Best Places to Start a Business in Washington

Small Business, Studies
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Best Places to Start a Business in Washington

Washington is a great place to start a business. Just take a look at Amazon, Microsoft, Starbucks and Costco, which all grew into national and international corporations in the Evergreen State.

Companies hoping to follow in the footsteps of those giants can benefit from the state’s educated and skilled workforce, not to mention funding opportunities from venture capital firms, which invested over $350 million in Washington startups in 2012.

To help entrepreneurs decide where to launch a new venture, NerdWallet crunched the data to find the best cities to start a business in Washington.

Entrepreneurs looking to start a small business in Washington 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.

NerdWallet’s analysis

NerdWallet analyzed 126 places in Washington, each with a population of at least 5,000. Cities with less than 500 businesses were excluded. We calculated the overall score for each location based on the city’s business climate and economic health using data from the U.S. Census Bureau.

To determine a community’s business climate, we looked at average revenue, percentage of businesses with paid employees and the number of businesses per 100 people. Most small businesses in the U.S. are sole proprietorships without paid employees.

To determine a community’s economic health, we looked at median annual income, median annual housing costs and the unemployment rate.

Best places to start a business in Washington

1. Redmond

Redmond’s 6,200 companies each see an average annual revenue of over $7.3 million, higher than any community on our list. That figure gets a boost from companies such as Microsoft, Nintendo of America and Data I/O, which are all headquartered in Redmond. The presence of those companies and the talent they attract also give a boost to smaller enterprises that complement the city’s tech sector or cater to those living and working in Redmond.

2. Woodinville

Wineries, breweries and fine dining options attract tourists and residents to Woodinville, a Seattle suburb just north of the tech-heavy Bellevue-Redmond area. Woodinville has about 11,000 residents, but its reputation as a destination helps businesses there together bring in nearly $5 billion in revenue annually. Almost 55% of the city’s businesses have paid employees, compared with an average of 30% among the cities analyzed in this study.

3. Gig Harbor

There are roughly 35 businesses for every 100 residents in Gig Harbor. That figure far outpaces other cities on this list, which have an average business-to-resident ratio of 1:10. Tourism helps sustain the level of enterprise in this quaint Puget Sound community. And the Gig Harbor Chamber of Commerce supports area business through networking events and training opportunities.

4. Fife

Businesses in this small city bring in big revenue, averaging over $4.2 million per business annually. Fife’s businesses benefit from its location — the Tacoma suburb is along Interstate 5 and major freight railways. The city is also next to the Port of Tacoma, which moves about 1.5 million containers annually. Businesses that build or expand in Fife can take advantage of several tax incentives, including help for manufacturers and food processors.

5. Issaquah

In 2000, Issaquah had less than 11,500 residents, but now the city, which is about 17 miles east of Seattle, is over 30,000 strong. And with a median annual income of over $82,000, residents have money to spend. Those factors have helped Issaquah amass nearly 3,000 businesses, which together see about $10 billion in annual revenue — this works out to an average of about $3.4 million per business each year. Issaquah’s growth doesn’t look like it’s slowing, either. The city plans to redevelop its 1,100-acre commercial core, which includes about 90% of the city’s commercially zoned land. Issaquah also hopes to add over 17,500 jobs by 2031.

6. Tukwila

Tukwila’s location can’t be beat. The city of nearly 20,000 is just south of Seattle, between Seattle-Tacoma International Airport and Boeing Field (King County International Airport) and intersected by interstates 5 and 405. Tukwila’s major employers include the Boeing Co., King County Metro and Costco. Although Boeing’s employee count has dropped from over 11,000 in 2004 to fewer than 8,000 employees in 2013, both King County Metro and Costco have expanded, adding over 500 workers between the two of them.

7. Chehalis

At about 7,300 residents, Chehalis is the smallest city in the top 10, and at roughly 85 miles south on Interstate 5, it’s also the farthest from Seattle. But that hasn’t stopped the city from attracting a number of businesses, including National Frozen Foods and the retail chain Fred Meyer, which has a distribution center in Chehalis. All told, companies in Chehalis average over $1.3 billion in annual revenue. And at least 52% of the city’s businesses have employees on the payroll, compared with an average of 30% among the cities included in this study.

8. Bellevue

Bellevue is home to the headquarters of Eddie Bauer, T-Mobile and Expedia, among other companies. Although Expedia is moving the company’s base to nearby Seattle, Bellevue still boasts thousands of businesses. And those companies bring in nearly $40 billion in annual revenue. Entrepreneurs starting out in Bellevue can find support and resources via the city’s chamber of commerce, which offers consulting services through the Bellevue Entrepreneur Center.

9. Burlington

This city, about 65 miles north of Seattle, along Interstate 5 and the Skagit River, has nearly 1,100 businesses, which collectively bring in almost $2 billion in annual revenue. Burlington’s median annual income of almost $37,000 is below average for the cities in this study. But affordable wages help make it easier for businesses to add employees: Over 45% of businesses in Burlington have employees on the payroll.

10. Poulsbo

Scandinavian charm and a picturesque waterfront location make Poulsbo a popular destination for tourists. That has helped this small city of about 9,000 people sustain nearly 1,500 businesses, including Sluys Poulsbo Bakery and Beatrice Marx Quilt Design. The Greater Poulsbo Chamber of Commerce helps support businesses with networking events and educational opportunities.

Looking for financing to start or grow your small business? Compare your options for small-business loans here:

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Best places to start a business in Washington

Scroll through the table below to see the data for all 126 places in Washington.

Rank City Population Number of businesses Average annual revenue per business Businesses with paid employees Businesses per 100 people Unemployment rate Score
1 Redmond 55,505 6,287 $7,351,911 35.85% 12.67 4.4% 64.22
2 Woodinville 11,089 1,796 $2,722,751 54.06% 16.95 4.0% 63.64
3 Gig Harbor 7,367 2,436 $603,800 36.74% 35.69 5.3% 56.30
4 Fife 9,226 1,055 $4,287,539 48.15% 14.72 7.4% 55.96
5 Issaquah 31,607 2,949 $3,359,984 39.44% 12.72 4.5% 54.06
6 Tukwila 19,366 2,575 $2,852,812 49.94% 14.99 7.3% 52.96
7 Chehalis 7,284 880 $1,483,090 52.73% 12.2 6.4% 52.28
8 Bellevue 129,209 16,166 $2,468,250 36.43% 13.32 4.9% 49.12
9 Burlington 8,419 1,094 $1,810,526 47.17% 12.85 6.7% 47.91
10 Poulsbo 9,310 1,464 $739,895 36.13% 18.4 4.3% 46.74
11 Tumwater 17,813 1,297 $1,443,044 40.32% 8.31 4.5% 45.58
12 Sequim 6,602 1,019 $547,437 42.59% 18.84 7.4% 45.35
13 Port Orchard 12,260 933 $567,150 42.66% 11.67 5.1% 45.29
14 Stanwood 6,349 899 $472,929 31.81% 17.96 3.3% 45.05
15 Longview 36,656 2,045 $1,702,806 48.07% 5.64 7.8% 44.21
16 Renton 93,601 6,090 $3,705,924 31.61% 10.22 6.2% 43.82
17 Moses Lake 20,757 1,696 $860,462 45.40% 9.35 7.2% 43.40
18 Snohomish 9,246 1,438 $652,286 35.88% 16.15 5.2% 43.33
19 Centralia 16,611 1,384 $718,913 50.72% 8.92 8.5% 43.20
20 Kirkland 75,835 8,021 $1,331,353 30.98% 17.04 5.2% 43.14
21 Sumner 9,506 979 $2,876,192 37.18% 10.26 8.8% 42.75
22 Kent 115,703 8,094 $2,733,398 34.45% 9.63 6.4% 42.44
23 Ellensburg 18,312 1,241 $611,479 41.58% 7.22 5.4% 42.26
24 Silverdale 19,775 1,773 $904,121 40.10% 11.67 6.3% 42.24
25 Everett 103,918 7,890 $3,636,085 33.52% 8.03 7.6% 42.01
26 Lynnwood 36,107 4,881 $941,463 35.63% 14.54 6.1% 41.98
27 Wenatchee 32,301 2,943 $1,053,820 35.98% 9.87 5.1% 41.78
28 Monroe 17,428 1,616 $618,265 38.74% 9.66 4.5% 41.59
29 Port Townsend 9,136 1,980 $207,030 31.21% 21.87 6.7% 41.47
30 Maltby 10,976 686 $1,454,897 38.05% 7.91 4.7% 41.23
31 Mercer Island 23,301 2,904 $824,118 24.14% 12.21 3.4% 40.98
32 Richland 49,933 3,347 $1,217,393 29.34% 7.41 4.1% 40.90
33 Aberdeen 16,683 1,401 $885,824 44.04% 8.7 8.4% 40.36
34 Seattle 624,681 73,997 $1,495,082 28.01% 12.46 5.0% 40.36
35 Clarkston 7,290 530 $1,084,347 39.43% 7.38 6.4% 40.23
36 Walnut Grove 10,704 510 $1,388,765 44.90% 5.82 7.2% 40.20
37 Lynden 12,334 1,299 $584,831 30.48% 11.22 4.2% 40.04
38 Bothell 34,220 4,474 $2,412,341 25.91% 13.96 6.2% 39.96
39 Edgewood 9,482 783 $285,598 38.57% 8.05 4.9% 39.91
40 Olympia 47,335 6,132 $892,472 32.22% 13.58 6.3% 39.87
41 Mukilteo 20,457 1,673 $1,001,419 34.97% 8.21 4.8% 39.86
42 Walla Walla 31,772 2,815 $726,438 33.68% 9.15 5.2% 39.66
43 Bainbridge Island 23,084 3,633 $347,952 25.49% 16.57 4.6% 39.46
44 Kennewick 74,969 5,277 $909,068 32.04% 8.06 4.7% 39.07
45 Spokane Valley 90,385 7,079 $1,349,502 35.17% 8.37 6.6% 39.06
46 East Wenatchee 13,293 976 $696,160 36.27% 7.97 5.8% 38.92
47 Shelton 9,830 873 $745,330 38.03% 9.59 7.1% 38.81
48 Puyallup 37,720 4,445 $1,062,885 34.20% 11.96 7.1% 38.69
49 Bremerton 38,614 2,450 $923,970 38.16% 7.01 6.4% 38.45
50 Ephrata 7,794 580 $444,278 32.24% 7.95 4.5% 38.35
51 Liberty Lake 7,774 793 $2,058,921 27.87% 11.97 7.1% 37.99
52 Yelm 7,086 776 $363,888 32.22% 14.52 6.0% 37.88
53 Bellingham 81,576 8,607 $848,397 33.40% 11.09 6.7% 37.75
54 Vashon 11,122 1,759 $156,305 22.85% 16.87 4.2% 37.71
55 Lakewood 58,762 3,528 $929,075 42.09% 6.17 8.4% 37.58
56 Kelso 11,878 754 $991,720 49.47% 6.29 11.4% 37.35
57 Mill Creek 18,439 1,772 $450,630 27.65% 10.49 4.3% 37.11
58 Sunnyside 15,940 912 $1,083,052 40.68% 6.12 7.9% 37.05
59 Clarkston Heights-Vineland 6,843 511 $253,006 21.72% 7.74 1.8% 36.76
60 Port Angeles 19,099 1,972 $556,128 31.95% 10.45 6.5% 36.63
61 Auburn 71,846 5,066 $2,028,303 30.69% 8.26 7.3% 36.45
62 Mount Vernon 32,059 2,708 $707,249 36.26% 8.81 6.9% 36.42
63 Yakima 92,082 5,741 $1,071,918 35.97% 6.83 7.2% 36.21
64 Burien 45,865 2,998 $711,543 32.19% 9.56 6.1% 36.07
65 Anacortes 15,879 1,658 $470,555 24.91% 10.03 3.8% 35.99
66 Edmonds 40,139 4,847 $384,624 23.99% 12.1 4.6% 35.74
67 Prosser 5,752 580 $653,266 39.48% 11.29 10.7% 35.63
68 Spokane 209,478 18,014 $1,006,497 30.05% 8.98 6.8% 35.33
69 Mountlake Terrace 20,157 1,536 $1,904,275 27.02% 7.66 6.0% 35.09
70 Lacey 43,316 2,598 $1,093,631 31.95% 6.82 6.1% 34.96
71 Sedro-Woolley 10,585 722 $1,034,281 36.57% 6.78 8.1% 34.86
72 Summit 7,953 591 $417,154 22.84% 7.46 2.9% 34.85
73 Duvall 6,962 554 $292,166 35.20% 9.23 6.3% 34.62
74 Lake Morton-Berrydale 9,847 618 $180,861 31.07% 6.44 4.3% 34.53
75 Arlington 18,139 1,890 $1,104,557 28.20% 11.45 6.7% 34.52
76 Tacoma 200,890 14,351 $1,286,502 32.45% 7.32 7.5% 34.45
77 Pullman 30,388 1,573 $430,240 24.09% 5.9 4.0% 34.17
78 Union Hill-Novelty Hill 22,488 1,448 $209,508 22.86% 8.36 3.8% 33.69
79 Cottage Lake 23,913 2,100 $223,476 25.00% 8.66 3.5% 33.38
80 Federal Way 90,720 6,419 $788,511 30.53% 7.58 6.7% 33.18
81 Oak Harbor 22,178 1,510 $359,064 32.72% 6.69 6.1% 33.00
82 Ferndale 11,766 1,005 $1,080,667 28.46% 9.19 7.5% 32.87
83 Orchards 21,138 1,082 $1,074,886 35.12% 5.63 8.2% 32.65
84 Vancouver 164,111 13,639 $1,106,892 29.19% 8.48 8.0% 32.49
85 Sammamish 47,766 3,930 $250,449 17.86% 9.43 3.2% 31.97
86 Pasco 63,560 3,150 $752,902 28.83% 6.01 6.2% 31.95
87 Kenmore 20,935 1,966 $366,779 22.84% 9.7 5.3% 31.94
88 Marysville 61,274 2,719 $600,990 32.03% 8.01 7.3% 31.87
89 Snoqualmie 11,087 1,018 $589,620 18.86% 13.52 4.4% 31.76
90 Otis Orchards-East Farms 6,177 521 $216,973 24.38% 8.38 4.3% 31.74
91 Milton 7,180 735 $367,325 23.95% 12.32 6.7% 31.61
92 College Place 8,828 699 $281,087 18.03% 7.82 3.5% 31.48
93 Bonney Lake 17,688 1,270 $419,882 27.72% 7.89 5.2% 31.14
94 Lake Stevens 28,710 1,305 $444,014 27.05% 9.4 6.3% 30.95
95 Camano 15,456 1,480 $128,214 21.01% 9.47 5.1% 30.78
96 Normandy Park 6,432 1,072 $114,616 12.31% 17.08 5.4% 30.44
97 Salmon Creek 21,235 1,557 $641,722 32.11% 7.54 9.4% 30.38
98 Camas 19,998 1,712 $1,138,084 18.87% 9.83 5.6% 30.16
99 Newcastle 10,599 896 $332,184 17.52% 9.23 4.6% 30.02
100 Mount Vista 7,640 522 $461,193 16.09% 6.69 3.8% 29.81
101 Shoreline 53,791 4,729 $372,804 23.64% 9.03 6.4% 29.43
102 Covington 18,008 1,111 $372,851 24.39% 6.22 4.4% 29.36
103 SeaTac 27,303 1,936 $750,518 25.31% 7.5 7.3% 29.35
104 Minnehaha 8,680 592 $351,524 29.73% 6.01 7.5% 29.03
105 Hobart 6,820 582 $254,921 23.54% 7.77 5.1% 28.94
106 Lake Forest Park 12,811 1,379 $203,465 15.01% 10.98 4.9% 28.80
107 Grandview 10,893 501 $837,872 33.13% 5.43 9.9% 28.65
108 Martha Lake 15,831 1,084 $639,371 28.51% 6.29 7.7% 28.52
109 Fircrest 6,547 725 $227,197 15.59% 11.73 4.9% 28.46
110 Parkland 36,696 1,168 $1,151,604 25.77% 4.4 7.7% 28.43
111 Spanaway 28,678 1,381 $300,106 25.42% 4.92 6.0% 27.72
112 East Renton Highlands 12,640 993 $118,901 17.52% 8.02 5.0% 26.75
113 Maple Valley 23,449 1,311 $353,037 21.13% 6.6 5.7% 26.66
114 University Place 31,507 2,202 $335,184 21.75% 7.25 8.1% 25.99
115 Selah 7,243 604 $948,560 25.17% 8.65 10.5% 25.85
116 Des Moines 30,139 2,316 $280,480 18.35% 7.99 5.9% 25.81
117 Battle Ground 17,797 1,342 $414,709 21.68% 8.09 7.9% 25.54
118 White Center 14,848 1,379 $219,672 22.34% 7.31 7.9% 24.64
119 Alderwood Manor 8,150 1,361 $155,663 17.12% 8.38 5.6% 24.56
120 Felida 7,325 684 $96,224 10.09% 8.77 4.1% 24.20
121 Five Corners 18,867 880 $511,207 25.34% 5.2 8.8% 24.11
122 South Hill 53,133 2,747 $417,406 21.84% 5.66 7.4% 23.95
123 Lakeland South 13,451 710 $119,938 15.49% 6.25 6.8% 20.82
124 Elk Plain 14,410 533 $241,647 25.33% 3.19 9.8% 20.43
125 Washougal 14,319 1,162 $533,143 17.13% 9.06 10.8% 19.92
126 Lakeland North 13,963 1,209 $114,435 9.26% 9.83 6.8% 19.41

Methodology

NerdWallet analyzed 126 places in Washington with populations of at least 5,000. Cities with less than 500 businesses were excluded. We calculated the overall score for each location using the following 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 related information, see NerdWallet’s resources on how to start a business. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

NerdWallet staff writer Kelsey Sheehy contributed to this article.


Bellevue, Washington, image via iStock.

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