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The Friendliest Cities For Small Businesses

Written by Ken Gaebler
Published: 4/5/2013

Thumbtack and the Kauffman Foundation reveal the U.S. cities that entrepreneurs rank as the friendliest (and least friendly) for small businesses.

Location can be a make or break factor for a small business. But in addition to finding the right location for your company in town, it can be just as important to launch your business in the right city or state.

Friendliest Cities for Small Business

In a recent survey of nearly 8,000 entrepreneurs, Thumbtack.com and the Kauffman Foundation found that Austin and Virginia Beach are the friendliest U.S. cities for small businesses. Other cities that made the top five list included Houston, San Antonio and Colorado Springs.

At the opposite end of the spectrum, San Diego, Sacramento, Cincinnati and Newark were identified as the least friendly cities for small companies.

Although tax rates were a factor, survey respondents considered a number of criteria in evaluating the friendliness of specific urban areas. "Some 7,000 businesses owners across the country have told us that they care about a lot more than just taxes -- for most businesses, simple licensing regulations and helpful training programs are even more important to their success." said Thumbtack's Sander Daniels.

Additional findings from the study included:

  • Professional licensing requirements mattered 30 percent more important to survey respondent than taxes.
  • Nearly half (40%) of small businesses are subject to multiple levels of government licensing requirements.
  • Utah was rated as the nation's most business-friendly state. Rhode Island was rated as the least friendly.
  • More than one in two small business owners said they feel they pay about the right amount in taxes.
  • A third of business owners said that obtaining and keeping health insurance was "very difficult", compared to just 6 percent who said it was "very easy."

"It is critical to the economic health of every city and state to create an entrepreneur-friendly environment," said Dane Stangler, director of Research and Policy at the Kauffman Foundation. "Policymakers put themselves in the best position to encourage sustainable growth and long-term prosperity by listening to the voices of small business owners themselves."

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