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Startups and Sole Proprietors – How Does Your Area Rank?





Does your area have a lot of sole proprietors — have you ever wondered?  And what about startups — will you find other startup entrepreneurs in your chosen city?

Using the ZoomProspector website I ran some heat maps that show concentrations of sole proprietors and startups across the United States.  The results were surprising.

Let me start with the sole proprietors.  Here is a heat map showing the sole proprietors across the U.S. — the lighter the yellow color, the fewer sole proprietors; the darker the red color, the more there are:

Sole Proprietors Heat Map -  Source: ZoomProspector

For comparison, I then ran a heat map showing the population density across the U.S.:

Population Heat Map -  Source: ZoomProspector

As you can see, the two maps look almost the same. At first I thought there was a mistake. But upon closer examination I do see some slight differences.  What this means is that sole proprietors are pretty evenly dispersed in ratio with the population density. Sole proprietors truly seem to be representative of America, insofar as location.





Then I ran a heat map showing startups per 10,000 people.  It shows a much different picture:

Startups per 10,000 People - Source: ZoomProspector

You may not be surprised by the concentrations of startups on the coasts.  However, all those wide open spaces in the Western states do seem to attract more than their share of entrepreneurs starting businesses.  And surprisingly, there are fewer startups per 10,000 people in places like Silicon Valley, than in places in “the middle of nowhere,” as the saying goes.

Who says you have to be in Silicon Valley to start a business?



To see what else you can do with the information in the ZoomProsector site, I’ll point you to John Tozzi’s article at BusinessWeek.com called “Best Cities for Startups.”  Using the site, BusinessWeek gathered together 11 data points to come up with the rankings for their take on the best city in each state to start a business.  The factors they looked at were:



… “based on a formula weighing the following 11 factors: workers with at least a bachelor’s degree (2008); white-collar workers (2008); “young and educated” population (2005-07); workers in “creative” professions (2005-07); international talent (2005-07); universities (2007); patents (2007); venture-capital funding (2006); small businesses per capita (2008); sole proprietors per capita (2005); and startups per capita (2004-05). All data was compiled by ZoomProspector.”

You may just be surprised. For instance, in California, it’s not San Jose or Cupertino or Palo Alto or San Francisco that BusinessWeek rates as the best city for a startup. It’s Irvine. 16 Comments ▼


Anita Campbell


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

16 Reactions

  1. Martin Lindeskog

    Interesting finding. Could it be related to Rich Karlgaard’s book, Life 2.0: How People Across America Are Transforming Their Lives by Finding the Where of Their Happiness? With today’s technology, you could start your own sole proprietorship in “middle of nowhere”.

    It is funny you are mentioning sole proprietors. I have just registered a domain name with the British English word for this type of business, sole trader. My new web site will be located at “Ego Sole Trader” dot com. 🙂

  2. Anita Campbell

    Martin, I think that places like Montana and Wyoming and Idaho naturally attract people who are individualists. They attract the same kind of person who is likely to prefer starting a business over getting a job somewhere.

    That’s one explanation.

    — Anita

  3. Very interesting information. I agree with you that it may be the individualism. That added to a low amount of regulation and taxation probably have effect on the amount of people starting and running their own businesses. It could also have something to do with the jobs and available salaries in the areas. Maybe there are fewer good paying jobs and so people start businesses instead.

    Interesting information and it’s fun to come up with why that could be.

    Jeremy @ RefocusingTechnology.com

  4. John Tozzi (BusinessWeek reporter)

    Martin,

    I agree. Our reporting turned up a very clear theme, especially among younger workers and entrepreneurs: they’re more likely to choose a place to live based on lifestyle factors, and then find work or start a business there, rather than follow jobs or better economic climates.

    So to the extent that an area is attractive for lifestyle factors (skiing, hiking, and other outdoor sports, for example), that attracts the workforce and entrepreneurs, it seems.

    Thanks for picking this up, Anita. Best,

    John

  5. Martin Lindeskog

    Anita,

    So, as an individualist, I should head to Montana, Wyoming or Idaho?

    From my post, Where Are You Now?

    I think that an optimal state of mind is a combo of a red state (“down-to-earth” and relaxed heartland type, e.g. the Midwest) and blue state (city slicker with an interest of business life pulse, culture and history, e.g. Boston)…

  6. Martin Lindeskog

    John Tozzi,

    Thanks for your input. I think it is important to see an integration of your work-life(style) situation. Right now, I am reading Jonathan Fields’s book, Career Renegade, and it has given me fuel for my life long journey and career path in the future. (Reviewed by Anita Campbell on January 15, 2009.)

    It was interesting to read your post, The Entrepreneurship Job on Small Biz Blog. I think that “more people see entrepreneurship as the next step,” with the precondition if it will become easier to start your own business, i.e., less regulation, red-tape, etc. Have you covered this issue in BusinessWeek?

  7. Having lived in a small detached town and rural areas, we see all types of small business start ups. In such areas, there are few employers and rarely large employers – you need to roll your own business. Small business are very common.

    The classic example I like is from a small town in Eastern WA – I once lived in the town – where the wife ran a tanning parlor, hair salon, video rental and quick oil change service next door – while husband ran a small cattle ranch operation. I think they later added a small fast food restaurant too.

    This is typical of smaller communities. Find a need and offer a solution.

  8. Irvine? Surprising! Interesting fact that you presented here Anita. It just proves that anyone who wants to be an entrepreneur can really become one whatever and wherever he is in this world.

    @Martin, congrats to your new domain!

  9. There are opportunities across the map (literally) for small businesses everywhere. The assumption (which you’ve confirmed) that I’ve always had about small business is that it follows the demographics. I’m very interested to see that start ups are much more sweeping and not ‘contained’ by population stats. It makes for a much more interesting business world.

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