Hot Cities 2006 Whether you're looking to expand, relocate or simply stay put, our 12th annual Hot Cities report will give you the lowdown on the nation's most dynamic cities for entrepreneurs.

Phoenix boasts some of the hottest temperatures around, but that's not all--it's also a hotbed of entrepreneurial activity. For the second year running, Phoenix has captured the top spot in Entrepreneur and NPRC's Annual Entrepreneurial Hot Cities rankings of the nation's best places to start and grow a business.

In the rest of the West, outside high-tech powerhouse San Diego, the high-cost Golden State is losing a bit of its luster these days. But an influx of house-rich California migrants has boosted the entrepreneurial energy level in surrounding states and cities, including top-ranked Phoenix.

Overall, Southern locales really stand out this year. In fact, seven of the top 10 states are in the South, according to data from the National Policy Research Council, a Washington, DC, think tank that calculated the Hot Cities rankings with Entrepreneur. With affordable home prices and lower-cost labor, many large and small Southern cities are drawing entrepreneurs. The South also bounced back from the downturn of 2001 and 2002 faster than other parts of the country--thanks to well-diversified economies that didn't rely too much on the high-tech sector.