While entrepreneurs can launch new businesses from anywhere, some cities offer a better chance at success.
New research from MoneyRates.com revealed that Texas and Florida offer the best economic climates for young entrepreneurs. Seven of this year's 10 best cities for young entrepreneurs are located in the Lone Star or Sunshine state.
"As much as entrepreneurship centers on the special characteristics of individuals, the broader economic environment also makes a difference in whether startups succeed or fail, or whether people even attempt them in the first place," the study's authors wrote. [See Related Story: How to Start a Business: A Step-by-Step Guide]
The researchers based their rankings on four key factors:
- Population growth: This indicates more consumer demand and that people are attracted to the area.
- The percentage of young adults earning competitive wages: This demonstrates that there are economic opportunities for younger people and that the community can sustain new products or services.
- The percentage of the population with at least a bachelor's degree: This indicates that the community has a large population of skilled workers and that the consumer market is sophisticated and affluent.
- Taxes: Lower state taxes offer businesses a better chance at profitability.
Based on the criteria examined, MoneyRates.com named these 10 cities the best for young entrepreneurs in 2016:
1. Austin/Round Rock, Texas
According to the U.S. Census Bureau, Austin/Round Rock is the third-fastest-growing metropolitan area in the nation. Additionally, it is one of the more well-educated areas of the country, with more than one-third of its population having a bachelor degree.
2. Raleigh, North Carolina
The city is one of the 10 fastest-growing in the U.S., and boasts the highest number for the proportion of the population with at least a bachelor's degree.
3. Midland, Texas
The city is the second fastest growing in the U.S. and ranks second in young adult affluence.
4. Houston/The Woodlands/Sugar Land, Texas
Houston has a high level of young adult affluence, and benefits from Texas' business-friendly tax policies.
5. Crestview/Fort Walton Beach/Destin, Florida (tie)
Because this area, which has one of the highest levels of young adult affluence, is located near a junction with three major highways, it provides great opportunities for business activity. Additionally, Florida has one of the nation's lowest business tax rates.
5. Odessa, Texas (tie)
Odessa ranked fourth nationally in both overall growth rate and young adult affluence.
7. Sioux Falls, South Dakota
South Dakota has the second-lightest business tax burden in the country, and Sioux Falls ranks in the top 10 nationally for young adult affluence.
8. The Villages, Florida
Even though this is a retirement community, The Villages has the fastest growth rate of any city in the nation. This presents a lot of opportunity for businesses that cater to senior citizens.
9. Denver/Aurora/Lakewood, Colorado
The Denver area ranks in the top 10 for educational attainment and young adult affluence. Additionally, it has a healthy growth rate.
10. Orlando/Kissimmee/Sanford, Florida
Orlando ranks in the top 10 because of its rapid population growth and favorable business tax climate.
"Our goal is to point out some places that might be especially welcoming to young entrepreneurs," Richard Barrington, a senior financial analyst for MoneyRates.com, said in a statement. "Even if these particular cities don't fit with a person's plans, our hope is to point out some of the characteristics a person should look at in deciding where to start a business."