Entrepreneurship is woven into the fabric of Memphis, said Dexter Muller, SVP of community development with the Greater Memphis Chamber.

"Piggly Wiggly, the very first grocery chain in the country, started here, as did the first Holiday Inn," he said. "FedEx (FDX) and AutoZone (AZO) are also headquartered here."

These companies serve as an inspiration to aspiring entrepreneurs, said Muller. "People here have a tradition of working for themselves."

New business owners are also supported by various city initiatives, including several incubators and accelerators, many of which are focused on tech and medical devices.

The cost of starting a business is also relatively low. "You can move here from San Diego, buy a bigger home and still have money left over to invest in your startup," said Muller.

Although the city doesn't yet have a robust network of angel investors or venture capital funds, Muller said small business loans from community and regional banks more than make up for it.

"Many young people are also moving here because they find Memphis to be cool," he said.