The Austin-Round Rock-Georgetown metro was recently crowned the No. 2 best large U.S. metro to kick-start a small business, according to a new Coworking Cafe study. The major Central Texas area stood out as the South’s lead among large and mid-sized metros where small businesses were flourishing. 

To determine the rankings, Coworking Cafe analyzed 286 U.S. metro areas and ranked them across three population brackets: large (less than 1 million in population), mid-sized (500,000 to 1 million), and small metros (less than 500,000). The study considered 12 key metrics, including business formation, small business density, GDP (gross domestic product) growth and labor force participation.

According to Coworking Cafe, the U.S. is home to 36.2 million small businesses, which account for nearly 46% of total employment and remain a backbone of the national economy. The report described that Austin had the fastest-growing economy among large metros.

“Over in Texas, Austin has been an economic powerhouse for a while now,” the study says. “Accordingly, it lands in the second spot for community-focused businesses by offering a well-rounded environment that allows entrepreneurs to thrive.”

The Austin area registered more than 2,300 new businesses per 100,000 residents in 2024, compared to the national average of 1,553, ranking No. 6 among large metros. In addition, the metro had a strong local business environment with 12,415 small businesses per 100,000 residents, above the national figure of 10,376. 

Small businesses in the Austin area also accounted for nearly half, 48.1%, of local employment, which is higher than the national benchmark of 45.9%. The city is home to a strong talent pool of educated residents, as the metro’s 71.4% labor force participation rate ranked No. 3 among large metros.

Forty-seven percent of Austinites ages 25 and older hold a bachelor’s degree or higher — well above the national benchmark of 33%. The report says this contributed to the metro’s nearly 50% GDP growth in recent years (2019-2023), “ranking No. 1 in this metric and signaling a dynamic market for small businesses looking to grow.”

The metro reported more than $55,000 in annual earnings, which strengthens local buying power in the economy for small businesses. Usually, the more people make, the more likely they are to spend at local businesses. 

For every 100,000 residents, there are more than 12,400 small businesses that make up about 48% of the workforce in the Austin metro. Among them, more than 11% of workers are small-scale enterprise owners, which the study says “reflects a strong entrepreneurial spirit.” Also, with the rise of coworking and remote work, the Austin metro has plenty of accessible options to support small teams and entrepreneurs. 

Austin ranked in the top 10 for coworking density, with 4.3 coworking spaces per 100,000 residents and a median coworking membership rate of $235. While Austin was the only Texas city to land on the report’s list of large U.S. metros for small businesses, Midland was ranked the No. 3 best small U.S. metro for small businesses.