Small Town, Big Opportunity: Where Do Startups Fare Best?

small town business opportunities

When it comes to small business startups, location is a key component of success. When choosing which town might be best for your business, factors like economic health, annual income, unemployment, and cost of living should be considered.

As it turns out, major cities like New York and San Francisco are not high on the list for reasons like high taxes and strict regulations that can hinder growth. Interestingly, small businesses actually tend to perform best in small towns.

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Why a Small Town?

Whether it’s real estate or entrepreneurship, the mantra is still, “Location, location, location.” To figure out the ideal startup environment, an analysis by NerdWallet offers a comprehensive view of what works.

For this study, main criteria were taken into account, and the first was how successful businesses were in a given location – a figure based on factors like average revenue, number of employees, and number of businesses per capita.

The second set of conclusions came from analyzing the area’s overall economy. Aspects like median annual income, unemployment rates, and median housing costs all figured into the takeaway. Average earning and spending history — as shown in this infographic series — are also useful pieces of data.

The report concluded that smaller markets tend to be the best places for startups to thrive, noting that all of the top 10 best locations have populations under 1 million and that five of them are located away from the coasts, either in Texas or in the Midwest.

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As it turns out, businesses tend do well in unlikely places and there are many small town business opportunities.

Unique Benefits of Small Town Business Opportunities

There are a number of reasons why small town business opportunities are great for entrepreneurs. First, it’s easy to get a sense of the entrepreneurial climate in a smaller area. When considering where to launch your startup, it’s important that you know your competition. Depending on the area, you may be faced with a locale with an obvious lack of options for consumers. Or you might land in a community that already has a longstanding business presence. In either case, a small town presents an advantage.

For example, a community that has a longstanding, well-loved ice cream parlor may not take well to another dessert shop that offers the same options. But if you want to offer a healthier option and sell frozen yogurt with fruit toppings, you may find that locals are excited to try something new.

On the other hand, areas that have a lot of small companies in one concentrated place often have a healthy business presence that readily supports its local community. According to small business owner Nellie Akalp, this congregation of businesses can be described as “a school of little fish [that] team up and swim as one big fish to avoid being eaten.” Businesses help each other out by referring customers to other neighboring businesses or by collaborating on community events.

If you’re a savvy entrepreneur, you may have a lot to offer as well. Small town business owners can often benefit from the insights you may be able to provide, which also creates small town business opportunities for professional consulting services or training that can help them advance their own careers.

Great Small Town Business Ideas

The above-mentioned ideas are just a few that could appeal to residents of smaller areas. But not everyone can provide great professional consulting or high-quality frozen yogurt.

If you’re hankering to flex your entrepreneurial muscles and don’t know where to begin, consider a few of these inspirational small town business ideas for your startup.

Delivery Service

Not everyone can go to the store during business hours, and a lot of people prefer to stay home instead of going out to eat. Still, these people want to enjoy fresh produce from the supermarket and excellent meals from their favorite local restaurant.

Services like GrubHub/Seamless and Instacart have taken off in bigger cities, but small town residents often need products delivered too. This could be a great small town business opportunity to start a local delivery service.

Event Planning

The Bureau of Labor Statistics has predicted a growth of 44 percent in the planning industry, which covers events like business meetings and conventions. If you’re resourceful and detail-oriented, and you enjoy working with other local business owners, this could be a great small town startup idea.


Working parents with children who are too young for kindergarten face the same problem all across the country: where do we put our kids for the day?

Daycare centers are expensive, which is why many parents are turning to in-home nannies. Nervous parents often don’t want to solicit babysitters from untrustworthy websites, but a licensed and bonded in-home daycare company that offers an affordable and secure service could be a godsend.

Starting a business is a major life decision, but every town has its needs. Whatever your industry, you’re sure to find a location that fits your expertise – and it may be where you least expect it.

Main Street Image via Shutterstock 3 Comments ▼

Jayson DeMers Jayson DeMers is the founder & CEO of EmailAnalytics, a productivity tool tool that connects to your Gmail or G Suite account and visualizes your email activity -- or that of your employees.

3 Reactions
  1. Hi Jayson,
    Great post. I live in a small town and there are definitely opportunities for startups, particularly in the areas you suggest like professional consulting/business networking groups and so on. Funnily enough, I’ve often considered that a local delivery service would do well here. We’re in the commuter belt for a large city and people often don’t arrive back home until after the small shops have closed – and so they then use the supermarket as it’s open rather than because they want to. A local delivery service could help to ensure the high street shops can increase their profits – which benefits everyone.

  2. I think doing business in a small town is not a guarantee of success. It still depends on the type of business that you plan to run. Even if you are targeting a s mall town, if your product or service is not even relevant to their lifestyle to begin with, then you may fail.