15 Cities Most Dependent on Small Businesses

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Senior woman and small business owner working on a tablet in her art studio making her hobby a business
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Small businesses are the heart of the U.S. economy. Small businesses represent 99.9% of all businesses in the U.S., collectively employing nearly half of all U.S. employees and generating nearly half of U.S. annual GDP, according to data from the U.S. Small Business Administration.

But the past two years have been treacherous for many small businesses. The initial shock of the COVID-19 pandemic disrupted many businesses, leading 43% to close at least temporarily and producing 9.1 million job losses in the first two quarters of 2020. Government support like the Paycheck Protection Program allowed businesses to weather the crisis, but challenges remain.

Labor market tightness over the last year has made it difficult to recruit and retain talent and driven wages upward. Supply chain issues and inflation have made it harder to obtain materials and manage costs. And with interest rates on the rise and investors becoming more cautious amid fears of a recession, capital to start or grow a business is likely to be harder to come by in the months and years ahead.

To determine the locations most dependent on small businesses, researchers at Smartest Dollar — a review website for professional liability insurance and other commercial insurance policies — calculated a composite score based on the percentage of employees at small businesses, the percentage of total payroll at small businesses, and the number of small businesses per 10,000 people. The data used in this analysis is from the U.S. Census Bureau’s Statistics of U.S. Businesses Tables.

Here are the U.S. metropolitan areas most dependent on small businesses.

15. Austin-Round Rock, TX

Austin, Texas
Roschetzky Photography / Shutterstock.com
  • Composite score: 48.87
  • Percentage of employees at small businesses: 48.4%
  • Percentage of total payroll at small businesses: 40.6%
  • Small businesses per 10,000 people: 189.7
  • Total number of small businesses with employees: 43,551
  • Total employees at small businesses: 434,122
  • Total annual payroll at small businesses: $22,136,221,000

14. San Francisco-Oakland-Hayward, CA

San Francisco, California
IM_photo / Shutterstock.com
  • Composite score: 51.03
  • Percentage of employees at small businesses: 49.7%
  • Percentage of total payroll at small businesses: 36.5%
  • Small businesses per 10,000 people: 227.8
  • Total number of small businesses with employees: 106,989
  • Total employees at small businesses: 1,134,646
  • Total annual payroll at small businesses: $83,169,809,000

13. Baltimore-Columbia-Towson, MD

Baltimore, Maryland
Hethers / Shutterstock.com
  • Composite score: 53.97
  • Percentage of employees at small businesses: 48.5%
  • Percentage of total payroll at small businesses: 43.1%
  • Small businesses per 10,000 people: 187.2
  • Total number of small businesses with employees: 52,418
  • Total employees at small businesses: 584,058
  • Total annual payroll at small businesses: $30,463,291,000

12. Fresno, CA

Fresno California
stellamc / Shutterstock.com
  • Composite score: 54.03
  • Percentage of employees at small businesses: 52.7%
  • Percentage of total payroll at small businesses: 51.7%
  • Small businesses per 10,000 people: 136.0
  • Total number of small businesses with employees: 13,615
  • Total employees at small businesses: 146,318
  • Total annual payroll at small businesses: $6,478,226,000

11. Washington-Arlington-Alexandria, DC-VA-MD-WV

Washington, D.C.
orhan-cam / Shutterstock.com
  • Composite score: 57.70
  • Percentage of employees at small businesses: 49.2%
  • Percentage of total payroll at small businesses: 44.2%
  • Small businesses per 10,000 people: 187.6
  • Total number of small businesses with employees: 118,633
  • Total employees at small businesses: 1,359,594
  • Total annual payroll at small businesses: $86,002,592,000

10. Buffalo-Cheektowaga-Niagara Falls, NY

Buffalo New York
Sopotnicki / Shutterstock.com
  • Composite score: 58.17
  • Percentage of employees at small businesses: 49.2%
  • Percentage of total payroll at small businesses: 44.5%
  • Small businesses per 10,000 people: 187.1
  • Total number of small businesses with employees: 21,061
  • Total employees at small businesses: 241,452
  • Total annual payroll at small businesses: $10,254,061,000

9. San Diego-Carlsbad, CA

San Diego, California
joseph-sohm / Shutterstock.com
  • Composite score: 59.87
  • Percentage of employees at small businesses: 49.6%
  • Percentage of total payroll at small businesses: 42.2%
  • Small businesses per 10,000 people: 215.0
  • Total number of small businesses with employees: 71,641
  • Total employees at small businesses: 652,088
  • Total annual payroll at small businesses: $34,234,372,000

8. New York-Newark-Jersey City, NY-NJ-PA

New York City coastline
IM_photo / Shutterstock.com
  • Composite score: 60.27
  • Percentage of employees at small businesses: 50.9%
  • Percentage of total payroll at small businesses: 39.8%
  • Small businesses per 10,000 people: 262.4
  • Total number of small businesses with employees: 501,830
  • Total employees at small businesses: 4,417,456
  • Total annual payroll at small businesses: $257,566,762,000

7. Grand Rapids-Wyoming, MI

Grand Rapids, Michigan
Suzanne Tucker / Shutterstock.com
  • Composite score: 60.37
  • Percentage of employees at small businesses: 50.2%
  • Percentage of total payroll at small businesses: 47.9%
  • Small businesses per 10,000 people: 179.5
  • Total number of small businesses with employees: 19,411
  • Total employees at small businesses: 257,668
  • Total annual payroll at small businesses: $11,888,215,000

6. Portland-Vancouver-Hillsboro, OR-WA

Portland, Oregon
photomatz / Shutterstock.com
  • Composite score: 61.03
  • Percentage of employees at small businesses: 51.0%
  • Percentage of total payroll at small businesses: 41.2%
  • Small businesses per 10,000 people: 226.7
  • Total number of small businesses with employees: 56,914
  • Total employees at small businesses: 552,890
  • Total annual payroll at small businesses: $26,756,996,000

5. Providence-Warwick, RI-MA

Providence, Rhode Island
Sean Pavone / Shutterstock.com
  • Composite score: 69.37
  • Percentage of employees at small businesses: 51.7%
  • Percentage of total payroll at small businesses: 47.2%
  • Small businesses per 10,000 people: 205.9
  • Total number of small businesses with employees: 33,432
  • Total employees at small businesses: 332,357
  • Total annual payroll at small businesses: $15,216,318,000

4. New Orleans-Metairie, LA

New Orleans, Louisiana at night
f11 photography / Shutterstock.com
  • Composite score: 71.17
  • Percentage of employees at small businesses: 53.7%
  • Percentage of total payroll at small businesses: 48.9%
  • Small businesses per 10,000 people: 189.4
  • Total number of small businesses with employees: 24,092
  • Total employees at small businesses: 269,529
  • Total annual payroll at small businesses: $12,389,281,000

3. Oklahoma City, OK

Oklahoma City
Henryk Sadura / Shutterstock.com
  • Composite score: 72.07
  • Percentage of employees at small businesses: 53.2%
  • Percentage of total payroll at small businesses: 47.9%
  • Small businesses per 10,000 people: 199.3
  • Total number of small businesses with employees: 28,402
  • Total employees at small businesses: 277,578
  • Total annual payroll at small businesses: $11,683,681,000

2. Los Angeles-Long Beach-Anaheim, CA

Los Angeles
holbox / Shutterstock.com
  • Composite score: 72.50
  • Percentage of employees at small businesses: 51.8%
  • Percentage of total payroll at small businesses: 45.9%
  • Small businesses per 10,000 people: 249.5
  • Total number of small businesses with employees: 327,093
  • Total employees at small businesses: 2,818,026
  • Total annual payroll at small businesses: $157,195,952,000

1. Miami-Fort Lauderdale-West Palm Beach, FL

Miami, Florida
littleny / Shutterstock.com
  • Composite score: 78.17
  • Percentage of employees at small businesses: 53.1%
  • Percentage of total payroll at small businesses: 47.6%
  • Small businesses per 10,000 people: 278.9
  • Total number of small businesses with employees: 172,172
  • Total employees at small businesses: 1,209,509
  • Total annual payroll at small businesses: $56,113,986,000

Methodology

Man analyzing data on a laptop
fizkes / Shutterstock.com

The data used in this analysis is from the U.S. Census Bureau’s Statistics of U.S. Businesses Tables. To determine the locations most dependent on small businesses, researchers calculated a composite score based on the following measures, weighted equally:

  • Percentage of employees at small businesses
  • Percentage of total payroll at small businesses
  • Small businesses per 10,000 people

In the event of a tie, the location with the greater percentage of employees at small businesses was ranked higher. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Note, the definition of a small business is an employer firm with fewer than 500 employees.

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