When Stephen Richards Jr. started his custom clothing company Richards Bespoke in 2016, he couldn't wait to leave Nashville. The plan was to move to Austin, Texas, which was the fastest-growing city in the U.S. at the time, attracting thousands of young professionals with its expanding job market, creative economy and vibrant culture.
His father advised against it.
"He said, 'That's a dumb idea. You're from here, and Nashville is already one of the hottest cities in the country,'" Richards said. "Looking back on it, I'm so glad I listened to him."
A decade later, Bespoke is still here and Nashville now ranks as the best city in the U.S. to grow a small business, according to an analysis from small business lender Clarify Capital.
Nashville landed
the No. 1 slot for having a combination of favorable factors like a 3% unemployment rate, 4.9% net job creation year-over-year and favorable tax incentives.
Clarify Capital analyzed the business environments in 56 major American cities by metrics like employment growth, net job creation, unemployment rates and company exit rates. Nashville didn't lead any individual category but performed consistently well across the board.
Financial services company Bluevine also rated Nashville a top place to start a business because of its relatively high business survival rate and low cost of doing business. Tennessee businesses have a 70.7% survival rate over the last 10 years.
"The data we’re seeing makes it clear that small business is flourishing in midsize cities across America," Bluevine CEO Eyal Lifshitz said in a statement.
The Nashville metro area occupies a middle ground between major markets like Los Angeles and New York and mid-size cities like Charleston and Des Moines. While continuing to draw Fortune 500 companies like Starbucks and Oracle, the region has also maintained a healthy small business environment, according to data from the Nashville Area Chamber of Commerce and Middle Tennessee State University.
Even as economic headwinds like global market instability, inflation, rising cost of goods and persistent recession fears impact businesses across the country, many Nashville entrepreneurs say business is still thriving. Business confidence is 27.8% higher among Middle Tennessee business owners than the national average, MTSU's Business Confidence Index Report for the second quarter of 2026 stated.
"We're going on five years of being able to acquire or start a new business every year here," coffee shop owner Luis Cortes said. "Nashville locals love to support local. That's given us a leg up, and it's been pretty consistent."
Nashville may be fertile ground for entrepreneurs, but success is far from guaranteed. Business owners still contend with rising labor costs, inflation, taxes and the constant pressure of generating enough revenue to pay the bills.
Property taxes, inflation weigh heavy on Nashville owners
Cortes moved to Nashville in 2009 and helped launch the first Chipotle restaurants in Tennessee. He stayed with the corporation for a decade before venturing off on his own. During a three-month span in late 2019 and early 2020, he met and married his wife Cyndi, and within the next year, they acquired their first business: Red Bicycle on Nolensville Pike.
The previous owner called it "low-performing," and the Corteses accepted the challenge.
They were in the shop every day building relationships with customers, refining recipes and experimenting with special menu items. By the end of 2022, annual revenue doubled. They have maintained a 7% growth rate each year since, turning around two more failing locations and planning a winter 2026 launch for their own brand Well Ground Cafe.
"Now, other economic factors have slowed down that kind of massive growth, but for a little while, we thought we might be the 'Restaurant: Impossible' couple," Cyndi Cortes said.
Cortes said the biggest challenges in recent years have come in the form of property tax hikes and rising costs of labor and goods.
"The cost of living is straining our employees, so we've had to go up on wages from where we first started by several dollars," she said. "That's hard for any small business to absorb, and then property taxes took a big jump."
Davidson County reappraises property values every three years. Amid Nashville's continued development, property values increased an average of 45% across Davidson County from 2022 to 2025, breaking the record set in 2017. The hike resulted in mass sticker shock across Nashville from homeowners to landlords and tenants in triple-net leases who must pay the difference.
"It doubled from previous years," Luis Cortes said. "There are some days where you really ask yourself: Does anybody want us here?"
Then there are others when he's received a franchise-and-excise tax refund or a small business grant, and he's sucked back into the thrill.
"There's so much time, dedication, resources and capital that goes into this," Cortes said. "And then you just pray."
What small businesses are growing in Nashville?
Despite challenges, Middle Tennessee business owners' sales outlooks for the next quarter are still strong, according to MTSU's Business Confidence Index Report. Daily Crunch CEO Laurel Orley said she watched Nashville's global profile rise over the last 12 years and expects Tennessee small businesses to continue rising along with it.
"I have seen this flywheel of the entrepreneur community just get bigger and bigger," Orley said. "For Nashville entrepreneurs, there's so much opportunity to grow, thrive and really feel like they belong in this community."
When she started her sprouted nuts snack brand in 2020, the consumer-packaged goods market was relatively small. Now, executives from major industry-leading companies are building a Nashville presence, from Poppi cofounder Stephen Ellsworth to Chomps Chief Operating Officer Elizabeth Carter. From Nashville, Orley has been able to raise more than $4 million in Series A funding and launch in Whole Foods and Sprouts nationwide.
"First, people were working remote here, but now, I feel like they're actually building their companies here," Orley said. "That's the shift I'm seeing."
While Orley looks to continue her company's expansion until Daily Crunch is a household snack, other Nashville businesses are happy to contain their growth to Music City.
Richards still runs his clothier out of the same space he bought in 2016 when Wedgewood-Houston was more industrial than designer. He recently bought the unit next door and launched womenswear brand, Shespoke, with cofounder Holland Downs.
"Once next door became available we hopped on it and built it from the ground up," Downs said. "As demand for our womenswear grew, we needed a separate space, something that was a little more feminine."
But that's the extent of expansion Richards and Downs want to undertake.
"Nashville's growing enough, and we're busy enough as it is," he said. "I'll never open up another location if it's going to lessen what we have here. We can travel around the world to do this, but we'll always be based in Nashville. I'm prideful in it."
Hadley Hitson covers business news for The Tennessean. She can be reached at hhitson@gannett.com. To support her work,subscribe to The Tennessean.
This article originally appeared on Nashville Tennessean: Nashville ranks No. 1 for small businesses despite rising costs. Here's why
