WalletHub’s newest study suggests a certain state has the goods this year.
Choosing the Best City for Your New Business: A Deep Dive into the 2025 Rankings
The success of your business doesn’t hinge solely on your hard work, persistence, and strategic planning; your location plays a pivotal role in determining your long-term prospects. Recent WalletHub research highlights the importance of geographic factors in entrepreneurial success, listing the best cities in the U.S. to launch a new company in 2025. The study meticulously evaluates a range of factors that affect the ease and profitability of running a business in these cities.
WalletHub assessed various metrics to generate its rankings, including labor costs, access to finance, availability of skilled workers, business expenses, and small business growth rates. Let’s explore the top cities where entrepreneurs are most likely to find success in 2025 and the factors driving these rankings.
Key Takeaways:
- Your location significantly impacts your business’s potential for success, beyond just work ethic and determination.
- WalletHub’s 2025 ranking factors in business expansion potential, access to resources, and business expenses.
- Florida cities, particularly Orlando and Tampa, top the list due to low taxes, a growing business environment, and increasing investor interest.
- Other top cities for entrepreneurs include Austin, Texas, Miami, and St. Petersburg, all offering favorable conditions for startups.
- San Jose and Washington, D.C. ranked the lowest, hindered by high labor costs and office space expenses.
Top U.S. Cities for New Businesses in 2025
1. Orlando, Florida (Score: 65.3)
Leading the rankings, Orlando stands out as the best city for new businesses in 2025. Its high score is driven by a booming number of new companies and an ever-growing entrepreneurial ecosystem. The city has seen an explosive rise in the percentage of small businesses, largely due to its thriving tourism industry and robust investment climate.
- Factors Contributing to Success:
- High investor interest: Orlando attracts venture capital, making it easier for startups to secure funding.
- Strong small business growth: As a top travel and tourism destination, Orlando’s economy fosters business expansion.
- Affordable business expenses: Orlando benefits from low overhead costs, making it an attractive choice for entrepreneurs.
While Orlando’s sunny reputation attracts a high volume of investors, it’s important to note that the city’s competitive real estate market could push prices higher in the future, especially in the hospitality and tourism sectors.
2. Tampa, Florida (Score: 63.51)
Close behind, Tampa, located on Florida’s Gulf Coast, ranks second for new businesses. Known for its low taxes, affordable living costs, and growing access to capital, Tampa presents an enticing environment for startups.
- Why Tampa Is Attractive:
- Low taxes: Florida’s corporate income tax is a relatively low 5.5%, and there is no personal income tax, making it financially advantageous for entrepreneurs.
- Investment opportunities: Tampa has garnered attention from both angel investors and venture capitalists, boosting its appeal.
- Rising small business growth: The city’s economy is growing, driven by industries like healthcare, construction, and technology.
However, one downside for Tampa is the risk posed by the hurricane season. Severe weather events could disrupt business operations and pose challenges for entrepreneurs relying on physical infrastructure.
3. Austin, Texas (Score: 60.51)
Austin has solidified its place as a leading business hub, particularly for technology startups. Known as the Silicon Hills, the city has attracted a surge of venture capital in recent years, driving the growth of a vibrant tech ecosystem.
- Why Austin Excels:
- Booming technology scene: Austin’s reputation as a tech hub continues to attract entrepreneurs, software developers, and venture capitalists.
- Vibrant startup culture: The city’s startup incubators and co-working spaces are fostering collaboration and innovation.
- Affordable office space: Compared to other major cities like San Francisco or New York, Austin offers more affordable office rents and lower operational costs.
Despite its rapid growth, Austin’s tech scene has created some competition for talent and rising living costs, which could be a challenge for startups trying to attract skilled workers.
4. Jacksonville, Florida (Score: 60.5)
Jacksonville, a rapidly growing city in Florida, ranks just behind Austin. This city has a unique mix of affordable living and a diverse economic base that supports entrepreneurship.
- Strengths of Jacksonville:
- Low business costs: Jacksonville benefits from low operational expenses, including cheaper labor costs and affordable office space.
- Business-friendly climate: Like other Florida cities, Jacksonville offers a low tax environment and a favorable regulatory climate for businesses.
Jacksonville’s port facilities also make it an attractive location for logistics and distribution businesses. However, the city still needs to strengthen its technology and innovation sectors to fully compete with cities like Austin or Orlando.
5. Miami, Florida (Score: 60.24)
Miami ranks fifth, and its growing status as a global business hub is helping it attract startups from diverse sectors, including finance, real estate, and technology.
- Why Miami Is Gaining Popularity:
- Strategic location: As a gateway to Latin America, Miami is ideal for businesses seeking global expansion.
- Diverse economy: Miami has a growing financial sector and is a hub for international trade.
- Favorable tax policies: Miami benefits from Florida’s tax advantages, making it an attractive place for businesses and entrepreneurs.
However, Miami’s market is competitive, and high real estate prices and hurricane risks could impact its appeal for certain types of businesses.
Cities Struggling to Compete: San Jose and Washington, D.C.
Despite being tech powerhouses, San Jose (38.23) and Washington, D.C. (33.85) rank at the bottom of WalletHub’s list, mainly due to high labor costs, expensive office space, and less favorable business climates.
- San Jose: As a hub for the tech industry, San Jose battles with high labor costs and skyrocketing real estate prices, reducing its attractiveness for new startups.
- Washington, D.C.: Despite its political importance, D.C. struggles with high costs for tech talent and limited access to affordable office space, ranking 97th for office space and 95th overall.
Conclusion: Florida Cities Leading the Way for New Businesses
When it comes to launching a new business in 2025, Florida cities like Orlando, Tampa, and Jacksonville emerge as top contenders due to their favorable tax policies, low business costs, and growing small business ecosystems. These cities offer a combination of affordable real estate, high investor interest, and a supportive business climate.
Austin also remains a strong choice for tech entrepreneurs, while cities like San Jose and Washington, D.C. may not be as suitable for startups due to high operational costs. As you consider where to start your next venture, Florida’s cities offer the best mix of resources, growth potential, and affordable business environments to help your new company succeed.
