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The Best 5 Cities in Connecticut to Start a Business, Ranked

Caroline Goldstein

Staff Writer at Fundera
Caroline is a small business and finance writer at Fundera. Before coming to Fundera, she received an MFA in Fiction from New York University. She loves finding creative ways to help entrepreneurs grow.

When you think of Connecticut, you might think of fall foliage, Gilmore Girls, big casinos, Mark Twain, Mystic Pizza, Yale University, country clubs, and commuters (and, if you’re Senator Chris Murphy, pizza to rival New York’s City’s). You might not think of Connecticut as a great state to start a small business—but you absolutely should. 

Other than its convenient proximity to major cities and lush green suburbs, Connecticut has a lot to offer potential entrepreneurs. At 3.4%, Connecticut’s total effective business tax rate is the lowest in the United States, but its highly skilled workforce is the third-most educated in the nation. Plus, Connecticut is famous (or infamous) for harboring some of the world’s most lucrative hedge funds and, relatedly, 16 billionaires as of 2018. That’s a lot of wealth in one tiny state (although it’s important to note that  income inequality in Connecticut is at an all-time high.)

Local business is incredibly important in Connecticut: Small businesses make up 97% of Connecticut’s total businesses, and employ almost half of the state’s private workforce. And Connecticut takes small-business promotion seriously, offering a range of state-specific small business financing programs and Connecticut tax incentives that encourage business investment.

What does all that boil down to? Connecticut is a promising state in which to start a small business—but where should you do it? Out of 169 towns and cities in the state, we found the five best cities in Connecticut to start a small business. Here are our rankings, our methodology for how we sorted through the data, and more on of why these five Connecticut cities are ideal for entrepreneurs looking to start a new venture.   

The Top 5 Cities In Connecticut to Start a Small Business

Based on our research, these are the top five cities in Connecticut to start a small business:

  1. Stamford
  2. Norwalk
  3. West Hartford
  4. Danbury
  5. Fairfield

Methodology: How We Got That Ranking

Our methodology consisted of data culled almost exclusively from the US Census and the Connecticut Department of Labor. We used additional data from AreaVibes, Sperling’s Best Places, Data USA, and reports from town resource centers.

Then, we weighed the following 10 metrics, which indicate the overall economic health of each town, their business climates, and their relative affordability. Next, we came up with a resulting Fundera score for each town—a city’s highest possible score was 5. We also considered qualitative data like access to small business resources, overall quality of life, and economic and commercial development initiatives in each town to come up with a more holistic definition of the “best.”

Here’s how we weighted the scores:

Median gross rent (5% of score)

  • The lower the rent, the more affordable it is to open and maintain a brick-and-mortar shop
  • Lower costs resulted in more points

Percentage of people with a bachelor’s degree or higher (5%)

Total number of firms (5%)

  • In our research, more firms in business meant a healthier overall business environment
  • More total firms resulted in more points

Unemployment rate (10%)

  • A town’s unemployment rate is a key indication of its overall economic prosperity
  • Towns with low unemployment rates compared to the state average received more points than towns with high unemployment rates

Median household income (10%)

  • On average, more money means more disposable income—and more to spend on small businesses
  • Towns with higher median incomes received more points than those with lower median incomes

Recent job growth (10%)

  • Higher job growth rates demonstrate a positive economic environment and a growing population of skilled workers
  • High job growth rates helped a town’s score

Overall cost of living, compared to the state average (10%)

  • The cost of rent is important in opening up a physical storefront, but small business owners need to factor in additional costs, too
  • More expensive towns received less points than affordable towns

Growth in median household income (15%)

  • Positive growth in median household income is an indication of a town’s overall economic growth, and the potentiality for greater disposable income
  • Towns with faster rates of median household income growth were awarded more points than their slower counterparts

Total retail sales and total retail sales per capita (15%)

  • The greater the total retail sales, the more opportunity for small businesses to receive a portion of that spending power
  • Greater amounts of total and per capita retail sales helped a town’s score

Projected job growth, compared to the national average (15%)

  • Projected job growth rates indicate a town’s positive economic momentum
  • Towns with higher future job growth rates received more points than towns with slower future job growth rates

Where to Start a Small Business in Connecticut

best-cities-in-ct-small-business

1. Stamford

Fundera Score: 3.45

Key metrics:

  • 16,194 firms (#1 on list)
  • 1.5% job growth rate (#1 on list)
  • 38.19% projected future growth rate (> 37.98% nat’l avg)
  • 5.3% population growth rate since 2010 (among state’s fastest growth rates)
  • 2.87% growth in median HHI

At 126,456 people, Stamford is the largest city on this list and, unsurprisingly, it’s one of the state’s major economic and commercial hubs. It’s just 40 miles north of New York City (and only one stop away on a MetroNorth express train). So, this coastal city is a popular suburb for Manhattan workers who want to distance themselves from the grind.

Stamford has long been home to some of the world’s biggest corporations, including nine Fortune 1000 companies. In particular, though, over the past year-plus Stamford has seen a “string of economic coups,” especially in gains in the corporate market. Henkel are opening their North American headquarters in Stamford, ITV America just signed a lease for a TV production studio, Greenwich-based hedge fund Tudor Investment plans to relocate to Stamford this year, and WWE, Conair, and RBS have headquarters here, too. This booming, large-scale corporate activity bolsters the city’s overall economy, and populates Stamford with employed folks with spending money to burn. In fact, Stamford’s median household income is $81,634, higher than the state average of $71,755.

Regardless of their size, companies are drawn to Stamford so they can take advantage of its proximity to New York, but bypass New York’s occasionally outrageous prices. Commercial real estate prices in Stamford range from $13-$15 per square foot to lease an industrial space, or $160 per square foot to purchase an industrial space, and costs to rent a retail space range from $20-$60 per square foot. In nearby Manhattan, on the other hand, ground-floor retail rents range from $124 to $3,324, depending on the neighborhood.

Despite its reputation as a nerve center for Connecticut’s big business, the City of Stamford’s resources for small business owners are robust. That includes a comprehensive guide to starting your business in Stamford, help with finding locations for your small business, information on registering your business, and a guide to financial advantages including available grants and funding options. Business owners can also benefit from Stamford’s tax incentive programs, which includes a program for businesses that develop and reuse rehabilitated industrial areas.

Photo by Shinya Suzuki/Flickr

2. Norwalk

Fundera Score: 3.25

Key metrics:

  • 11,380 firms (> comparably sized towns)
  • 1.48% job growth (among list’s highest)
  • 38.15% projected job growth rate (> nat’l avg, among list’s highest)
  • 5.08% growth in median HHI

Norwalk is a historic, coastal city with a growing commercial, retail, and restaurant opportunities. With a population of 88,438, Norwalk is among the biggest towns on this list. In a local survey, Norwalk residents listed local business, urban improvement, and culture among the features they liked most about living in Norwalk, and that’s reflected in the city’s efforts to build, promote, and sustain those features.

In particular, SoNo, the city’s vibrant South Norwalk downtown area, is an arts, nightlife, dining, shopping, and entertainment hub on the waterfront, which has undergone major redevelopments over the past few years. The town’s active Norwalk Arts Council is just one organization that promotes this economic center, organizing city-wide events like First Fridays, where visitors can explore and patronize its art galleries, restaurants, and shops. Norwalk chef Matt Storch became a Chopped Champion on one of the Food Network show’s most recent episodes—a possible indicator that Norwalk’s food scene isn’t just on the rise in the state.

On the local business end, the town instated a comprehensive economic development action plan a few years back. Included in the plan are efforts to “provide resources for start-ups, entrepreneurs and small businesses in Norwalk,” like free counseling programs, permit guidance and advocacy, information on funding, job-training programs, and quality-of-life initiatives to support local businesses and residents. Additionally, Fairfield County’s SCORE Chapter is headquartered in Norwalk.

Norwalk is small-business friendly, but its economy is boosted by big business, too. Major corporate headquarters in Norwalk include Pepperidge Farm, MetLife, Xerox, and GE Capital. Overall, the city’s efforts to promote local business pays off: Norwalk averages $1,718,982 in total retail sales, and $19,715 retail sales per capita, among the highest on this list.  

best-cities-in-ct-business

Photo by Allan Lim/Flickr

3. West Hartford

Fundera Score: 2.95

Key metrics:

  • $1,236 median gross rent (among list’s lowest)
  • 6.13% growth in median HHI (#1 on list)

Just west of the state capital, West Hartford is the only non-Fairfield County town on this list. At 3.1%, the unemployment rate here is among the state’s lowest, and far lower than the state average of 4.7%. West Hartford also boasts a highly educated labor force, with 61.7% of the population holding a bachelor’s degree or higher.

Overall, the cost of living in West Hartford is just 4% higher than the state average—far lower than cities of comparable sizes and demographics, which reach as much as 73% higher than the state average (that’s Greenwich, right on the border of New York State).

With a highly educated population, stores of disposable income, relative affordability, and an impressive roster of cultural and recreational activities (like the Mark Twain House and Museum, public parks, community theaters, farmers markets, and art galleries), West Hartford has all the makings of an ideal business environment. In a recent presentation, the city’s economic development officials showed that this affluent community’s commercial districts are indeed growing, with dozens of new small businesses—including restaurants (the city now has a total of 1,400 outdoor restaurant seats), cafes, retail, a new luxury boutique hotel, and other small firms—opening this year, or planning to open soon.

Small businesses at 485 New Park, for example—one of West Hartford’s independent retail enclaves—include a comic book store, a vintage shop, a bakery, a photography studio, a boutique fitness studio, a kitchen and bath designer, an IT solutions company, and a brewery, among others. Similar growth patterns abound across the town, with small businesses dominating many of its commercial areas.  

Big businesses are drawn to West Hartford, too. Recently, Saks Off 5th, Shake Shack, and REI opened in the town’s repurposed Corbin’s Corner, spurring a new wave of economic growth.

best-cities-in-ct-business

Photo by redisant/flickr

4. Danbury

Fundera Score: 2.75

Key metrics:

  • Population growth rate #1 in CT from 2015-2016 (0.9%), +5.1% since 2010
  • 4.1% unemployment rate (< 4.7% state avg, among list’s lowest)

With an overall cost of living score at only 5% higher than the state average, Danbury is among the most affordable towns in Fairfield County. Plus, Danbury is ideally located, with easy access to MetroNorth trains and major highways that get you to New York City in under two hours and Boston in under three.

Overall, Danbury has a positive business climate. The town is dedicated to revitalizing its commercial centers, drawing new business opportunities, and supporting both new and established businesses—and, recently, Danbury invested over $100 million in their Main Street shopping area.

Other small business resources in Danbury include an Office of Business Advocacy, which helps small business owners establish and expand their businesses and oversees economic development programs. CityCenter is an organization of property owners, sponsors, businesses, and more that contribute to projects to revitalize the downtown commercial area and support new and existing ventures. And shoppers will be coming: The Connecticut State Data Center estimates that 10,000 new residents will settle in Danbury by 2040.  

Despite its growth, Danbury remains affordable: Commercial rents in Danbury’s pedestrian-friendly City Center start at just $8 to $15 per square foot. But what really set Danbury apart is its huge number of retail sales. According to the most recent data from the US Census, Danbury averaged $2,283,324 in total retail sales—almost doubled that of Stamford, despite its much smaller population—which is the highest on this list.

best-cities-in-ct-business

Photo by lien/flickr

5. Fairfield

Fundera Score: 2.6

Key metrics

  • 62.3% of population have bachelor’s degree or higher (#1 on list)
  • 1.46% recent job growth rate (among list’s highest)
  • 3.8% unemployment rate (among state’s lowest)

Fairfield is situated right at the top of Connecticut’s “Gold Coast,” named for this region’s high concentration of wealth. No surprise, then, that Fairfield boasts the highest median household income on this list ($122,135). Overall, though, the cost of living in Fairfield is much lower than its pricier neighbors.

This New York City suburb is easily accessible to commuters, so it’s a draw for families, weekend warriors, and those with the budget for second homes. Fairfield also has a thriving downtown with shops, restaurants, live theater and outdoor concert venues, several arts centers, public libraries, museums, beaches, and marinas.

Fairfield is home to the Fortune 500 companies GE and Bigelow Tea, but it’s a college town, too, with Fairfield University and Sacred Heart University in the vicinity. Thanks in part to these stalwarts feeding its economy, and boosting its spending population, Fairfield is growing: Among other real estate projects, a new mixed-use development, planned to build 160 apartments and 22,000 square feet of ground-floor retail space, will break ground this year.

The town offers support and incentives to small business owners, too. Fairfield’s Micro-Enterprise Assistance Program offers entrepreneurs and small business owners with “training, technical assistance, and start-up capital needed to create and sustain viable and productive small businesses in Fairfield.” All new or existing small businesses that employ five or fewer employees and which operate in Fairfield are eligible to apply.

The town’s Office of Community & Economic Development also offers support to small business owners, both in establishing new businesses and in promoting and improving small businesses after opening. The office puts on Shop Local Events like sidewalk sales, Restaurant Week events, and seasonal shopping events, and workshops for small business owners. Additionally, Fairfield County SCORE Chapter has a location in Fairfield.

Starting a Small Business in Connecticut

As we mentioned earlier, there are 169 towns and cities in Connecticut, so this list the five best cities in Connecticut for starting a small business is by no means comprehensive. According to our methodology, however, Stamford, Norwalk, West Hartford, Danbury, and Fairfield all have particularly positive environments for starting your business and fostering its growth. 

It’s worth thinking about starting your small business in one of these Connecticut locales, especially if you’re looking to move from a pricier city. These cities’ prime locations allows commuters easy access to every major city along the northern East Coast, and New York City may be as close as a 40-minute train ride. That, plus Connecticut’s arguably better lifestyle—for one thing, Forbes ranked CT #5 for quality of life in the country—makes this small state attractive to city workers to raise their families, buy country homes, or move to entirely (and bring their spending power with them).

And, despite that extreme wealth and massive income gap, the overall cost of living and doing business in Connecticut is much lower than its neighboring New York City: Mean office rent is $40 per square foot in Connecticut, versus Manhattan’s average price of $73 per square foot. And the cost of housing in Connecticut is 65% lower than Manhattan.

So, consider starting your small business in one of these high-growth, resource-rich towns—and, who knows, you might eventually join that list of billionaire Nutmeggers. (Can’t hurt to dream.)

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Caroline Goldstein

Staff Writer at Fundera
Caroline is a small business and finance writer at Fundera. Before coming to Fundera, she received an MFA in Fiction from New York University. She loves finding creative ways to help entrepreneurs grow.

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