For many people today, the daily commute to the office and nine to five work schedule is a thing of the past. Employees are enjoying — and expecting — greater flexibility and work-life balance and are willing to leave their current positions to find it. In July 2021 alone, four million Americans quit their jobs in an ongoing phenomenon that’s become known as the “Great Resignation.”
This pandemic-induced change has ushered in new attitudes about finding meaning and purpose in our work. It’s given people the time and space to pursue hobbies, passion projects, and creative endeavors. And now people are turning those pursuits into full-fledged careers. A recent Intuit survey of small business owners revealed that 83% accelerated plans to start their own business due to COVID-19. The report further predicts that 17 million new small businesses will be formed in 2022 – that’s three consecutive record years for entrepreneurship.
It’s clear that we’re going to be seeing a lot more startups forming over the next few years. The question is how many of these new companies will flourish? We’ve set out to understand where small businesses are starting most across the country and finding the highest rates of success. By looking at factors including population growth, startup survival rate, and funding, we’ve identified the top 25 fastest-growing cities for small businesses in the US
- Apex, North Carolina
- Bentonville, Arkansas
- Folsom, California
- Elk Grove, California
- Minnetonka, Minnesota
- Alpharetta, Georgia
- Bronx, New York
- Atlanta, Georgia
- Marietta, Georgia
- Philadelphia, Pennsylvania
- Joliet, Illinois
- College Station, Texas
- Irving, Texas
- Memphis, Tennessee
- Champaign, Illinois
- Newark, New Jersey
- Corona, California
- Leander, Texas
- Tampa, Florida
- Pompano Beach, Florida
- Missoula, Montana
- McKinney, Texas
- Jacksonville, Florida
- Chandler, Arizona
- Little Rock, Arkansas
- Apex, North Carolina, is a small town with room to grow. With a populace of just 59,300, Apex ranks as the number one fastest-growing city for small businesses on our list for its high population growth and small business survival rate.
- Things really are bigger in Texas. Texas has the most cities on our list, with four of the 25 landing in the Lone Star State. California, Florida, and Georgia are not far behind with three cities each.
- Open for business in Philadelphia, Pennsylvania. Philadelphia saw a 61.81% rise in the number of business applications from 2019 to 2020.
- Conducting business coast to coast. With the top 25 cities located across the country from California to New York, there’s an opportunity to thrive wherever you land. Talk about the American dream.
We’ll get into more information on the top 25 cities, but first, let’s take a look at how we compiled our rankings.
Charting the American Dream
First, we took 1,000 US cities with a population of over 50,000. We then gave them scores across four primary factors:
1. Year-over-year population growth
2. Number of new business formation applications filed in each county
3. Startup survival rate
4. Small business funding from 2019/2020 to 2021
Those with the highest-ranking across all four measures represent the cities where the population is booming and small business is thriving. Here’s our top 25:
The top 25 cities are scattered all over the map, with representation in every corner of the country. Regionally, the South sweeps the list, with a grand total of 14 top cities. The West trails with five cities, and the Northeast and Midwest tie with three each.
From our results, it’s clear small businesses are taking advantage of that famed Southern hospitality. To get a better sense of why, let’s take a closer look now at some of the southern cities that topped our list.
Business is sweeter in the South
Please excuse our pun, but Apex, North Carolina, is at the apex of the startup game. It’s the number one fastest-growing small business-friendly city and has one of the highest small business survival rates in the country.
One reason that Apex is so attractive for startups is its location within the state’s “Research Triangle” area, which encompasses Raleigh and Durham and is minutes from an international airport and three tier-one research universities. Combine that with an educated workforce (60% hold a bachelor’s degree) and a high median household income, and you’ve got a recipe for entrepreneurial success.
Elsewhere in the South, there are high concentrations of top cities in:
- Texas: College Station (#12); Irving (#13); Leander (#18); McKinney (#22).
- Florida: Tampa (#19); Pompano Beach (#20); Jacksonville (#23).
- Georgia: Alpharetta (#6); Atlanta (#8), Marietta (#9).
Like Apex, the cities in Texas owe some of their draws for small businesses to their location. In this case, all four are situated within a region known as the Texas Triangle, or Texaplex, that encompasses the large metropolitans of Austin, Dallas–Fort Worth, Houston, and San Antonio. With rapid growth and favorable business regulations, it’s no wonder entrepreneurs heart Texas.
Meanwhile, the Sunshine State is poised for continued growth. Already the third most populous state with the fourth-largest economy in the nation, Florida welcomes 900 net new residents each day. All three cities on our list are located in urban counties along the coast with access to plenty of capital, resources, and infrastructure.
The Peach State is home to three of the top 10 small cities for businesses. Entrepreneurs wanting to start and grow their business need to look no further than the Atlanta metro area. A-Town suburbs Alpharetta and Marietta are located in two of the state’s most populated and affluent counties. Businesses have access to the world’s second-busiest airport and opportunities to break into booming industries, from fintech and healthcare information technology to advanced manufacturing and logistics.
Winning big out West
Across the coast, three cities in California made the top 25 cut: Folsom (#3); Elk Grove (#4); and Corona (#17). In addition to being conveniently located near major cities – Sacramento in the case of the former two and Los Angeles for the latter – all three have the highest small business survival rate out of the top 25 cities.
Where else might small businesses find a high likelihood of survival? This one might surprise you – Missoula, Montana. While a mention of the Big Sky State calls to mind rugged scenery and bucolic ranches – thanks, Yellowstone – there’s more going on here than meets the eye. For starters, Missoula is the state’s second-largest (and growing) city. It’s located within a regional medical center and home to a major research university.
People come to Montana for access to nature and outdoor activities. They stay – and build businesses – for the tax breaks. The Tax Foundation’s 2022 State Business Tax Climate Index ranked Montana as the nation’s fifth-best state for a favorable tax environment. Music to every business owner’s ears.
Funding highs and lows
Small businesses experienced high highs and low lows across the country these past few years, but some swings were more drastic than others. In order to better understand in which cities small businesses saw the biggest financial wins and losses, we filtered our list down to cities that had small business funding greater than or equal to $5 million each year from 2019 to 2021. From there, we were able to see what cities had the biggest changes in revenue in 2021 from the previous two years.
The high highs…
Wilmington, Delaware saw the biggest percent increase in small business funding from 2019/2020 to 2021, with an impressive 528.15% change. Despite a small dip in funding during the 2020 year, Wilmington more than bounced back in 2021; enough so that Delaware was even named the number six best state for business by one US News report.
If we’re talking big bucks, Miami’s got it. Miami, Florida had the second-largest percent increase in small business funding in 2021, but the actual dollar amount of funding far exceeded the other cities on our list. In 2021, small businesses in Miami had a reported $333,373,580.00 in funding, pulling ahead of the pack with a couple hundred million dollars above the other top five cities for funding growth.
The low lows…
Unfortunately for small businesses in Maryland, the Old Line State had two cities at the bottom of the list with the steepest decrease in small business funding. Baltimore experienced a 58.04% funding decrease, while Bethesda saw a loss of 56.22%.
A factor worth noting is that Maryland ranks first in the nation in R&D federal obligations (includes orders placed, contracts awarded, services received). In 2020, 43% of all small business contract dollars went to just 17 congressional districts in Maryland and Virginia. At the same time, the overall number of small businesses awarded federal contracts has declined over the past decade. As small businesses contracting with the government are necessarily subject to fluctuations in congressional spending, this likely accounts for some of the decreased funding that Maryland businesses have recently experienced.
Calling all entrepreneurs
With so many places across the country ripe for starting new businesses, now is the time for entrepreneurs to set their sights on growth. Our list of the top 25 fastest-growing cities for small businesses shows that, despite setbacks business owners might have faced due to the pandemic, the opportunity to become your own boss is better than ever. And with hotspots for startups all across the country, there are so many opportunities to grow your business.
If you’re looking for a small business phone system that separates your work and personal conversations check out OpenPhone. Our modern business phone solution makes it flat out simple to keep your personal number private and you can get as many virtual phone numbers as your team needs. Best of all, you can easily access your OpenPhone numbers from any computer, smartphone, or tablet via WiFi.
So get out there and turn that pandemic-induced tie-dye art slash bread baking pastime into a legitimate money-making business! Because the world needs more rainbow-colored sourdough rolls. Even more, it needs the hard-working entrepreneurs who are willing to put in the time and dedication to turn their passions into dough — both the bread and cold hard cash varieties.
We started with the top 1,000 US cities with populations over 50,000 and ranked them by four key growth factors in order to find the top 25 fastest-growing cities for small businesses in America. Our four factors include:
- Business applications by county (Census.gov) – the more business applications, the better
- City population growth rates (Census.gov) – higher growth rate = more points
- Business survival rate by state (Kauffman) – (“Startup Early Survival Rate”)
- Small business funding (Crunchbase) from 2019 & 2020 to 2021, by city
Small business funding ranking details
- If small businesses had any funding at all from 2019 to 2021, its city received points
- If a city had an increase in funding from 2019/2020 to 2021, it got more points for showing small business growth
- If there was no funding at all over the three years, the city did not get any points