Cities With the Most Small Business Owners

Small businesses are an important backbone of the American economy, accounting for approximately half of the private sector jobs in the country. In this study, AdvisorSmith examined 259 metropolitan areas in the United States, which we call “cities,” to find the cities with the highest rates of small business ownership per capita.

Our study used data from the U.S. Census Bureau’s Current Population Survey to estimate the number of active small business owners in each city. We identified business owners who were self-employed in either incorporated or unincorporated businesses as their primary job, and who had worked in their business during the week they were surveyed. We then used these estimates to calculate the number of small business owners per 1,000 residents in each of the cities.

  • Prescott had 149.4 active small business owners per 1,000 residents. Nationally, small cities had an average of 47.7 small business owners per 1,000.

  • There are a total of 35,134 active small business owners in Prescott.

  • Prescott had more small business owners than Yuma (#16).

We segmented cities into three groups based on population size, with cities having over 750,000 residents classified as large cities, and cities with between 250,000 and 750,000 residents classified as midsize cities. Small cities were those with under 250,000 residents. Using these classifications, we determined the top cities for small business owners in each city size grouping.

We found that nationwide, there were approximately 45 active small business owners per 1,000 residents in the United States. In the 259 cities included in our study, there were about 47.7 small business owners per 1,000 population. Among large cities, the average was 43.1 per 1,000, while in midsize cities, the average was 40.7 per 1,000 population. In small cities, there were 60.5 small business owners per 1,000 residents. Small business ownership was most common in small cities and least common in midsize cities.

Methodology

In this study, we determined the number of small business owners in 259 U.S. metropolitan areas, which we call “cities.” We used microdata from the U.S. Census Bureau’s Current Population Survey from April 2020 through September 2020. This microdata includes survey responses from individual small business owners from around the country.

We defined an active small business owner as an individual whose primary job was self-employed, either in an incorporated or unincorporated business, and who worked more than zero hours in their business during the survey week. Although this data also includes larger businesses, almost all businesses are small businesses (approximately 99% to 99.9%), so the total number of business owners provides an accurate approximation of the total number of small business owners.

For each metropolitan area, we calculated the total number of small business owners. We also retrieved the population of each metropolitan area and used this number to calculate the number of small business owners per 1,000 population. We segmented the metropolitan areas into three groups based on population, with large cities having over 750,000 residents, midsize cities having between 250,000 and 750,000 residents, and small cities having under 250,000 residents. We then ranked the cities within their size cohorts to determine the cities with the most small business owners.

For the full study, go HERE.

Sources

  1. U.S. Census Bureau, Current Population Survey

 

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