With National Small Business Week approaching in the U.S. (from May 4th) coupled with many employers continuing to struggle to hire new workers, the personal-finance website WalletHub has examined where the most appropriate places in the U.S. are to establish an enterprise.
The company has released its report on 2025’s Best Small Cities to Start a Business. 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 ranged from small business growth rates and accessibility of financing to investor access and labor costs.
The top ten cities were found to be:
- St. George, UT
- Fort Myers, FL
- Cedar City, UT
- Washington, UT
- Bozeman, MT
- Holland, MI
- Bend, OR
- Redmond, OR
- Greenville, SC
- LaGrange, GA
Bubbling below this upper set are:
- Post Falls, ID
- Midvale, UT
- Aberdeen, SD
- Rapid City, SD
- Carrollton, GA
- Helena, MT
- Caldwell, ID
- Nampa, ID
- South Bradenton, FL
- Boca Raton, FL
With the larger data set there are some interesting variance, highlighting major differences across the country. For example, from the top ten, Bozeman, Montana, has the highest number of startups per 100,000 residents, which is 14.7 times higher than in Salisbury, Maryland, the city with the lowest.
In terms of educational attainment, Los Altos, California, has the highest share of the population with at least a bachelor’s degree, which is 15.6 times higher than in Coachella, California, the city with the lowest.
Whereas, on the basis of rental prices the study established that 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.
Another important cost is wages. Here Isla Vista, California, has the lowest labor costs (median annual income), which is 10.2 times lower than in Los Altos, California, among the cities with the highest. Another employee centric measure is the time spent at work. For this, West Odessa, Texas, has the longest work week, which is 1.8 times longer than in Isla Vista, California, the city with the shortest.
Looking at these patterns further, Thomas S. Lyons, PhD – Professor; Executive Director, Center for Innovation and Entrepreneurship, University of Tennessee at Chattanooga says there are advantages to running a business in a small city:
“It is easier to engage with customers and learn their needs and wants so that your offering(s) resonates with those needs and desires. In marketing, this is called the ‘product-market fit.’ Along the same line, it is easier to establish your brand more quickly through social capital building. The ability to have closer relationships with your customers makes establishing trust easier. There is typically less competition. If you can establish your moat (what makes your offering unique), you can position your business to capture a larger share of the local market.”
On the other hand, businesses need to be mindful of the pitfalls. On the debit side, Lyons cautions: “The available market is typically smaller than it would be in a larger city. There tends to be less support for small businesses than in larger cities (i.e., professional services, financing, business development assistance, technical support, etc.). The insularity of small communities (everyone knows everyone else) can provide comfort and security, but it can often stifle creativity and innovation.”
Lyons continues: “Much creativity in business comes from the serendipitous interactions among people that are less common in smaller populations. The kind of diversity of perspective that creates essential creative tensions is less common in smaller places.”
