A Tale Of 25 Cities

The finest places in the United States to own a business

Paris may be great for lovers, and Sydney is the current hot spot for sports, but for entrepreneurs in search of the best cities for their businesses, the names are locales like Fort Worth, Las Vegas and West Palm Beach/Boca Raton, Florida. These cities were among the top 10 large U.S. metropolitan areas in Entrepreneur and Dun & Bradstreet's seventh annual ranking of the best cities in the nation for entrepreneurship. They won their laurels not because of their romantic milieus or skill at lobbying the Olympic committee, but for their ability to inspire business start-ups, encourage expansion of existing firms, attract new jobs and limit the risk of failure.

In the Net age, when communications tentacles reach almost everywhere, it might seem anachronistic to suggest any geographic location is better than another. Yet the strong showings of these top cities suggest there are such things as great cities, and these fit the bill.

Obviously, to be a great entrepreneurial city, you have to have a lot of entrepreneurs. We looked at the percentage of businesses in each metropolitan statistical area (MSA) that were five years old or younger. Las Vegas had the highest score of the 60 MSAs studied, scoring 100 in this category, helping it grab the No. 7 overall ranking. But all the top 10 cities had scores in the upper 80s or better, with one exception: ninth-ranked New York City, where apparently new businesses aren't being started much faster than they are in the average city.

Another measure of growth looked at how much employment expanded from 1999 to 2000 in existing businesses that started the period with fewer than 20 employees. Once again, Las Vegas had a very high score of 99, matched only by New York among the top 10. Florida cities tended to do poorly on this metric, with both No. 8 Orlando and No. 2 West Palm Beach/Boca Raton ranking average or below average.

Economic growth, a parameter based on the change in employment among all businesses as reported by the U.S. Bureau of Labor statistics over the three years ending January 1999, highlighted Las Vegas yet again. The desert dynamo sported the best economic growth rating in the nation, but was only one point ahead of Orlando and 10th-ranked Austin/San Marcos, Texas.

The risk of bankruptcy was represented by a Dun & Bradstreet cal-culation of the rate of business failures during 1999. The higher the number, the safer the city for nascent firms. Here was Las Vegas' downfall, as the city scored among the worst in the nation, neutralizing its stellar rating on the other three criteria. However, that's not necessarily bad, says Iris Geisler, the Dun & Bradstreet economist who conducted the study. In an otherwise economically robust community like Las Vegas, higher bankruptcy rates are likely due to an adventurous group of entrepreneurs willing to take risks and a financial community willing to lend them the money to try novel ideas.

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This article was originally published in the October 2000 print edition of Entrepreneur with the headline: A Tale Of 25 Cities.

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