SmartAsset 2022 Study: Best Places for Asian American Entrepreneurs
Asian Americans make up just under 5% of the total adult population in the U.S., but own roughly 10% of all U.S. businesses. And as the Asian American population is expected to more than double from roughly 22 million in 2019 to over 46 million in 2060, many more Asian American entrepreneurs across the country will be seeking to make their mark. Keeping this in mind, SmartAsset analyzed data to identify and rank the best places for Asian American entrepreneurs in 2022.
To do this, we compared 52 of the largest metro areas across three categories and a total of nine underlying metrics. The three categories include prevalence of Asian-owned businesses, new business success and income & job security. For more information on our underlying metrics and how we put together our findings, read our Data and Methodology section below.
- California and Texas metro areas are most conducive for Asian American entrepreneur success. Seven of the top 10 metro areas are located in these two populous states including the No. 1 metro area, San Francisco-Oakland-Berkeley. All seven places cracked the top 20 metro areas in two of the three categories we considered: the prevalence of Asian-owned businesses and new business success.
- Despite moderate Asian-owned business growth nationally, some metro areas saw large upticks. Nationally, the number of Asian-owned businesses grew by 4.60% from 2017 to 2019. However, in 13 areas in our study, the number of Asian-owned businesses grew by more than 10% during the same time period.
1. San Francisco-Oakland-Berkeley, CA
The San Francisco-Oakland-Berkeley, California metro area ranks first for two categories: prevalence of Asian-owned businesses and new business success. There are roughly 28,400 Asian-owned businesses in the area (ranking third-best), meaning that just over one in four businesses in the area are Asian-owned (26.82%, to be exact). California is home to the highest startup survival rate (81.83%) and in San Francisco-Oakland-Berkeley, 30.62% of new businesses are Asian-owned.
2. Dallas-Fort Worth-Arlington, TX
Across the three categories we analyzed, Dallas-Fort Worth-Arlington, Texas ranks third-best for its prevalence of Asian-owned businesses and sixth-best for new business success. There are 19,031 Asian-owned businesses, which equates to 15.04% of all businesses in the area (ranking ninth-best). The number of Asian-owned businesses is 15.33% higher than two years previously, the 10th-best increase. In terms of new business success metrics, the Texas startup survival rate is 79.63% and almost 16% of new businesses in Dallas-Fort Worth-Arlington are Asian-owned.
3. Houston-The Woodlands-Sugar Land, TX
The second of three Texas metro areas in our top 10 is Houston-The Woodlands-Sugar Land. The metro area ranks second-best for its prevalence of Asian-owned businesses. There are almost 19,900 Asian-owned businesses in the area (ranking fifth-best), making up 17.89% of total businesses (ranking fourth-best). In addition, the number of Asian-owned businesses increased by 9.57% from 2017 to 2019 (ranking 14th-best).
Asian American entrepreneurs in Houston-The Woodlands-Sugar Land may also have additional savings to put towards their new business. The median Asian American household income is 15th-highest in our study, at $92,719.
4. Los Angeles-Long Beach-Anaheim, CA
Another California metro area in the top 10 is the Los Angeles-Long Beach-Anaheim. Like the No. 1 metro area, Los Angeles-Long Beach-Anaheim ranks particularly well for our first two categories, prevalence of Asian-owned businesses and new business success. There are roughly 75,800 Asian-owned businesses (ranking second-best), which is nearly one in four of total businesses in the area (ranking second-best). Additionally, Los Angeles-Long Beach-Anaheim has the second-highest percentage of new Asian-owned businesses compared to all new businesses (25.80%).
5. Washington-Arlington-Alexandria, DC-VA-MD-WV
Home to the nation’s capital, the Washington-Arlington-Alexandria metro area not only ranks fifth-best overall, but also fifth-best for two categories: prevalence of Asian-owned businesses along with income and job security. For new business success, this metro area ranks 18th-best.
In the Washington-Arlington-Alexandria metro area, there are a little over 20,000 Asian-owned businesses (ranking fourth-best). That accounts for 18.16% of all businesses (ranking third-best). Of exclusively new businesses, 19.08% are Asian-owned (ranking fifth-best).
6. San Diego-Chula Vista-Carlsbad, CA
In California’s San Diego-Chula Vista-Carlsbad metro area, there are nearly 8,800 Asian owned businesses (ranking 13th-best), which equates to 12.39% of all businesses in the area (ranking 13th-best). Moreover, the state of California ranks best for its start-up survival rate (81.83%) and in the area, 14.80% of new businesses are Asian-owned (ranking 11th-best).
7. Sacramento-Roseville-Folsom, CA
The Sacramento-Roseville-Folsom, California metro area ranks second-best for our new business success category and 12th-best for the prevalence of Asian-owned businesses. There are roughly 6,500 Asian-owned businesses in the area, making up 16.09% of all businesses. Also, 70.50% of Asian-owned businesses have annual sales exceeding $250,000 (ranking 11th-best).
8. Richmond, VA
Across the three categories, Richmond, Virginia performs best for our income and job security category. It has the 16th-highest median Asian American household income ($91,519) and the 14th-lowest February 2022 unemployment rate (3.2%). In terms of its business environment, 9.51% of businesses are Asian-owned (ranking 18th-best) and there was a 35.77% increase in the number of Asian-owned businesses from 2017 to 2019 (ranking second-best).
9. Atlanta-Sandy Springs-Alpharetta, GA
Atlanta-Sandy Springs-Alpharetta, Georgia ranks in the top 15 metro areas for all three categories: fourth-best for Asian American income and job security, 10th-best for its prevalence of Asian-owned businesses and 15th-best for new business success.
There are just over 15,000 Asian-owned businesses (ranking eighth-best) which makes up 13.27% of all businesses. In terms of revenue, 68.47% of Asian-owned businesses have annual sales exceeding $250,000 (ranking 17th-best). Of new businesses in Atlanta-Sandy Springs-Alpharetta, 16.78% are Asian-owned which ranks seventh-best for this metric.
10. Riverside-San Bernardino-Ontario, CA
Riverside-San Bernardino-Ontario, California rounds out our list of the best places for Asian American entrepreneurs. New business success for Asian Americans is high in the area, ranking third-best. Beyond California’s high start-up survival rate, more than 19% of new businesses in the area are Asian-owned (ranking sixth-highest). Additionally, Census data shows that 71.00% of Asian-owned businesses earned revenue exceeding $250,000 in 2019 (ranking ninth-best).
Data and Methodology
To find the best places for Asian American entrepreneurs, SmartAsset looked at the 100 largest metro areas in the U.S. Of those, 52 areas had complete data available, and we compared them across three categories, spanning nine individual metrics:
- Prevalence of Asian-owned businesses. We analyzed the number of Asian-owned businesses, two-year change in number of Asian-owned businesses and percentage of Asian-owned businesses. Data comes from the Census Bureau’s Annual Business Surveys and is for the years 2017 and 2019.
- New business success. This category includes the percentage of new businesses that are Asian-owned, start-up survival rate and percentage of Asian-owned businesses with sales exceeding $250,000. Data comes from the Census Bureau’s 2019 Annual Business Survey and the 2020 Kaufmann Indicators of Entrepreneurship report. To note, the metric start-up survival rate is reported at the state level.
- Income and job security. To create this score, we looked at the median Asian American household income, 2020 Asian American unemployment rate and February 2022 Asian American unemployment rate. Data comes from the Census Bureau’s 2020 5-year American Community Survey and the Bureau of Labor Statistics’ Local Area Unemployment Statistics.
First, we ranked each metro area in each metric, assigning an equal weight to all nine. Then we averaged the rankings across the three categories listed above.
For each category, the metro area with the highest average ranking received a score of 100. The metro area with the lowest average ranking received a score of 0. We compiled our final list by averaging category scores, giving a double weighting to the first two categories.
Finance Tips for Entrepreneurs
- Understand the tax implications. One of the more challenging aspects of self-employment is handling the associated taxes. Learn more about the taxes to expect, the deductions you could take and how to file them when the time comes.
- Hire an expert. Whether managing your own finances or the finances of your business, talking to a professional can help you meet your goals. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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