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Originally Posted On: https://www.homecity.com/blog/best-cities-to-do-business-in-texas
At the core of our everyday lives, whether it be going to work or picking up groceries at the store, business is always occurring. Transactions, revenue, profit, and losses all define the parameters and details of our everyday.
But if you’re considering jumping into the lion’s den and opening up a new business, the city you live in can impact your level of success. Taxes, median income, cost of rent and population growth are just a few of the factors that influence whether a city is a great place to do business.
So for all the daring entrepreneurs out there looking to break into a new market, we calculated and ranked the best cities in Texas to open a new business.
Frisco is home to FC Dallas, The Star (the Cowboy’s practice facility), and major employers such as T-Mobile, Oracle, IKEA, Amerisource. For this reason (and many more) it tops the list as the best city in Texas to do business.
Frisco did consistently well across almost every category we analyzed for this piece. Specifically, Frisco ranks number one in Texas for median house prices sitting at $368,000.00–this indicates a level of prosperity and affordability within the city limits.
Frisco also ranked number two in Texas for 10-year percent population growth (71.1%), number two in Texas for percent of residents with a Bachelor’s degree (63.4%), and number three in Texas for percent of residents with high school diploma (93.3%).
Their high performance in these categories likely affected their high performance in the lowest poverty rate and percent of residents in the civilian workforce.
Frisco ranks number two in Texas for the lowest poverty rate with a rate of 3.6% and number ten in Texas for percent of residents in the civilian workforce with a rate of 72%.
And although Frisco only ranks number 39 in Texas for the number of businesses per 100 residents, Frisco somehow makes up the gap by having the number five per capita annual income rate in Texas with an astounding $52,991.00 per capita income rate.
Frisco also enjoys one of the lowest violent crime rates in Texas which makes it safe and profitable for businesses to stay open late and operate throughout the entirety of Frisco.
One of Austin’s most important aspects that makes it so attractive for business is its incentives such as grants for technology opportunities program, small business assistance, business expansion, and relocation assistance, and community preservation and revitalization programs.
In addition to these programs, Austin offers several grants for non-profit businesses such as cultural funding, non-profit home sales, and a grant for technology opportunities funding.
In our data, we found that Austin did best in areas such as being the fourth largest in population, ranking number four in Texas for the total number of firms, and ranking number five in Texas for median housing price. Austin also ranked number eight in Texas for percent of residents with bachelor’s degrees at 50.4%. This is interesting because Austin’s high performance in these categories likely affected its high performance in the per capita annual income.
Austin ranked number six in Texas for percent of residents in the civilian workforce at 73.3% and number seven in Texas for per capita annual income, at $40,391.00.
Austin’s government and community have long shared a commitment to supporting their local small businesses, music, and cultural arts. The successful nature of Austin’s business community and economy is partly a result of this commitment.
Plano is the greenest and most prosperous suburb in all of Texas. With the highest quality of life rating in our ‘Best Cities to Live in Texas’ study, Plano residents benefit from high median incomes, a relatively low rate of violent crime, and shorter commute times.
There are areas where Plano shined in this study include the number of residents with bachelor’s degrees (56.7%), number of total firms (with 30,567 businesses), and total population (with 287,677 residents).
They also rank highly for percent of the population with a high school diploma (93.4%) which likely directly impacted their high performance in the per capita annual income, businesses per 100 residents, and lowest poverty rate categories.
Plano is number six in Texas for per capita annual income at $46,394 annually per capita. They are also ranked number seven in Texas for median housing prices at $291,300.00 and number eight in Texas for businesses per 100 residents.
4. Flower Mound
Flower Mound is a small town of about 80,000 residents that lies north of Grapevine, halfway between Fort Worth and Dallas. The category where Flower Mound distinguished themselves the most was that they have the number one lowest poverty rate in all of Texas.
One might wonder which categories might influence a lower poverty rate and the numbers seem to indicate that educational attainment and per capita annual income was the best indicators.
Flower Mound ranked number two in Texas for percent of residents with a high school diploma at 96.7% and is number three in Texas for percent of residents with a bachelor’s degree at 61.9%.
On top of having an extremely educated populace, Flower Mound also benefits from having the second-best per capita annual income at $52,991.00 annually per capita.
When the residents of a city are well educated and make more money per capita than a majority of the state, it would only logically follow that Flower Mound would have the lowest poverty rate in Texas.
Addison is a small town of about 16,000 residents that lies north of Dallas and southwest of Plano. The area where Addison stood out from the pack was that they led the entire state in the percentage of residents in the civilian workforce at a blistering 83.7% of residents. This stat becomes less mysterious once you take a look at the areas where Addison also excelled in.
95.2% of residents have a high school diploma, and 57.6% of residents have a bachelor’s degree. Additionally, Addison has a rate of 24.29 businesses per 100 residents which locks them in at number two in the state.
With such an ample supply of highly educated employees and businesses to employ them, Addison’s number one ranked percent of residents in the civilian workforce begins to make much more sense.
6. The Woodlands
The Woodlands is a beautiful suburb that lies just north of Houston proper. The interesting aspect of The Woodlands is that they dominated every category that they did well in.
Here are some of the categories where The Woodlands demonstrated their business potential: They ranked number one in Texas for per capita annual income at $62,672.00 per capita annually, number one in Texas for percent of residents with high school diploma at 97.4%, and number one in Texas for percent of residents with Bachelor’s degrees at 65.1%.
They also ranked number two in Texas for median housing prices, coming in at $361,500.00, and number three in Texas for the lowest poverty rate at 4%.
The numbers seem to paint a picture that The Woodlands has some of the richest and most educated residents in all of Texas. They have the second most expensive homes and the fourth lowest poverty rate, which makes the area ripe to start a business as long as you can afford the property taxes and keep the lights on.
McKinney is a sizable city of about 200,000 residents that lies northeast of Dallas. The city ranks well for 10-year population growth at 51.9% and number eight in Texas for median home price at $281,300.
McKinney ranks number ten in Texas for the lowest poverty rate at 6.9%. This means that, in general, McKinney’s growth is likely driving up business transactions, increasing the median home price, and ultimately lowering the city’s poverty rate.
8. Sugar Land
Sugar Land lies southwest of Houston proper and is home to about 118,500 residents. The suburb found their sweet spot in the percent of residents with a bachelor’s degree (60.4%) category as well as the percentage of residents with a high school diploma (93.8%).
They also shined in the annual income category coming in at $52,393.00 annually per capita. This is interesting because Sugar Land’s performance in these categories is what boosts their ranking in the lowest poverty rate and median housing price categories.
Sugar Land is number five in Texas for Lowest Poverty Rate at 5% and number six in Texas for Median House Price at $309,000.00.
Carrollton is a sizable suburb of about 140,000 residents that lies just north of Dallas and south of Lewisville Lake. The categories that propelled Carrollton to number nine on our list include businesses per 100 residents (10.3 businesses) and percent of residents with a bachelor’s degree (38.8%).
It’s worth noting that their strong performance in these two categories is likely what bolstered their success in the percent of residents in the civilian workforce, median house price, and lowest poverty rate categories.
Carrollton is number seven in Texas for the percentage of residents in the civilian workforce at 72.9%, number 14 in Texas for with a median housing price of $217,700.00. It is also number 15 in Texas for the lowest poverty rate at 9.
In Midland, business is booming, and business in Midland revolves primarily around one industry–energy. As the only representative of West Texas in our top 10 and the only city that does not reside in or around a major metropolitan area, Midland is unique.
Its prosperity is tied to the Permian Basin and the lucrative oil/natural gas industry that makes its profits by drilling the resources in the area. Nationwide, there are 883 oil rigs as of 2019 and more than half of those rigs are located in the Permian Basin.
Here are some other areas where Midland stood out from the pack: they ranked number seven in Texas for businesses per 100 residents at 10.8 businesses and number eleven in Texas for population growth at 31.3%.
They also ranked number 12 in Texas for percent of residents in the civilian workforce at 70.7% which is worth noting because the combination of these categories is likely what is driving Midland’s high per capita annual income. Midland ranked number nine in Texas for per capita annual income at $40,048.00.
11. Cedar Park
Cedar Park, home to about 80,000 residents, exists just north of Austin proper and resides adjacent to its neighboring suburb, Round Rock.
Cedar Park excelled in several categories including percent of residents with a high school diploma at 95.9%, percent of residents with a bachelor’s degree at 49.2%, and a population growth rate of 44.2%.
They also ranked number eight in Texas for percent of residents in the civilian workforce at 72.3%. Cedar Park’s high marks in these areas have likely boosted its performance in the lowest poverty rate, per capita annual income, and median house price.
12. Round Rock
Round Rock is located just north of Austin and directly east of Cedar Park. In our data, we found that Round Rock did best in areas regarding growth.
They ranked number three in Texas for percent of residents in the civilian workforce (at 74.1%), number ten in Texas for 10-year percent population change (at 33.3%), and number 11 in Texas for percent of residents with a high school diploma (at 92.8%).
It also ranks number 12 in Texas for percent of residents with a bachelor’s degree, which demonstrates that Round Rock’s Dell Headquarters has brought in a lot of well educated and well-paid employees.
Irving borders the northwest edge of Dallas proper and is home to about 240,000 residents. The categories where Irving distinguished themselves include the percent of civilians in the workforce (74%), the total number of business firms ( 22,175 businesses), and total population (with 239,798 residents).
They also did well in the businesses per 100 residents and the percentage of residents with bachelor’s degrees categories.
14. Dallas (tie)
Some of Dallas’ incentives for businesses include job training, tax exemptions, renewable energy incentives, and various programs designed to stimulate the economy.
These incentives have given rise to one of the most healthy business cultures and local economies in the country, so much so that the success of Dallas has bolstered the economic health of its surrounding metro cities such as our current rank leader, Frisco.
The categories where Dallas excelled were the number of total firms, total population, and businesses per 100 residents.
14. Katy (tie)
Katy is a small town of about 21,700 residents that lies directly east of Houston. The areas where Katy excelled include the number of businesses per 100 residents, 10-year population change and having the lowest poverty rate at 6.4%.
Katy’s high supply of businesses per capita is boosting growth and keeping the poverty rate low.
Boerne is a small town of about 18,200 residents that resides northwest of San Antonio. Boerne knocked it out of the park in the population change, businesses per 100 residents, and poverty rate categories.
They also ranked high for residents with a high school diploma (at 93.5%), and median home -price (at $259,600.00) which is intriguing because it demonstrates that, similarly to Katy, Borne’s high supply of businesses per capita is boosting growth and keeping the poverty rate low.
Houston is the urban center of East Texas and the most populous city in the entire state. In fact, Houston is the fourth most populous city in the entire country. In order to support business and its large populace, the city has a program called, Build Up Houston.
This program strives to increase the success of small businesses within the city. Additionally, other programs like HireHouston encourage businesses to hire from the local communities that they serve in order to strengthen the ties between business and community.
H-town has safely landed in our number 17 spot with a little help from NASA. Let’s see how Houston did overall: #1 in Texas for Total Population with 2,320,268 residents, #1 in Texas for Total # of Firms with 260,374 businesses, #6 in Texas for in businesses per 100 residents with 11.22 businesses, and #18 in Texas for per capita annual income at $31,576.00
18. Fort Worth
Our previously named best city to live in Texas is coming into these rankings as the 18th best city to do business in Texas. Unlike Dallas whose growth has stabilized, Fort Worth is growing its population at almost double the rate of Dallas, which means Fort Worth is receiving double about the number of new consumers moving to the city.
Additionally, Fort Worth has a very successful high school education system which has boosted the city to where 87.1% of Fort Worth residents have a high school diploma. Fort Worth is also the home of one of the best universities in the state, Texas Christian University (TCU).
Categories Fort Worth excelled in include total population, number of firms, and percent of 10-year population change.
Arlington showed a strong representation in the total population, number of firms, and percent of residents in the civilian workforce categories. They also did well in the business per 100 residents category which is notable because it shows that Arlington sees a lot of business happen on a daily basis due to its location between Fort Worth and Dallas.
20. New Braunfels
New Braunfels is a small riverside town of about 90,200 northeast of San Antonio. New Braunfels is floating comfortably into #20 on our list. They made the biggest splash in the population change, poverty rate, and number of residents with a high school diploma categories.
21. Denton (tie)
Denton is a city of about 141,500 residents that lies directly north of Arlington and Flower Mound. Denton has locked horns with Georgetown here at the 21st spot on our list. Denton shined in the education and population growth categories.
21. Georgetown (tie)
Georgetown is a charming city of about 80,000 residents that sits north of Austin and Round Rock. Georgetown, Red Poppy Capital of Texas, is coming in red hot at #21 on our corporate leaderboard. They shine with a low poverty rate, educated populace, and high income to affordability ratio. They did well in most categories for a well-rounded performance.
Kyle is located just southwest of Austin, between Buda and San Marcos. The quaint city came in as the #23 best city in Texas to do business.
In fact, Katy has been the fastest growing city in Texas over the past decade. For this reason, they shined in the percent population change. They also did well in the percentage of civilians in the workforce and education realms. This is notable because it demonstrates that firms are hiring in Kyle, Texas, and that demand for labor has driven Kyle’s population growth rate through the roof.
Odessa is a moderately-sized city with about 123,300 residents that directly neighbors Midland to the west. Odessa did not do quite as well as their neighbor, Midland, in our rankings, but they still brought a strong showing as the 24th best city to do business in Texas.
They broke the top 20 for percent population change, the number of businesses per capita, and low poverty rates. All of this illustrates that Odessa is massively benefitting from the oil & fracking industry’s investment into the area.
25. San Antonio
Last but definitely not least, San Antonio is the second-largest urban city in Texas with about 1.5 million residents. San Antonio is bolstering the tail end of the rankings by owning the 25th Best City to Do Business in Texas title.
Let’s see how San Antonio stacks up to the other 24 cities ahead of it in some key categories: number two in Texas for total population, number three in Texas for total number of firms, and number 22 in Texas for 10-year percent population change. San Antonio is steadily growing and adding businesses at a healthy and sustainable rate,
Overall, the most important takeaway when looking at these rankings is how well the suburbs and small towns surrounding Texas’ urban centers did compare to Texas’s largest cities.
In these rankings, Austin was the only major urban center to make an appearance in the top 10. The rest of the top ten were all suburbs of either Austin, Houston, or Dallas. Of course, at #10, Midland was the exception to the rule once again because it is neither a major urban center nor a suburb of one. Midland is an oil-rich city in an otherwise sparse and desertous region of West Texas.
These findings track along well with our findings from the ‘25 Best Cities to Live in Texas’ study where the DFW metro-area suburbs dominated the top 10. When cities that are within close proximity to one another work together to create societal and commercial ties with one another, the data shows that there’s a synergy generated from these transactions that leads to better business and living conditions for all parties involved. Thus, the numbers describe a common idiom found in Western culture; divided we fall and together we will prevail.
In general, when evaluating the business prowess of something as broad of a category as an entire city, many factors and confounding variables must be accounted for in order to paint an accurate picture of the economic opportunities and the health of the business community in any given city.
Not only do many variables have to be accounted for, but the information must also be available. Although it may be helpful to know the literacy rate of the workforce in every city, that information may only be available for the large cities in Texas. In those cases, we found similar variables to account for the data-lacking variable.
The ten categories we used for this study were: Population (July 2019 estimates), 10-year percent population change, poverty rate, per capita income in past 12 months (in 2018 dollars) [2014-2018], all firms (2012), businesses per 100 residents, percentage of residents in the civilian workforce, percent of residents with a high school diploma, percent of residents with a bachelor’s degree, and median house price.
We believe that these 10 datasets paint a broad and clear picture of the business potential in each of these 25 Texas cities. Each category either demonstrates the strength of the city’s consumer base, workforce, or business community. When each category is weighted equally and the rankings are averaged together for each city, we arrive at a Final Ranked Score. The top 25 cities with the lowest Final Ranked Score were then sorted from lowest to highest, resulting in a list of the top 25 cities to do business in Texas.
All data was pulled from the U.S. Census Database.
You can find the full methodology complete with all the data tables here.