Looking to start a business in Tennessee? With a growing population, vibrant cities, and a supportive business climate, Tennessee is a great place to launch a business.
A growing number of entrepreneurs are setting up shop in the Volunteer State, with an average of 36,000 jobs added each quarter, according to the U.S. Small Business Administration. In all, the small businesses in the state employ 1.1 million people, which is about 42% of the state’s workforce, according to the SBA.
To help entrepreneurs form Tennessee LLCs, we’ll explore what kind of business to set up and look at 10 different businesses that are thriving in the state.
Why These Businesses Made Our List
When it comes to the best businesses to start in Tennessee, we did our homework (so you don’t have to). In addition to looking through all of the trends in the state’s economy, the ZenBusiness team went even further by diving into the most recent national census data to sniff out business types that are currently underserved in Tennessee.
In doing so, we’ve found a list of glaring business opportunities that are perfect for soon-to-be entrepreneurs like you. Go forth, get inspired, and let us know if we can help you get started.
Economic markers show a strong state economy. Employment is rising, the number of employers is growing, and the state’s skilled labor force is climbing in population, according to the Tennessee Department of Labor and Workforce Development. The small business job growth rate is up almost 12% as well, per Tennessee Economic and Community Development.
Looking more closely at the state statistics and geographics, middle Tennessee is seeing the quickest growth. In this area, employment is up by almost 3%. It includes the state capital of Nashville and its surrounding 38 counties, says the Tennessee Department of Labor and Workforce Development.
In addition to a skilled workforce, Tennessee has metropolitan areas with some of the most successful entrepreneurs.
What kinds of businesses work best in Tennessee?
The top three industries in the state of Tennessee are health care, accomodation and food services, and retail trade. The small business health care field provides roughly 155,000 jobs. Accommodation and food services supply another 148,000 jobs, and retail trade lends another 104,000 jobs, according to the SBA.
Of course, the entertainment field is also big in Tennessee, as it’s known as the Capital of Country Music. In Nashville alone, the music scene is responsible for a $10 billion economic impact and some 56,000 local jobs, according to Livability. There is also a strong farming presence with many jobs in the Tennessee Agriculture Industry.
8 Best Businesses to Start in Tennessee
Ready to dig into our list of the best companies to start in Tennessee? Take a look at the Volunteer State’s top 10 startup business options, according to our research.
1. Start a Real Estate Business
With a thriving housing market in the state, a real estate business in Tennessee is certainly worth considering. The number of homes sold in larger cities like Nashville are on the rise. And even in the face of the COVID-19 pandemic, which flattened home sales in many cities across the nation, Nashville’s home sales climbed by 6% in the last six months, according to the NashvillePost. Plus, sales across the state appear in recovery mode.
Since the industry is already getting back on track, a realtor could set up shop just about anywhere. With a median home price of $184,000, realtors can make a good commission on each home.
What kind of income and expenses can you expect in this field? Income in the real estate industry will fluctuate, but research shows it steadily climbs each year. Your first year could average about $20,000, according to RealEstateExpress.com, but by year four income is above $62,000.
As for expenses, research suggests that first-year agents typically spend about $6,300 in related business expenses. That doesn’t include marketing costs, licensing, continued education, or income taxes. Tennessee state fees may also apply. Expenses can vary, of course, and some of them are optional. For example, a marketing budget can be as small as a few hundred dollars per year, or it can go up to the thousands. Some people may decide to outsource marketing to a social media marketer, for instance, which is an additional cost.
2. Become a Home Improvement Contractor
Home improvement contractors can fare well in Tennessee since the state’s housing stock is fairly old. In Knoxville, Memphis, and Chattanooga, 30-37% percent of the homes were built before 1960. In Nashville, about 24% of homes are considered “early builds” that are at least 60 years old.
Older homes are just part of the equation, because the state population is aging, too. Over the next 20 years, the senior population will increase by 30%. Seniors tend to hire home improvement projects out, which adds to the demand for home improvement contractors.
3. Open a Law Firm
Starting a law firm in Tennessee could be a great opportunity to help people while making a good living. Research shows that lawyers in Tennessee make just under six figures at $99,600 a year. Even the starting salary in the state hovers around $55,000, so it’s a profitable career for the younger generation to consider as well.
The state also has several initiatives to encourage pro bono work. The Tennessee Supreme Court Access to Justice Commission released a survey that shows 50% of all law firms in the state provide their services for free to a handful of clients; proof that the profession can be worthwhile and profitable.
4. Open a Restaurant
Tourism in Tennessee outpaces the nation with travelers spending $22 billion in the state in 2018. Travelers spend an estimated $60 million per day, a portion of which goes to restaurants like Loveless Cafe. This 70-year-old restaurant started as a simple truck stop and still serves its staple biscuits and gravy to hungry visitors to this day.
While Nashville might draw the biggest crowds with its rich country-western history and iconic venues like the Grand Ole Opry, the mountains in Pigeon Forge, and the blues-filled Beale Street in Memphis attract millions as well. A restaurant located in one of the state’s well-traveled cities could provide an excellent opportunity for the right restaurateur.
5. Become a Consultant
A consultant’s job is to offer advice and expertise to help a business grow and thrive. On the national level, consulting is a growing industry and has been since 2012. On the state level, there are more than 500,000 small businesses in Tennessee, many of which could benefit from a consultant’s help.
Most consultants specialize in a certain area like strategy, operations, finances, human resources, or risk and compliance. For instance, Nashville-based Southwestern Consulting focuses on sales growth, while CAPSTONE Business Advisors in Brentwood helps executives buy and sell companies.
Operations consulting or financial consulting as two growing sectors.
6. Open a Beauty Salon
Employment for hair stylists and cosmetologists is expected to grow 7% over the next few years, which is faster than the national average for all occupations. Employment rates provide a good benchmark of what’s to come, but the state’s tourism rates are also a good sign.
What does tourism have to do with a beauty salon? Travelers like to try new salons while they’re on-the-go, especially salons that have a good reputation, a known stylist, or offer unique services. The Lucy Pop Salon in Nashville is known for its hair extensions, for example.
7. Start an IT Firm
The tech industry is growing in Tennessee, with several large tech firms raising serious startup cash. A cognitive computing company, Digital Reasoning, raised $106 million, and an audit software company, Confirmation.com, raised $60 million. With more investors looking for opportunities, now could be a great time to start an IT firm in the state.
What kind of IT business should you start? Cybersecurity, AI, and development are the fastest growing sectors. If you can tailor these service areas to Tennessee’s staple industries like music and tourism, your IT firm could be in high demand.
8. Open a Landscaping Business
Forty percent of Americans with a yard hire a landscaper to maintain it. When you combine the demand for lawn care services with its low startup costs and minimal barriers to entry, this kind of company becomes a viable option as a Tennessee business.
While many landscaping firms maintain residential properties there are others that specialize in retail lots or commercial buildings, or both. Companies like Prestigious Landscaping Services in Burn, Tenn., for example, cater to residential and commercial clients.
Others specialize in niche areas like golf courses, gardens, or exotic plant maintenance.
Starting a Tennessee business is an exciting endeavor and many different businesses are viable in the state. We’ve outlined 8 different businesses that fit well in Tennessee, but no matter what business you select, it’s important to consider startup costs, time commitments, pricing, location, and the space needed to conduct business before launching any company.