It used to be that San Francisco or New York were the only places one should consider if one was thinking of starting a business, tech or not. Today? Not necessarily so. With the speed at which business has grown online, you can now open your start up anywhere and have a decent chance of success.

If you want to increase those chances of success? Understanding what you are looking for will help you narrow down your choices to the best city for you personally.

Curious about the elements that make for a supportive environment for startups? If so, read on.

Hera Hub, San Diego
photo credit: Hera Hub

1. Does it have spaces geared for collaboration?

Being able to bounce your ideas off someone is key to helping launch a product, a business idea, or other initiative. Because entrepreneurs often work alone, cities that are great for entrepreneurs have spaces that provide for this kind of interaction. These collaborative spaces provide a supportive environment that fosters success in freelancers and solopreneurs.

Some cities design for this purpose from the start. The ones that do use urban living architects to create buildings that fulfill multiple roles within a community. What does that look like when you are evaluating a city and seeing if it can provide the kind of collaboration you are looking for? In San Diego, Hera Hub has created a space that is a spa but also offers work and meeting spaces for professional women. The innovative facility provides women with access to business experts and networking opportunities.

Look for cities that provide spaces where you can meet up with others who are in the same boat as you. A supportive community can help to bolster you when you need that extra push over the top.

2. Does it have affordable rent and low cost of living?

According to a Global Entrepreneurship Monitor report, 82 percent of start ups are self-funded. On a practical level, this often means that things are tight for the first couple of years for the person starting a business. Made worse if the city you live in has a high cost of living.

Being able to break even at the end of the day is vastly affected by how much money you need to bring in to stay solvent. These are elements affected by monthly rent for your office space, not to mention how much you are paying for your personal accommodations.

It is worthwhile to research cities that have affordable to low cost of living. This will allow you to funnel your income appropriately. Without it all going to things that do not advance your business or that do not equal business growth. Do searches for cities that have affordable to low cost of living, both on an individual level and for business expenses.

Sioux Falls, South Dakota
Downtown of Sioux Falls, South Dakota

3. Is the state tax friendly for businesses?

If you own a small business, state and other taxes will affect how well you do once tax season has come and gone. There are various aspects to consider when looking at the tax friendliness of each state. For example, individual income tax, sales tax, unemployment insurance tax, and major business tax.

Some of the states that are most well known as being tax friendly include South Dakota and Wyoming. Both states have no corporate or individual income tax. Montana and New Hampshire have no sales tax. And Florida has no individual income tax. On the other hand, states that have tax laws least favorable to businesses include Ohio, New Jersey, New York, and California.

Looking at a state’s tax laws and rates will give you an idea of how much you will walk away with after Uncle Sam has had his share. And this is an important aspect of finding a city in which to launch your start up.

4. Does the city have a good business success rate?

Finally, to round off this list, experts recommend taking a look at how many businesses have opened and stayed open within the last 5 years. In other words, how many small businesses have found success in that city? Taking a look at those kinds of statistics will give you insight into spots that are favorable to start ups.

Finding a city that has a low cost of living plus a thriving economy can be hard to pinpoint across so many states. But combine that with measuring state tax and other criteria, you will have a better idea of cities to avoid. And then from there you can narrow down your search.