Following on a story from last week where Providence was ranked the least business friendly city in the country for hispanic entrepreneurs now comes news from WalletHub that Providence ranks as the second worst city in the nation to start a business. Providence lags behind such economic beacons as Newark, NJ and Pittsburgh, PA. For comparison sake, Boston ranks 14th best and number one for “access to resources.”
In order to identify the best cities to start a business, WalletHub’s analysts compared the 150 most populated U.S. cities across three key dimensions, namely “Business Environment”, “Access to Resources” and “Costs.” With regard to our sample, please note that “city” refers to city proper and excludes surrounding metro areas.
First, they identified 16 relevant metrics, which are listed below with their corresponding weights. Each metric was given a value between 0 and 100, wherein 100 represents the most favorable conditions for startups and 0 the least. Data for metrics marked with an asterisk (*) were available at only the state level.
Finally, they calculated the overall score for each city using the weighted average across all metrics and ranked the cities accordingly.
Business Environment – Total Points: 50
- Length of Average Workweek: Full Weight (~8.33 Points)
- Average Growth of Number of Small Businesses: Full Weight (~8.33 Points)
- Number of Startups per 100,000 Residents: Full Weight (~8.33 Points)
- Average Growth of Business Revenues: Full Weight (~8.33 Points)
- Five-Year Business-Survival Rate: Full* Weight (~8.33 Points)
- Industry Variety: Full Weight (~8.33 Points)
Access to Resources – Total Points: 25
- Financing Accessibility: Full Weight (~4.17 Points)
Note: This metric was calculated by dividing the “total annual value of small-business loans” by the “total number of small businesses.”
- Venture Investment (amount) per Capita: Full Weight (~4.17 Points)
- Prevalence of Investors: Full Weight (~4.17 Points)
- Human-Capital Availability: Full Weight (~4.17 Points)
Note: This metric was calculated by subtracting the “unemployment rate” by the “number of job openings per number of population in labor force.”
- Higher Education Assets (Average University Score & Number of Students Enrolled per Capita): Full Weight (~4.17 Points)
- College-Educated Workforce: Full Weight (~4.17 Points)
Note: This metric measures the percentage of the population holding at least a bachelor’s degree.
Costs – Total Points: 25
- Office-Space Affordability: Full Weight (~6.25 Points)
Note: This metric measures the per-square-foot cost of commercial office space.
- Labor Costs: Full Weight (~6.25 Points)
Note: This metric measures the median annual income of the city.
- Corporate Taxes: Full* Weight (~6.25 Points)
- Cost of Living: Full Weight (~6.25 Points)
Sources: Data used to create these rankings were collected from the U.S. Census Bureau, Bureau of Labor Statistics, National Venture Capital Association, Yelp, Indeed.com, U.S. News & World Report, Tax Foundation, Areavibes, Council for Community and Economic Research, LoopNet and Federal Deposit Insurance Corporation.