How to Start a Big-Time Business in a Small Town

How to Start a Big-Time Business in a Small Town

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Woman promoting newly opened coffee shop

By Rieva Lesonsky

Do you dream of quitting your corporate job in the big city and moving to a small town to start, say, a charming antiques store, a winery, or an artisanal cheese shop? You’re not alone: For many people who want to become entrepreneurs, starting a business in a small town has a lot of appeal.

If you’re ready to turn your small-town startup fantasy into reality, you’ll want to check out WalletHub’s new list of the best small cities to start a business. The study shows that starting a business in a small town has both pros and cons. For example, the study authors note that small-town entrepreneurs benefit from a lower cost of living and less competition, but may suffer from the limited customer and employee base.

Survey says …

The study compared more than 1,200 cities with populations of between 25,000 and 100,000 people, evaluating them based on three factors:

  1. Business environment (including average growth in number of small businesses, average revenue per business, and number of startups per capita)
  2. Access to resources (including financing, investors, and employees)
  3. Business costs (including cost-of-living, corporate taxes, office space, and labor costs)

Overall, Holland, Michigan, topped the list, followed by Carbondale, Illinois; Springville, Utah; East Chicago, Indiana; and Jefferson City, Missouri, rounding out the top five.

Does that mean you should pack your bags and move to the Midwest? Not necessarily. Cities with a high overall score sometimes score low in one of the three areas. For example, while Holland, Michigan, has a favorable business environment, it did not rank as well in terms of access to resources.

Is a small town right for you?

When deciding where to launch your business, the most important factors to consider are those that matter most to you. What does your startup need to succeed? For example, if you want to start a business that will rely on people physically coming into your location, such as a restaurant, the cost of renting space and the availability of a sufficient customer base will be big factors in your decision.

On the other hand, if you’re starting a technology business that will serve clients all over the country remotely, a bigger concern would be the availability of skilled employees you can hire as your business grows.

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Here are some questions to ask yourself when considering a small-town location:

  • How much assistance does the town offer small business owners? Are there tax or other financial incentives to start businesses or locate in the area? What type of economic development, networking and support organizations are available for business owners?
  • How close is the town to larger cities and/or transportation hubs? If your small town is within driving distance of a larger city, you might enjoy the best of both worlds: a peaceful, lower-cost lifestyle, with relatively easy access to customers, employees, and transportation for products or business travel.
  • What does the local labor pool look like? How well do their skills match your needs? For instance, starting a manufacturing business in a town where large manufacturers have closed can give you a pool of experienced employees to draw from.
  • Is there a college or university nearby that can provide educated, entry-level employees? If you’ll need employees with specialized skills, consider forming a partnership with local colleges and universities to develop a pipeline of workers.
  • How much money will your startup require? If access to financing is a big concern for you or you need to raise a substantial amount of capital, either obtain financing before you move or investigate how easy it is to access capital in the small town.

One final caution: Don’t assume that just because you are launching your business in a small town, you can do the bare minimum and still succeed. Your business will be more visible in a small town than in a larger community, so any mistakes you make will be magnified, and can be harder to correct. What’s more, just because you currently own the only Mexican restaurant in town doesn’t mean that will last.

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