If you’re a young entrepreneur scoping out a locale where your new business will thrive, your best bet may be in Austin, Texas, the San Francisco Bay Area or Salt Lake City.
The three metro areas top the list of cities most suited to young entrepreneurial ventures, according to an analysis by NerdWallet. To find the best cities, we examined 181 metropolitan areas in the U.S. and analyzed data on the local business environment, economy and demographics.
The top cities all have key factors in common that make them ripe for business ventures to flourish — such as higher median earnings in San Francisco; Seattle; Midland, Texas; and Minneapolis. Other positive indicators for young entrepreneurs in these places include high percentages of residents ages 25 to 34. Additionally, people living in the top 10 metro areas — especially the San Francisco area, Boston and Madison, Wisconsin — have the highest percentage of bachelor’s degrees or higher.
After determining the location for your venture, next on your list may be business financing and finding the right small business loan. Salt Lake City is home to the second-highest amount in small business loans received per 100,000 residents.
If money is a concern, starting up in areas with a lower cost of living might make sense.
The San Francisco area and Boston, for example, rank high on our list, but these cities are also among the most expensive. Other options — Austin, Salt Lake City and Midland, for example — all offer costs of living below the national average.
10 best cities for young entrepreneurs
Without further ado, here are the top 10 metro areas for young entrepreneurs.
1. Austin-Round Rock, Texas
- Percentage of population ages 25-34: 17.5% (rank: No. 1)
- SBA loan amount per 100,000 residents: $17.6 million (rank: No. 5)
2. San Francisco-Oakland-Hayward, California
- Median earnings: $61,810 (rank: No. 2)
- Percentage of residents with a bachelor’s degree or higher: 45.9% (rank: No. 4)
3. Salt Lake City, Utah
- SBA loan amount per 100,000 residents: $21.5 million (rank: No. 2)
- Percentage of population ages 25-34: 16.3% (rank: No. 6)
4. Denver-Aurora-Lakewood, Colorado
- SBA loan amount per 100,000 residents: $14.6 million (rank: No. 13)
- Percentage of residents with a bachelor’s degree or higher: 40.8% (rank: No. 13)
5. Minneapolis-St.Paul-Bloomington, Minnesota and Wisconsin
- SBA loan amount per 100,000 residents: $15.9 million (rank: No. 7)
- Unemployment rate for September 2015: 3.1% (rank: No. 10)
6. Seattle-Tacoma-Bellevue, Washington
Median earnings: $55,123 (rank: No. 6)
Percentage of population ages 25-34: 16.0% (rank: No. 11)
7. Madison, Wisconsin
- Unemployment rate for September 2015: 2.7% (rank: No. 6)
- Percentage of residents with a bachelor’s degree or higher: 44.7% (rank: No. 8)
8. Midland, Texas
- Percentage of population ages 25-34: 16.9% (rank: No. 3)
- Small businesses per 100 residents: 2.90 (rank: No. 5)
9. Boston-Cambridge-Newton, Massachusetts and New Hampshire
- Median earnings: $60,168 (rank: No. 3)
- Percentage of residents with a bachelor’s degree or higher: 45.2% (rank: No. 6)
10. Fargo, North Dakota
- Unemployment rate for September 2015: 2.1% (rank: No. 2)
- Percentage of population ages 25-34: 16.3% (rank: No. 6)
Top 5 states for small business financing
- Utah: $18.2 million in SBA loans per 100,000 people
- California: $14.4 million in SBA loans per 100,000 people
- Colorado: $13.1 million in SBA loans per 100,000 people
- Georgia: $13.1 million in SBA loans per 100,000 people
- Idaho: $12.9 million in SBA loans per 100,000 people
Top 5 states for local business environment
- Montana: 3.49 small businesses per 100 people
- Wyoming: 3.43 small businesses per 100 people
- Vermont: 3.25 small businesses per 100 people
- North Dakota: 3.15 small businesses per 100 people
- Washington, D.C.: 3.11 small businesses per 100 people
Top 5 states by earnings
- Washington, D.C.: $65,595 in annual median earnings for full-time workers
- Connecticut: $56,466 in annual median earnings for full-time workers
- Massachusetts: $56,023 in annual median earnings for full-time workers
- New Jersey: $54,716 in annual median earnings for full-time workers
- Maryland: $53,906 in annual median earnings for full-time workers
Best cities for young entrepreneurs: Full data
Click here to see the full data for all 181 metropolitan areas in this analysis.
Methodology
NerdWallet analyzed 181 metropolitan areas where cost of living data was available. The score for each location was determined by analyzing data from the U.S. Small Business Administration, U.S. Census Bureau, U.S. Bureau of Labor Statistics and the Council for Community and Economic Research. We examined:
Small business financing is 20% of the score. This score is based on SBA loan guarantees per 100,000 people from October 2014 to September 2015 from the U.S. Small Business Administration. A higher rate contributed to a higher score.
Local business environment is 25% of the score. This score is based on two metrics from the U.S. Census Bureau’s 2013 County Business Patterns report and the Bureau of Labor Statistics: Small businesses per 100 residents is 15% of the score. A higher number contributed to a higher score. And the unemployment rate for September 2015 is 10% of the score. A lower rate contributed to a higher score.
Local economy is 55% of the score. This score is based on four metrics from the U.S. Census Bureau’s 2014 American Community Survey and the Council for Community and Economic Research:
- The percentage of the population ages 25 to 34 is 15% of the score. A higher percentage contributed to a higher score.
- The percentage of the population age 25 and older with a bachelor’s degree or higher is 15% of the score. A higher percentage contributed to a higher score.
- The median earnings of the full-time, year-round civilian employed population age 16 and older is 15%. A higher amount contributed to a higher score.
- The cost of living index in the third quarter of 2015 is 10% of the score. A lower rate contributed to a higher score.
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