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67. Honolulu
Population: 383,424
Pro: Easy access to Asian markets
Con: High cost of living

An ocean may separate Honolulu and the rest of the country, but free wireless Internet throughout much of the city, plus a time zone midway between New York and Asia, means that entrepreneurs here can be more connected than their mainland peers. Global-minded business owners can reach New York markets in the morning and Asian contacts in the afternoon, while the University of Hawaii supplies a well-educated workforce.

Tourism has long been a major industry, but finance, insurance, health care, and construction are also growing sectors. Tech businesses receive a boost from the city's tech-friendly tax structure (royalty income from the sale or licensing of intellectual property is exempt from both general excise and income taxes; and tax credits are awarded to firms that boost their research activity).

Hawaii Business Express assists entrepreneurs in working through red tape, and nonprofits such as HiBeam, a tech mentoring firm, also get start-ups off the ground. A little more than half of Honolulu County's private-sector businesses operate with four or fewer employees.

The cost of living is high - but so is the quality of life. Palm trees, sandy beaches, and other outdoor attractions convince many educated workers to stick around. -Peter McDougall

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NEXT: 68. Ventura, Calif.

Last updated July 02 2008: 11:16 AM ET
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