Top 10 Affordable Cities for Starting a Business


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When starting a business, keep in mind the old real-estate adage "location, location, location." For many entrepreneurs, this translates to Silicon Valley or Boston or New York City. These days, though, you don't need a VC firm down the street to secure funding, and there are a lot of other factors to consider. Chief among them: Can you afford to live while you get up and running? looked at the cost of living, per capita income, education level, unemployment rate, and policy environment in the nation's largest metro areas to come up with 10 affordable cities for starting a business.


Texas is the third-most-favorable state for small businesses according to the latest ranking by the Small Business and Entrepreneurship Council. The conservative group ranks the states based on 42 criteria, from taxes to government spending. Texas scores well for personal and corporate income tax (it has none), energy regulation, and workers' compensation costs. The city of San Antonio started 2015 with just 4.1 percent unemployment, an indicator of a healthy economy, and has a below-average cost of living.


Oklahoma City makes perennial appearances on lists of top cities for starting a business. What's behind its popularity? The cost of living is eighth lowest among the nation's largest metro areas while per capita income is a respectable $44,280. Unemployment in the Oklahoma City metro area was a low 3.7 percent at the start of 2015. Entrepreneurs are supported by a local chapter of the nonprofit SCORE Association, Oklahoma Small Business Development Centers, and CareerTech, a state system of technology centers that offers business and entrepreneurial services.


In Iowa's capital, about 32 percent of residents have a college degree and unemployment is a relatively low 4.5 percent. The city combines a below-average cost of living with an above-average personal income of $47,612 per capita. Small businesses can find helpful resources through StartupIowa and the Greater Des Moines Partnership.


Seattle is no stranger to successful startups -- think Starbucks and Amazon. GeekWire, a Seattle-based tech site, lists nearly 1,000 startups throughout the Pacific Northwest. The cost of living is much higher than average, but per capita income is also well above the national average, at $55,190. More than a third of residents (37 percent) have a college degree and unemployment is 5.5 percent. The Small Business and Entrepreneurship Council ranks Washington as the sixth friendliest state for small businesses.


The cost of living in Omaha is well below average and unemployment is among the lowest in the nation, at 3.5 percent. One-third of residents have a college degree and the per capita income is an above-average $47,736. An Omaha-based entrepreneur has cataloged other advantages on a Wall Street Journal blog. She asserts that finding talent and doing business is easier and less costly here than on the coasts.


This city makes the top five with a below-average cost of living, a sizeable proportion of residents with a college degree (32.5 percent), and below-average unemployment (5 percent). Ohio is one of the most small-business-friendly states, according to the Small Business and Entrepreneurship Council. The city of Columbus has a Small Business Builder resource that offers "business roadmaps" for entrepreneurs in select industries.


Denver has a high cost of living, but the average income of $51,946 is also one of the highest among all the metro areas we researched. The city ranks ninth in college-educated residents, at 38.2 percent, and the state placed ninth in the Small Business and Entrepreneurship Council's ranking of friendly policy environments for entrepreneurs. Entrepreneurial groups such as the Denver Founders Network, Internet-focused Refresh Denver, and the Denver-Boulder Lean Startup Meetup provide mentoring and networking opportunities.


Dallas has a per capita income of nearly $47,000, low unemployment of 4.4 percent, and a slightly below-average cost of living. More than 30 percent of residents have a college degree and nearly 80 percent of the city's businesses are small businesses (with fewer than 20 employees), according to the Dallas Office of Economic Development, so entrepreneurs should have plenty of potential mentors nearby to lend a hand -- as well as healthy competition.


Austin is an emerging hotbed for technology startups and a well-known destination for those in the music industry, as highlighted by the popular South by Southwest conference held every March. A low unemployment rate of 3.4 percent testifies to the economic activity in the area and nearly 40 percent of residents have a college degree. Austin also benefits from the state's friendly policy environment for small business and entrepreneurship, as gauged by the Small Business and Entrepreneurship Council.


In Houston, the cost of living is below average while per capita income is 12th highest among all the cities we researched, at $51,930. Unemployment is a low 4.5. Fast Company points out that Texas's deregulated energy market has helped make Houston a magnet for energy startups. Entrepreneurial activity doesn't stop there, however. The Texas Medical Center in Houston works with local healthcare startups, and the University of Houston and Rice University have co-working spaces, accelerator programs, and business plan competitions to encourage innovation.

METHODOLOGY cross-referenced a list of 99 major U.S. metropolitan areas with data on per capita income (Bureau of Economic Analysis, 2013); unemployment rate (Bureau of Labor Statistics, January 2015); percentage of adults 25 and older with a college degree (Brookings Metropolitan Policy Program, 2010); cost of living, which includes food, housing, utilities, transportation, and healthcare (Sperling's Best Places, 2010); and the Small Business and Entrepreneurship Council's Small Business Policy Index (December 2014). Each metro area was ranked from best to worst in each category. The top 10 listed here had the highest average ranking, with each of the five factors given equal weight. participates in affiliate marketing programs, which means we may earn a commission if you choose to purchase a product through a link on our site. This helps support our work and does not influence editorial content.