In 2021, the IRS received a whopping 5.4 million business applications—an all-time high since the U.S. government began tracking this data in 2004. The year with the second-highest number of new business applications? 2020. Today, small businesses employ nearly half of the nation's workers, according to a Chamber of Commerce report.
It's fair to say that the past few years have been banner years for small businesses, but what about regional differences? The business climate in a small town in Texas is likely not the same as a small town in Connecticut. The Chamber of Commerce report found that the Midwest was the most business-friendly region, thanks to the relatively low cost of living, well-educated workforce, and regulations lowering taxes and easing zoning restrictions for businesses.
Of course, the East and West coasts also have plenty to offer, from California's Silicon Valley and Hollywood studios to New York's financial hub to Massachusetts' prominence in the aerospace, defense, and information technology industries. A few states—including Delaware, Wyoming, and Nevada—even allow you to incorporate your business within their borders without ever setting foot there.
For even more specific data, let's take it a step further by analyzing counties. Are certain counties more friendly to small businesses than others? To pinpoint the areas nationwide where small businesses abound, altLINE used Census Bureau data to find the county in each state with the highest concentration of small businesses in 2021, calculated as small establishments per 1,000 residents. Small establishments are defined as those with fewer than 500 employees. Counties with fewer than 1,000 residents were excluded from the analysis, as well as counties for which the Census Bureau didn't have population estimates. Population data for Connecticut counties were sourced via the Federal Reserve.
Another important factor to consider: States where nonresidents are allowed to incorporate businesses will also have a higher ratio of small businesses to residents since not all small businesses are actually operated by people living in that state
Taking a close look at the type of counties that topped the list in each state also reveals some interesting trends. World-class vacation destinations—like Nantucket, Massachusetts; Maui, Hawaii; Aspen, Colorado; Key West, Florida; and Sedona, Arizona—are well represented on this list, perhaps because tourists are looking to get a sense of how the locals live through small businesses like restaurants, bakeries, bars, and boutiques.
While the counties on this list do include a few major cities like Manhattan, Atlanta, and Charleston, South Carolina, less populated counties with smaller towns are much more common. In fact, 19 of the counties on this list have a population of less than 25,000. Although most of the nation's small businesses are located in major metropolitan areas, those that are located in rural areas tend to be more stable—possibly due to loyalty from local residents or the absence of competition from large corporations.
Keep reading to discover the county in your state with the highest concentration of small businesses. It just might give you inspiration for your next endeavor.
