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Whether opening a new business or expanding an existing one, when evaluating new markets, many entrepreneurs ask themselves several questions:

  • Is there a demand for my product or service in the area?
  • Will I be able to adequately staff my business in the local market?
  • Does the city promote and support small businesses?

If you’re the one starting a business, the last question in particular is one you must answer before you plant your roots.

That said, researching local markets can be a time-consuming and costly process. Luckily, I’ve done the research for you and picked out the top small business-friendly cities in the United States. Note: These are selections based on my personal opinion.

What cities made the cut?

As local governments work to transform their regulatory environments into ones that promote and nurture the establishment and growth of small businesses, it’s becoming easier to measure and rank their efforts. In no particular order, here are my top picks:

1. Dallas, Texas

Austin, Texas, is often heralded as a startup leader’s heaven, but Dallas is only a few hundred miles away, and it’s nothing to sneeze at. It is one of the 10 most efficient cities to do business in, according to the U.S. Chamber of Commerce Foundation’s regulatory climate index, which assesses the cost of doing business across five areas of regulations.

2. St. Louis, Missouri

One of the best selling points of this city is its incredibly affordable cost of doing business. On top of this, there are abundant resources available to business owners—be it venture capital funding opportunities or recruiting channels via one of the local universities. Alongside Dallas, St. Louis was also ranked an efficient city on the regulatory climate index.

3. Manchester, New Hampshire

In a SmallBusiness.com survey of 18,000 small businesses, Manchester was rated the number one city to start a small business in (Dallas came in at number two), not least because the city is considered friendly. It also scored an A+ from Thumbtack on tax codes, ease of hiring, and regulations and licensing.

4. Boston, Massachusetts

Small business owners are privy to numerous resources in Boston, including ReStore Boston, which offers local business owners up to $7,000 in grants and loans to spearhead their storefront renovation projects. While Boston wasn’t one of the top 10 cities on the climate index, it was rated as moderately efficient.

What makes a city “small business friendly”?

However, the factors that make the above cities appealing only scratch the surface.

Let’s dive a little deeper into what makes a city “small business friendly”:

  • Accessible training and resources: If you’re thinking of starting a business in a new city, it’s important to understand the nuances of operating there—whether that means brushing up on statewide regulations or simply recognizing the state of the economy. Cities that show a commitment to providing readily available, organized training on local and state regulations set their constituents up for success.
  • Simple licensing procedures: Cities with convoluted or erratic licensing requirements will be much harder to operate in. It’s absolutely crucial to look for a city that makes complying with licensing rules as streamlined as possible.
  • An effective online presence: The easiest place to find information about a city should be its website. Cities with engaging, information-packed sites lean more toward being small business-friendly than those with poorly built, spammy-looking websites. These sites can be invaluable to small business owners looking to share local information with potential clients and employees.

These aren’t the only factors that determine how small business friendly a city might be; the cost and challenge involved in obtaining a construction permit, local property taxes, access to capital, and zoning requirements are also important.

To be small business friendly, a city must make a marked effort to create an environment that inspires and empowers people to open and run their own businesses. Take the Silicon Valley area, for example—it’s a setting that cultivates an aura of innovation that continually welcomes entrepreneurs looking to create the next big thing.

Commitment backed by policy

Support doesn’t just happen; it requires strategy and should always be backed by policies that buttress a small business’s longevity.

Among the top cities on my list, I noticed a trend in local policies established to create an environment in which small business owners face the fewest obstacles. Enacting regulatory assistance policies and forging active partnerships are two of the most effective ways local governments can create fertile ground for small business growth.

Regulatory assistance programs are designed specifically to aid small businesses in the permitting and zoning processes. According to the SmallBusiness.com survey mentioned earlier, effective regulatory assistance policies impact the success and longevity of small businesses the most. Both new businesses and businesses in the growth phase are most likely to benefit from these services.

Small business partnerships are key to creating a supportive environment for entrepreneurs. Effective partnerships keep the line of communication between local businesses and governments open and allow government entities to address the roadblocks business owners face in their jurisdictions.

Laying the groundwork

Every city on my list can share success stories about the startups that hit it big and that ultimately laid the groundwork for future entrepreneurs.

Just a few examples of companies that started small and went on to dominate the economy include Anheuser-Busch, Emerson Electric Co., and Monsanto in St. Louis, as well as Texas Instruments and Southwest Airlines in Dallas.

When a business starts as the proverbial seed and grows into a multibillion-dollar company, the success inspires locals who’ve been on the fence about venturing out and attracts out-of-staters who want a piece of the pie. Sometimes, the greatest impact a successful business makes is inspiring the movers and the shakers.

Becoming a city that nurtures new business

Throughout the research process, I learned that becoming a city that nurtures and supports small businesses isn’t as challenging as I thought. By developing a committee focused on growth and new business (and taking planned and measurable steps toward that goal), any city can transform its business environment.

And, as a local business owner, it’s your duty to jumpstart this process.

Here are a few reflections I want you to ponder as you begin your journey:

  • Overly restrictive permitting, zoning, and licensing requirements prevent the establishment and growth of small businesses.
  • A simple partnership with small businesses in the form of a quarterly forum goes a long way.
  • An engaging, informative, and easy-to-navigate website is an investment in the growth and enrichment of a community.
  • A regulatory assistance program can make or break it for new businesses.

I’m not saying these are the only four cities you should consider starting a business in—I, myself, started a business in Columbia, Missouri—but I am saying there are a few factors that can determine whether the city you choose will build you up or bring you down.

By addressing the major factors first, you can change your business environment with a big dream and a small team of key players who are committed to an environment that empowers business owners.

View our Business Management Guide today!

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Cris Burnam
Cris Burnam

Cris Burnam is president and co-founder of StorageMart, a Columbia, Missouri-based self-storage company he founded with Mike Burnam, his brother, in 1999. StorageMart has grown from a single self-storage facility into the world’s largest privately owned self-storage company with 169 locations across the U.S. and Canada.