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Personal Finance Reports

The Best 100 Towns in Texas for Starting a Small Business

Published Feb 06, 2018
4-min read
Mike Brown Author Photo
Written by Mike Brown
Mike Brown Author Photo
Written by Mike Brown

Expertise:

Mike Brown uses data from surveys and publicly-available resources to identify emerging personal finance trends and tell unique stories. Mike’s work, featured in outlets like the Wall Street Journal and Washington Post, provides consumers with a personal finance measuring stick to make informed financial decisions.

Learn more about Mike Brown

Boerne, Texas has been rated by LendEDU as one of the best places in the state for starting a small business.

In more ways than one, Texas is big.

​By both area and population, Texas is the second largest state in the United States. The Lone Star State has the second most electoral votes in the country. There are three cities in Texas with a population above one million: Houston, San Antonio, and Dallas. Two more cities, Austin and Fort Worth, are pushing the million-person mark.

Since 2002, Texas has led the U.S. in export revenue and has had the second highest gross-state product. Were it a country, Texas would have the 10th largest economy in the world. 

While everything in Texas seems to be super-sized, one can still appreciate the smaller, finer things in the state. 

That is especially true when it comes to small businesses in the Lone Star State. Bigger isn’t always better, and small businesses in Texas can attest to that motto. Every American can appreciate a small business that puts a little extra tender, lovin’ care into their products, as opposed to Walmart goods that are made on a conveyor belt.

Despite all of its grandiosity, Texas is still home to many towns and cities that offer some of the best small businesses around. LendEDU has recognized the 100 towns and cities in the Lone Star State that have become the very best for starting small business. 

Using licensed data, we analyzed over 1,000 Texas communities based on their conduciveness to small businesses. The following three parameters were used to judge each town and city:

  1. ​Population Score (20%, listed in table as Pop.)
  2. Income Score (40%, listed in table as Income)
  3. Expenses Score (40%, listed in table as Expenses)

Each parameter featured a few sub-metrics that were used to calculate the total score for each parameter. Afterwords, every Texas community’s three parameter scores were summed together to get the final score. The entire process is explained further in the methodology at the bottom of this page.

Below, you will be able to see the 100 towns and cities in Texas that LendEDU has recognized as the very best for starting a small business.

Complete Rankings & Interactive Map of the Best 100 Towns in Texas for Small Businesses

Methodology

All data that was used in this report was licensed by LendEDU from Onboard Informatics. Onboard Informatics’ dataset includes many stand alone statistics that were used for this report, including population figures, tax data, and income projection figures. In total, over 1,000 Texas towns and cities were evaluated for this study. An arbitrary population cutoff was established at 7,500, and any community with a population below that number was eliminated from further analysis. 

The following three parameters and their respective sub-metrics were used to evaluate each and every Texas town and city based on their conduciveness towards small businesses.

1. Population Score (Weight – 20%, Maximum Point Total – 20 points)

  • Daytime Population Score – The difference in the normal population and the population that is present during standard working day hours (Weight – 10%, Maximum Point Total – 10 points)
  • Population Growth Score – Forecasted population growth over the next five years (Weight – 10%, Maximum Point Total – 10 points)

2. Income Score (Weight – 40%, Maximum Point Total – 40 points)

  • Disposable Income Score – The average disposable income available to residents (Weight – 20%, Maximum Point Total – 20 points) (note: this helps reduce the need for small business loans)
  • Income Growth Score – Forecasted income growth over the next five years (Weight – 20%, Maximum Point Total – 20 points)

3. Expenses Score (Weight – 40%, Maximum Point Total – 40 points)

  • Property Tax Score – Property tax rates (Weight – 8%, Maximum Point Total – 8 points)
  • Sales Tax Score – Sales tax rate (Weight – 8%, Maximum Point Total – 8 points)
  • Utilities Score – Average cost of utilities (Weight – 8%, Maximum Point Total – 8 points)
  • Burglary Score – Rate of burglaries compared to the national average (Weight- 8%, Maximum Point Total – 8 points)
  • Property Crime Score – Rate of property crimes compared to the national average (Weight – 8%, Maximum Point Total – 8 points)

Each town and city’s respective sub-metric score for a specific sub-category was ranked against all the other respective town’s sub-metric scores in the same sub-category on a percent scale from 0 to 100. This was done for each sub-metric. Later, each individual percent rank was multiplied by its weight to produce the point total. All of a given community’s sub-metric scores in a specific parameter were added together to get the total parameter score. All three total parameter scores were then summed together to get the final score. Towns and cities in Texas with a greater final score were ranked higher on the list and vice-versa. 

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