HONOLULU (KHON2) — New data shows the odds are stacked against small businesses in Hawaiʻi.
When it comes to starting a business in the United States, not all cities are created equal. A new study of the Best Large Cities to Start a Business looked at 100 cities using 19 data points that included business environment, access to resources and business costs.
Honolulu came in at No. 98 out of 100. That’s a tough spot for the capital of paradise.
KHON2.com decided to dig through the data to find the top things to know about Honolulu’s low ranking and what that really means for future entrepreneurs in the islands.
1. Only two cities ranked lower than Honolulu
Out of the 100 largest U.S. cities studied, Honolulu landed near the very bottom at No. 98. Only San Jose, California (No. 99), and Washington, D.C. (No. 100), scored lower overall. That places Honolulu in the bottom 3% nationally when it comes to startup conditions.
This isn’t just a bad ranking. It’s a sign that there are systemic obstacles for new businesses here.
If you’re dreaming of opening a café, launching a tech startup or creating a local clothing brand, it means you’ll likely face more challenges in Honolulu than almost anywhere else in the country.
2. Honolulu’s business costs are amongst the worst in the U.S.
In the Business Costs category, Honolulu ranked No. 99 out of 100. This is obviously troubling but not surprising. Hawaiʻi consistently ranks amongst the most expensive states in the nation for housing, goods and service; and that reality carries over into the costs of running a business.
Commercial rent in Honolulu is high and operating in an island economy comes with built-in shipping and logistics fees that mainland cities don’t have to deal with.
3. Access to resources is also a big problem
Starting a business takes more than a great idea. It requires people, funding and support systems. In Access to Resources, Honolulu ranked No. 75. That puts the city in the bottom quarter nationwide.
This includes metrics like:
- Availability of small-business loans.
- Number of venture capital investors.
- The percentage of college-educated residents.
- Growth of the working-age population.
Honolulu has a strong cultural and community spirit; but when it comes to business infrastructure — like access to capital and a large, skilled workforce — the numbers show there’s a serious shortage.
4. Business environment? Not great here either
Even in the Business Environment category, Honolulu struggled, ranking No. 94 out of 100. This category includes how many startups already exist, how quickly they grow, and how long they survive.
Honolulu’s low score here may reflect the high rate of business closures, the slow growth of small businesses, and limited industry diversity. For an economy that depends heavily on tourism and government jobs, there are fewer opportunities for entrepreneurs in tech, finance, or manufacturing compared to other cities.
5. It’s not all bad: Cultural strength can’t be measured by metrics
While the numbers paint a challenging picture, there’s a bigger story behind Honolulu’s ranking. Hawaiʻi has always done things a little differently. Local entrepreneurs often focus on community, sustainability and cultural integrity. Things that are not easily captured by a national business study.
The aloha spirit, resilience of kamaʻāina and innovation rooted in ʻike kūpuna (ancestral knowledge) are not measured by profit margins alone. Honolulu’s ranking doesn’t mean businesses can’t succeed here. It means they succeed differently, often with more grit and purpose.
6. The bottom line: Know what you’re up against
Honolulu’s ranking at No. 98 out of 100 is a wake-up call. Starting a business in this city comes with unique and serious challenges. High costs, limited access to resources and a tough environment for growth are part of the reality here.
But if you understand the risks and are ready to lean into the strengths of Hawaiʻi — i.e. our people, our values and our community — you may still find your place in the local economy.
You can click here to read the full report.
Just know this: the numbers say it’s hard, but they don’t say it’s impossible.