this survey.
3. Olympia/Tumwater, Washington
Located about 60 miles south of Seattle, this area is a newcomer to the list. Its ranking is clearly deserved because young adults frequently seem to prosper there -- it topped all the other cities on this list in the proportion of young adults earning at least three times the poverty level.
4. The Villages, Florida
This city in central Florida is designed as a retirement community, so what is it doing on a list of the best places for young entrepreneurs? If you think about it, the nature of a retirement community creates demand for services without adding to the supply of labor. That spells opportunity for young entrepreneurs.
5. (tie) Crestview/Ft. Walton Beach/Destin, Florida
This area is a new addition to this list, based in large part on its ranking third among the cities examined for young adult prosperity.
6. (tie) North Port/Sarasota/Bradenton, Florida
This area on Florida's central west coast remains in the top ten this year after winning the top spot in the 2017 version of this study.
7. Austin/Round Rock, Texas
The Austin area has long been a hub for youth culture, and its economic and demographic strengths have allowed it to repeat last year's seventh-place ranking on this list.
8. Bend/Redmond, Oregon
This is the fourth-fastest growing metropolitan area in the U.S., and it ranked in the top ten among fast-growing cities for the proportion of its adult population with a bachelor's degree or better.
9. Orlando/Kissimmee/Sanford, Florida
Florida led all other states by placing four metropolitan areas on this top-ten list. One reason is that Florida was rated by the Tax Foundation as having the most favorable business tax environment of any state.
10. St. George, Utah
Located in the southwest corner of Utah, St. George makes this top-ten list after narrowly missing last year when it ranked 11th. The main thing that makes St. George one of the best cities for startups is that it grew faster than any other metropolitan area in the United States over the most recent year measured, and a growing population represents a growing market for businesses.
It's not easy to start a business. You need energy, inspiration and financial acumen. One way you can improve your chances of success is by choosing the right location, and each of the cities on the above list is worthy of consideration.
From north to south and east to west, many areas of the country are represented on the list of promising cities for new businesses. That gives young entrepreneurs plenty of choice when it comes to finding the best conditions for their startup business to succeed.