N.C. Cities Rule For Small Businesses

The two markets with the nation's top scores for small-business vitality sit 140 miles apart in North Carolina. Raleigh is No. 1 in the national rankings, while Charlotte is No. 2, according to a new study by BizJournals.

BizJournals used a six-part formula to analyze the nation's 100 largest metropolitan areas for the places most conducive to the creation and development of small businesses.

The two North Carolina markets excel in four areas with a direct impact on small-business activity:

1. Population: Raleigh and Charlotte picked up a combined total of 427,000 new residents between 2002 and 2007. Raleigh grew by 21.2 percent in that 5-year period, Charlotte by 17.4 percent. Both dwarfed the national growth rate of 4.8 percent.

2. Employment: Although the recession is hurting all states, the two North Carolina hubs cushioned any future blows with outstanding job growth during the 2003-08 span--23 percent in Raleigh, 15.4 percent in Charlotte. The U.S. gain was 5.8 percent.

3. Small-business growth: The number of small businesses grew dramatically in both markets from 2005 to 2006, the latest period covered by official statistics. Raleigh led the way with a 4.6 percent rise, followed by Charlotte at 4 percent. The national increase was 1.3 percent.

4. Small-business concentration: The typical U.S. market has 24.57 small businesses for every 1,000 residents. The North Carolina markets enjoy concentrations that are at least 10 percent bigger, with Raleigh at 27.58 per 1,000, Charlotte at 27.07.

The 100 markets in BizJournals' study group had a combined total of 197.3 million residents as of mid-2007, equaling 65 percent of the nation's population. They also contained 4.9 million small businesses. At the bottom of the new rankings is Detroit, further proof that the auto industry's declining fortunes have harmed all kinds of small businesses in Michigan.

Employment has fallen 7.5 percent in the Detroit area since 2003, the worst decline anywhere outside of New Orleans. Detroit also suffers from a weak concentration of small businesses, with only 22.70 per 1,000 residents, nearly 8 percent below the national average.