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| Credit: Africa Studio |
If you're starting a new business, you might want to consider moving down South and avoiding California, new research suggests.
Six of this year's 10 best cities in which to start a business are located in Southern U.S. states, and seven of the worst are in California, according to a study from the personal finance social network WalletHub.
Shreveport, Louisiana, tops this year's list of the best cities in which to start a business, as it ranked highly for having accessible resources for entrepreneurs and a friendly business environment.
To help aspiring entrepreneurs maximize their chances of long-term prosperity, WalletHub analyzed the relative startup opportunities in the 150 most populous U.S. cities. Researchers ranked each city on 13 key metrics divided into two categories: access to resources and business environment.
Access to resources focused on financing accessibility, office space affordability, employee availability and median annual income. Business environment was judged on factors like corporate taxes, cost of living, average workday length, workforce education level, entrepreneurial activity, five-year survival rate, number of small businesses per capita, industry variety and small business friendliness.
Here are this year's top 10 cities for starting a business, and their rankings for access to resources and business environment:
- Shreveport, Louisiana. Resources: 6; Environment: 13
- Tulsa, Oklahoma. Resources: 18; Environment: 1
- Springfield, Missouri. Resources: 1; Environment: 70
- Chattanooga, Tennessee. Resources: 2; Environment: 65
- Jackson, Mississippi. Resources: 4; Environment: 72
- Sioux Falls, South Dakota. Resources: 39; Environment: 2
- Memphis, Tennessee. Resources: 14; Environment: 39
- Augusta, Georgia. Resources: 15; Environment: 21
- Greensboro, North Carolina. Resources: 31; Environment: 11
- Columbus, Georgia. Resources: 26; Environment: 19
The city in which an entrepreneur chooses to operate his or her business can be critical to the company's success, noted Lou Marino, a professor of entrepreneurship and strategy at the University of Alabama.
"Despite the plethora of online resources and the use of virtual teams, nothing can take the place of the ecosystem that exists in the city in which your base of operations is located," Marino said in a statement. "Perhaps even more important than the formal institutional support that exists in a city for entrepreneurship, the culture and livability of the city can significantly impact your ability to get the best people to work for you and how happy they are to be there."
Worst cities for business
California appears to be the worst state for new businesses. Seven of the 10 worst cities in which to launch a business are located in the Golden State. However, no city is worse than Newark, New Jersey, which ranks near the bottom for both the available resources for entrepreneurs and a business-friendly environment.
Here are this year's 10 worst cities in which to start a business, and their rankings for access to resources and business environment:
- Newark, New Jersey. Resources: 111; Environment: 150
- Jersey City, New Jersey. Resources: 147; Environment: 138
- Garden Grove, California. Resources: 139; Environment: 133
- Yonkers, New York. Resources: 144; Environment: 106
- Fremont, California. Resources: 149; Environment: 91
- Ontario, California. Resources: 136; Environment: 123
- Oakland, California. Resources: 134; Environment: 114
- Santa Ana, California. Resources: 118; Environment: 146
- San Jose, California. Resources: 140; Environment: 103
- Anaheim, California. Resources: 131; Environment: 118
Experts say there are a number of steps communities can take to stimulate entrepreneurship and new business development. David Deeds, the Schulze chair in entrepreneurship at the University of St. Thomas, said everything starts with a great education system.
"Great K-12 education provides a talented and creative workforce, and attracts and retains talent in a region," Deeds said. "Education is the most important input, and gets the least amount of press and attention, because it's hard, takes a long time and is difficult to directly correlate with outcomes."
Besides supporting an education climate that stimulates entrepreneurship, cities must do a better job of supporting existing small businesses' efforts to expand, said Peter Russo, an executive-in-residence and senior lecturer at the Boston University School of Management.
"These entrepreneurs have already demonstrated the validity of their ideas but may lack the education, skills and access to resources to grow their business and create more jobs," Russo said in a statement. "Helping them is less exciting than stimulating new venture creation, but the upside can be greater. "
The full list of cities can be viewed on the WalletHub website.
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