To determine the most business-friendly small markets in the U.S., WalletHub compared more than 1,300 cities with fewer than 100,000 residents across 18 key metrics. The data set ranges from small business growth rates and the accessibility of financing to investor access and labor costs.
| Top 20 Small Cities to Start a Business | |
| 1. St. George, UT | 11. South Bradenton, FL |
| 2. Fort Myers, FL | 12. Lake Worth Beach, FL |
| 3. Washington, UT | 13. Post Falls, ID |
| 4. Bozeman, MT | 14. Midvale, UT |
| 5. Greenville, SC | 15. Palm Beach Gardens, FL |
| 6. Cedar City, UT | 16. Horizon West, FL |
| 7. Boca Raton, FL | 17. East Lake-Orient Park, FL |
| 8. Cheyenne, WY | 18. Salisbury, NC |
| 9. Ocala, FL | 19. Springville, UT |
| 10. Dover, DE | 20. Rapid City, SD |
Key Stats
- Bozeman, Montana, has the highest number of startups per 100,000 residents, which is 8.7 times higher than in Austin, Minnesota, the city with the lowest.
- Wellesley, Massachusetts, has the highest share of the population with at least a bachelor’s degree, which is 14.8 times higher than in Immokalee, Florida, the city with the lowest.
- Kentwood, Michigan, has the most affordable office spaces, which is 6.8 times lower than in Mountain View, California, the city with the least affordable.
- Isla Vista, California, has the lowest labor costs (median annual income), which is 9.6 times lower than in Los Altos, California, among the cities with the highest.
- West Odessa, Texas, has the longest work week, which is 1.8 times longer than in Isla Vista, California, the city with the shortest.
“The benefits of starting a business in a small city include lower overhead costs, stronger relationships with customers and the potential to become a big fish in a little pond. But there are drawbacks, too. Entrepreneurs who want to build a large professional network aren’t likely to make as many connections in a town with fewer residents. Other restrictions might include limited industry options, a less diverse customer base, and difficulty attracting and keeping top talent.”
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“St. George, UT, is the best small city to start a business, ranking among the top cities in the country for both startups per capita and growth in the number of small businesses (nearly 42% between 2017 and 2023). The city also has very cheap office space, costing around $10.73 per square foot, in contrast, the most expensive city charges nearly $62 per square foot. In addition, St. George has a very high annual job growth rate. All of these factors allow entrepreneurs to minimize costs while maximizing their chances of success.”
- Chip Lupo, WalletHub Analyst
Expert Commentary
What are the pros and cons of starting a business in a small city?
“Generally, it is easier to start a business in a small city because small cities are more welcoming to new businesses which may have a greater impact on the city's economy than would opening in a large city. Smaller cities often have offices dedicated to helping new businesses get started, walking them through the processing and aiding them in completing paperwork. There are generally fewer bureaucratic obstacles to opening a business and there are more networking possibilities and opportunities to integrate with other businesses through local organizations. Taxes are usually lower in smaller cities as well. Smaller cities, however, tend to have smaller markets and do not have the infrastructure in place that a larger city does. Smaller cities are often inconvenient in terms of distribution and transportation, which is one of the reasons they have stayed small. The local government may not have the tax revenue available to maintain city infrastructure that a larger community does.”
Scott Thorne, Ph.D. – Instructor, Southeast Missouri State University
“Starting a business in a small city gives you immediate visibility. You are not competing with dozens of similar brands, and customers notice you quickly. Costs are also lower, which matters early on. Small businesses already generate about 44 percent of US economic activity, and in smaller communities, they often carry even more weight. The limitation is scale. There are simply fewer customers and fewer resources. Growth tends to slow unless you expand beyond the local market. As one longtime small business owner put it, ‘In a small town, people know your name before they know your business.’”
Andrew Burnstine, Ph.D. – Associate Professor, Lynn University
What tips do you have for an entrepreneur starting a business in a small city?
“Network, network, network. Get involved with local organizations such as the Chamber of Commerce or Main Street organizations. Do your research before opening. Find out about the market, economic base and transportation availability.”
Scott Thorne, Ph.D. – Instructor, Southeast Missouri State University
“The smartest place to start is by paying attention to what is missing. In smaller cities, opportunity is often simple and practical. If people need it and cannot find it easily, there is your opening. It also requires discipline. Cash flow matters more than rapid growth, and relationships matter more than branding. Word of mouth still drives a large share of business in smaller communities. At the same time, technology has made starting easier than ever. About one-third of small businesses in the US now start from home, showing how low the barrier has become. There is a simple truth many founders discover quickly. ‘People do business with people they recognize, especially in smaller places.’”
Andrew Burnstine, Ph.D. – Associate Professor, Lynn University
What can local authorities do to encourage entrepreneurial activity in their small cities?
“Improve the infrastructure of the community by improving internet access. Providing grants and incentives to encourage businesses to move to the community. Reducing red tape and setting up an office which [focuses] on bringing new businesses to the community and helping them get established.”
Scott Thorne, Ph.D. – Instructor, Southeast Missouri State University
“The biggest factor is how easy it is to start. When permits are simple, costs are manageable, and support is visible, more people take the leap. Investments in broadband, walkable downtowns, and small-scale funding programs all make a difference. Main Street programs across the US have generated billions in local reinvestment, demonstrating the power of local support. Equally important is momentum. When people see businesses opening and succeeding, it creates confidence. ‘Entrepreneurship grows where people believe it is possible.’”
Andrew Burnstine, Ph.D. – Associate Professor, Lynn University
More From WalletHub
- Best Large Cities to Start a Business
- Best Business Credit Cards
- Best Bank Accounts for Small Businesses
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