Small businesses have powered the US economy for hundreds of years, and have contributed to the economic prosperity of the cities they’re based in. While the United States, as a whole, is a great country for small business, some cities are more welcoming to small business owners than others.
Some cities provide more of a challenge, thanks to factors like property prices and income tax. Here are the four most challenging locations to start a small business.
The Aloha state might be a top vacation destination but its capital is, unfortunately, one of the most expensive places to do business in the US. The state’s remoteness from the rest of the United States means there’s a high cost to importing basic goods and supplies. If you run a business, this high cost affects you as well.
Hawaii also comes in second after New York on the list of states with the highest income tax in the US, which makes it an unattractive destination for potential talent. This, combined with high property costs, means entrepreneurs hoping to start small businesses could end up losing more money than they expected.
San Francisco, California
San Francisco has earned quite a reputation over the years. Unfortunately, it hasn’t been for the most positive of factors. Thanks to a tech boom, San Francisco has become home to many large startups with seemingly bottomless bags of funding. While this has led to a strong economy, it has also resulted in the city having the highest cost of living in the United States.
San Francisco is notorious for its astronomical rent prices. Any small business owner hoping to set up shop there is looking at paying thousands of dollars more rent than the national average. Even if this small business exists solely online, your personal living costs will likely eat into whatever profit you make.
New York, New York
New York. The city of stunning possibilities…and, sometimes, crippling failure. Small businesses have existed in New York since the city was first built and many have seen remarkable success. But it hasn’t been easy.
New York has some of the most unfriendly corporate tax rates in the United States. The city also has some of the highest commercial rent prices in the world. Without a massive injection of funding and a clear understanding of the risks involved, your small business dreams could be crushed before you’ve even launched them.
Like the other places on this list, Boston risks becoming a small business dead-zone because of its commercial rent prices. The city is the fifth most expensive place to live in the US with the average 1-bedroom apartment renting for $2,200. Commercial rent is no exception either.
Boston also has one of the highest literacy rates in the country, partly bolstered by the presence of some of the world’s best universities located in the city or nearby. But that high literacy rate translates to high labor costs for small business owners.
Larger companies couldn’t be more pleased with the talent available in the city. But smaller businesses may want to keep moving.
If you’re feeling discouraged against launching your small business in one of these cities, don’t be. Your small business doesn’t have to exist in a brick and mortar location; you can simply do all your business online. Alternatively, you can use profits from your other business investments in another state to ensure you have enough funding for a small business in one of these cities.
Moving money is often an expensive affair, with banks charging astronomical sums to send slow wires that you so desperately need.
In addition to this, they are often unreliable, as a single missing detail can result in you losing your money.
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