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New Jersey recently unveiled a $50 million fund geared at helping entrepreneurs get started. That’s just one aspect of New Jersey that makes it a good place to start a business.
The state has a vibrant small-business scene, highlighted by the investment from a group that includes Amazon.com. The accelerator fund will be based in Newark, at the headquarters of successful audiobook company Audible.
But business success also can be found in smaller cities and towns as NerdWallet discovered when looking for the best places to start a business in New Jersey.
Our findings weren’t a surprise for Jeffrey Robinson, a professor at Rutgers Business School in New Jersey, who says many small cities in the state have made a concerted push at revitalization.
“For the places that are not considered major urban centers, the strategy for business growth is to repopulate the Main Street areas,” said Robinson, who is also academic director of the school’s Center of Urban Entrepreneurship and Economic Development.
And the strategy in New Jersey has paid off.
Entrepreneurs looking to start a small business in New Jersey will find resources in NerdWallet's Small Business Guide. For financing, take a look at NerdWallet's comparison of small-business loans for a variety of needs.
Small cities lead the way. Eight of the 10 top cities on our list have a population under 25,000. The No. 1 place on the list, East Hanover, has less than 12,000 residents, which shows that small places in New Jersey have much to offer when it comes to starting and growing a business.
Solid revenue is a key to success. Solid sales are a key driver of business success in the places on our list. For example, 10 of the top 20 cities and towns were also among the places with the highest average annual revenue per business.
NerdWallet crunched the data for 231 places in New Jersey each with a population of 10,000 or more.
Our analysis is based on data from the U.S. Census Bureau's Survey of Business Owners that weighed factors such as average annual revenue per business and the number of businesses with paid employees. We also used data from the American Community Survey, which includes information on income, housing costs and unemployment rate.
Best places to start a business in New Jersey
1. East Hanover
With just 11,200 residents, East Hanover is one of the smaller communities in New Jersey. But the Morris County township is at No. 1 on our list of best places to start a business in the state. East Hanover has 1,500 businesses and is perhaps best known as the home of snacks and cookies manufacturing giant Nabisco. Businesses here recorded an average of nearly $9 million in annual revenue per business.
2. Red Bank
The Red Bank borough website features a quote from New Jersey Monthly Magazine: “Battered for years by stiff competition from malls and megastore shopping centers that have sprung up like dandelions, Red Bank hoped to use (its plan for a Special Improvement District) to foster a cleaner, more vital downtown with better recognition.” Now, Red Bank is home to dozens of restaurants, coffeehouses and the Count Basie Theatre, which the borough says, “attracts national and regional acts — everything from rock bands to dance companies.” Red Bank recorded an impressive $6.75 million in average annual revenue per business, the second best in the top 10.
The township of Hanover in Morris County is known for the Whippany Railway Museum, which opened in 1965 along with the Morris County Central Railroad, and offers “a nostalgic trip into railroading’s colorful past.” Hanover has a population of nearly 14,000, and recorded $4.86 million in average annual revenue per business.
The town of Secaucus in Hudson County is famous in New Jersey for its retail shops. The official New Jersey tourism site calls this community of about 17,000 residents an outlet and retail shopping mecca. Secaucus posted $5.54 million in average annual revenue per business, which is the third highest in the top 10.
Eatontown, which has a population of 12,500, is a Monmouth County borough with about 1,600 businesses that record $3.2 million in average annual revenue per business. It is a place that takes recreation and the health and fitness of its residents seriously. The town also encourages visitors get “Be Historically Fit” on a two-mile walk of the borough that combines exercise and education.
With a population of about 26,000, Paramus is the second-biggest community among the top 10 places. Paramus has transformed from its past of “celery farms and dirt roads” in the 1600s, to a “land of enormous malls and shopping centers that has made it one of the top retail ZIP codes in the U.S.,” according to the borough’s website. It is also known as the venue for The Barclays FedEx Cup, a major golf tournament. Businesses in the Bergen County borough posted nearly $3 million in total average annual revenue.
7. Florham Park
Florham Park, with a population of nearly 12,000, is the Morris County borough that’s known as the home of the New York Jets. Florham Park has about 1,800 businesses and recorded an average of $3.1 million in annual revenue per business.
Morristown is full of historic sites and was designated by the National Trust for Historic Preservation as one of its Dozen Distinctive Destinations, according to the town website. Morristown has a population of roughly 18,400 and is home to about 2,750 businesses. Businesses here posted an average of about $1.7 million in annual revenue per business.
The township of Moorestown, which has a population of about 21,000, exemplifies the role downtown development has played in making many New Jersey towns and cities great places to start a business. “Our Downtown Main Street” is highlighted on the Moorestown website, which calls it a step back to an earlier era but “current enough to ensure that the goods, services and restaurants provided are competitive to businesses outside of Moorestown.” Businesses see nearly $3.8 million in average annual revenue per business.
Hackensack won a brief mention in the 1978 movie “Superman” when it was identified as one of the targets of Lex Luthor’s sinister plot. Hackensack has a population of nearly 43,500, making the Bergen County city the largest among the top 10 places. Businesses in the city recorded $2 million in average annual revenue per business.
NerdWallet analyzed 231 places in New Jersey each with a population of 10,000 or more. We excluded places with less than 500 businesses, regardless of the population.
The overall score for each community was calculated using these criteria:
Business climate, 65% of the overall score, is based on three metrics from the U.S. Census Bureau’s Survey of Business Owners.
Average revenue of businesses is 20% of the score. A higher average contributed to a higher score.
Percentage of businesses with paid employees is 25% of the score. A higher percentage contributed to a higher score.
Businesses per 100 people is 20% of the score. A higher number contributed to a higher score.
Local economic health, 35% of the overall score, is based on three metrics from the U.S. Census Bureau’s American Community Survey.
Median annual income is 10% of the score. A higher median income contributed to a higher score.
Median annual housing costs are 10% of the score. Lower median costs contributed to a higher score.
Unemployment rate is 15% of the score. A lower rate contributed to a higher score.
For more related information, visit NerdWallet's resources on how to start a business.
Former NerdWallet staff writer Ben Pimentel contributed to this article.
Hackensack, New Jersey, image via iStock.