Entrepreneurs are a special breed. They have unique insights into product ideas or how business should be done, and the willingness to take risks in pursuit of their visions. Often, this requires having the grit to fail and try again.
Entrepreneurship is also the rare area of business where youth can be an advantage. Whereas established companies typically look for experience when they hire, a start-up business can benefit from the fresh perspectives and raw energy of younger adults.
Younger people like millennials also have less to lose in terms of an established career and salary, and so they can be more willing to put what they have at risk to create a new business. As people grow older, they tend to lose this appetite for risk.
As much as entrepreneurship centers on the special characteristics of individuals, the broader economic environment also makes a difference in whether start-ups succeed or fail, or whether people even attempt them in the first place.
To examine which areas of the country do the best job of encouraging the investment of time, money and energy it takes to start a business, MoneyRates.com has conducted its first study of the Best Cities for Young Entrepreneurs.
Criteria for Entrepreneurship Study
To assess the environment for entrepreneurship in different cities, MoneyRates.com looked at four criteria:
- Population growth. A growing population means more consumer demand, plus it is a sign people are attracted to the area.
- Young adult affluence. To focus in particular on young entrepreneurs, MoneyRates.com looked at the percentage of the young adult population that is already earning a competitive wage. This indicates both economic opportunity for young people and a healthy market for new products or services.
- Educational attainment. Looking at the percentage of the population with a bachelor's degree or better indicates where a skilled workforce is available to a growing business, as well as where there is likely to be a sophisticated and affluent consumer market.
- Tax environment. State taxes raise the barrier to profitability for businesses, so this study favored cities that are located in states with relatively low state business tax burdens.
Texas and Florida came across particularly well, but the study also discovered favorable entrepreneurial conditions in places as diverse as North Carolina, Colorado and South Dakota.
The 10 Best Cities for Young Entrepreneurs
Based on the above factors, MoneyRates.com created the following list of the 10 Best Cities for Young Entrepreneurs:
1. Austin/Round Rock, Texas
As home to the annual South by Southwest Festival, Austin has built a national reputation for innovation and culture, and the 50,000-strong student body of the University of Texas at Austin ensures that the area has an energetic and educated population. According to the U.S. Census Bureau, Austin/Round Rock is the third-fastest growing metropolitan area in the nation, and with over a third of its population having a bachelor degree or better, it is also one of the most well-educated places in the country.
"Entrepreneurs have been attracted to Round Rock for many, many years - look no further than Michael Dell, who moved his company to Round Rock in 1994. More recently, Gravity Workspace just opened in our growing Downtown district. The City has earned a reputation for attracting young, talented business people because we work hard to keep a light regulatory touch and low tax rates. It's one of the reasons we continue to grow, but grow in a smart, strategic way."
— Laurie Hadley, City Manager
Round Rock, TX
2. Raleigh, North Carolina
Home to 10 different colleges and universities and part of North Carolina's famed Research Triangle, Raleigh is well-positioned for creative entrepreneurs. The city is one of the 10 fastest-growing in the U.S., and has the highest proportion of its population holding at least a bachelor's degree.
“My hope is for all of our citizens to participate in this recognition and our vibrant economy.”
— City Councilman Corey Branch
3. Midland, Texas
Located in the western part of Texas, Midland is the second-fastest growing city in the U.S., and also ranked second in young adult affluence. Midland is at the center of the Permian Basin, an oil-rich part of the state.
"Our community has always thrived off the entrepreneur spirit created by this city and the energy sector. Hard work is rewarded and young professionals have the opportunity to succeed in many endeavors. During the last five years we have seen the majority of the population in Midland shift to adults 40 and under. Being an individual that falls into that category, I am excited about the future of our city. As we continue to grow, Midland will always strive to be the center of success for young entrepreneurs."
— J.Ross Lacy, Mayor Pro Tem
"Midland has long been known for its strong presence in the energy sector and has provided opportunities for young and old alike to live the American Dream. Our young entrepreneurs have really stepped up to the plate and contributed as we continue to grow and diversify our economy."
— Mayor Jerry Morales
4. Houston/The Woodlands/Sugar Land, Texas
This already-huge metropolis has continued to grow rapidly. Besides its growth creating favorable conditions for entrepreneurship, the Houston area has a high level of young adult affluence. It also benefits from the business-friendly tax policies in Texas.
“Your rating is a tribute to The Woodlands and all the other fine cities included in your Top Ten. The vision of our founder, George Mitchell, was to build a community where people could live, work, play and learn. This was his guiding principle and remains so today. The Woodlands is one of the few Master Planned Communities that survived the so called suburban development ‘experiment" of the 1970s, where innovative developers sought to reshape the suburban landscape. This is a testament to Mr. Mitchell’s visionary leadership and those who came after him. But, The Woodlands has grown to be more than a bedroom, suburban community. Today, given our infrastructure, schools, amenities and favorable pro-business climate, we offer businesses, employees and residents a great climate in which to thrive. The Woodlands offers a high quality environment where their employees can reap the benefits of Mr. Mitchell’s vision and success, a major factor in attracting those business to locate in our great community.”
— Mike Bass, Vice Chairman Board of Directors Governing Body
The Woodlands, TX
5. Crestview/Fort Walton Beach/Destin, Florida (tie)
Its location on Florida's panhandle includes the junction of three major highways, which makes it a good hub for business activity. Florida also aids entrepreneurs by having one of the nation's lowest rates of business taxation. Additionally, the Crestview area has one of the highest portions of young adult affluence.
"To be ranked among the Top Ten Cities for Young Entrepreneurs and declared fifth in the nation is a great honor and recognition. Crestview is known as the Hub City and we are a Hub that embraces innovation. Who better represents innovation than entrepreneurs? We have a lot to offer within the city and especially our Historical Downtown District. I encourage investors and entrepreneurs to check us out when pursuing their business venture. When you come to Crestview, we work as a team because your success is our success. It is our goal to live up to being the best."
— Brenda Smith, Director
Community Redevelopment Agency
“We have worked diligently over the years to better position our city to grow and attract new businesses. Economic development is a top priority in Destin. Working with our chamber of commerce and economic development council has positioned us as an attractive destination in marketplace.”
— Mayor Scott Fischer
5. Odessa, Texas (tie)
With four cities on this list, Texas has more of the top 10 areas for young entrepreneurs than any other state. While Odessa has benefited from its location near one of the nation's largest oil reserves, it also built a thriving healthcare industry. Two of its strongest points in terms of this study were that it ranked fourth nationally in both overall growth rate and young adult affluence.
"Odessa has always been a community where risk and boldness are rewarded and today we have a large and vibrant young professional group that is pushing themselves to succeed in that environment."
- Richard Morton, City Manager
7. Sioux Falls, South Dakota
While Texas and Florida dominate this top-10 list, here is an option for people who prefer cooler weather. The Tax Foundation found South Dakota to have the second-lightest business tax burden in the country, and Sioux Falls is in the top 10 nationally for young adult affluence.
8. The Villages, Florida
This may not be a household name, but The Villages has enjoyed the fastest growth rate of any city in the nation. It is primarily a retirement community, which may sound like an odd place for young entrepreneurs until you consider the needs for goods and services that are created by a fast-growing population of older citizens.
A fast-growing retirement community represents an excellent opportunity for a young entrepreneur for two reasons: First, older people are generally affluent relative to the general population and second, retirees create demand for goods and services while not being in a position to supply those goods and services themselves. This eans a growing market with relatively little competition from the general population.
9. Denver/Aurora/Lakewood, Colorado
Legalization of marijuana has attracted many young entrepreneurs to Colorado, but fundamental conditions suggest there are reasons to consider start-ups in other lines of business there as well. The Denver area has not only had a healthy growth rate, but it is an attractive market because it ranks in the top 10 for educational attainment and young adult affluence.
10. Orlando/Kissimmee/Sanford, Florida
In terms of potential business opportunities, the Orlando area is attractive because of its rapid population growth and Florida's favorable business tax climate.
If you are considering investing in a start-up venture, you have to look beyond your own business model and consider the economic environment in which you will be operating. The above cities appear to be welcoming places for young entrepreneurs, and even if these specific locations don't suit you, they are good examples of the kind of favorable conditions a young entrepreneur should look for when starting a business.
More Top City Rankings for Entrepreneurs
With the various factors for the study listed above, some cities performed better than others in certain rankings, such as growth rate or the income amongst youth populations. Explore these additional top rankings below:
Fastest Growing Cities
|Rank for Growth Rate||Metro Area||% Gain|
|1||The Villages, FL Metro Area||27.3|
|2||Midland, TX Metro Area||17.7|
|3||Austin-Round Rock, TX Metro Area||16.6|
|4||Odessa, TX Metro Area||16.3|
|5||Myrtle Beach-Conway-North Myrtle Beach, SC-NC Metro Area||14.7|
|6||Cape Coral-Fort Myers, FL Metro Area||13.5|
|7 (tie)||Greeley, CO Metro Area||12.8|
|7 (tie)||Bismarck, ND Metro Area||12.8|
|9 (tie)||Raleigh, NC Metro Area||12.7|
|9 (tie)||St. George, UT Metro Area||12.7|
Cities with Affluential Young People
|Wealth Rank||Metro Area||% 18-24 YOs w/ Income 3x Higher Than Poverty Rate or More|
|1||Daphne-Fairhope-Foley, AL Metro Area||52.70|
|2||Midland, TX Metro Area||49.39|
|3||Crestview-Fort Walton Beach-Destin, FL Metro Area||45.59|
|4||Odessa, TX Metro Area||42.94|
|5||Denver-Aurora-Lakewood, CO Metro Area||42.61|
|6||Sioux Falls, SD Metro Area||42.18|
|7||Bismarck, ND Metro Area||39.57|
|8||Houston-The Woodlands-Sugar Land, TX Metro Area||39.37|
|9||Greeley, CO Metro Area||38.31|
|10||Charleston-North Charleston, SC Metro Area||37.39|
Cities with Favorable Business Tax Climates
|Tax Foundation 2016 State Business Tax Climate Index Overall Rank||Metro Area|
|2||Sioux Falls, SD Metro Area|
|4 (tie)||The Villages, FL Metro Area|
|4 (tie)||Naples-Immokalee-Marco Island, FL Metro Area|
|4 (tie)||Orlando-Kissimmee-Sanford, FL Metro Area|
|4 (tie)||Cape Coral-Fort Myers, FL Metro Area|
|4 (tie)||Crestview-Fort Walton Beach-Destin, FL Metro Area|
|9 (tie)||Provo-Orem, UT Metro Area|
|9 (tie)||St. George, UT Metro Area|
|10 (tie)||Odessa, TX Metro Area|
|10 (tie)||San Antonio-New Braunfels, TX Metro Area|
|10 (tie)||Houston-The Woodlands-Sugar Land, TX Metro Area|
|10 (tie)||Dallas-Fort Worth-Arlington, TX Metro Area|
|10 (tie)||Austin-Round Rock, TX Metro Area|
Comment: Where would you move to start and grow a business?