The Best Small Cities to Start a Small Business

See full list of cities here

When it comes to the world of startups and small businesses, the US reigns supreme. Between Silicon Valley and dozens of up-and-coming tech scenes sprawled across the likes of Denver, Austin, and Boston, America consistently dominates the startup space—in company count, zeal, and success.  

But major cities can’t take all the credit—self-made millionaires and well-established brands are cropping up in small cities too, thanks to small businesses. Large cities certainly have larger networks and more talent—which help put companies ahead—but there are a number of small cities whose infrastructures support a vibrant startup ecosystem as well. Even better, these booming small cities boast competitive operation costs and are far more feasible to live in than Silicon Valley.

To find the small cities best for small businesses, Go.Verizon.com got its hands dirty and did some digging. Read on to see which smaller cities are small business hotbeds—we think you’ll be surprised.

Data factors examined

To narrow down our scope of cities—and to make sure cities like New York and Austin didn’t skew the data—we considered only cities with populations between 50,000 and 75,000 people in our rankings (because, you know, “small”). From there, it was all about the numbers. To determine each city’s financial climate, workforce, and operation costs, we examined the following elements within each city:

Higher education (15%): We used information from the 2018 American Community Survey 5-Year Estimate to find the percentage of people over twenty-five with a Bachelor’s degree or higher.

Commute time (15%): Based on data from the same survey, we evaluated the number of minutes it takes someone to go to and from work each day within each city. This data accounts for time spent waiting for public transportation, carpooling, and drive time.

Number of non-farm businesses per 1,000 residents (5%): Taken from the U.S. Census Bureau, 2012 Economic Census: Survey of Business Owners, we found the number of cities that have twenty-five or less non-farm businesses. Compared to each city’s population, we determined the number of non-farm businesses per 1,000 residents.

Income per capita (15%): Based on data from the 2018 American Community Survey 1-Year Estimate, we used per capita income to measure labor costs. In the case of small businesses, the lower per capita income, the better (the lower the score, the lower the operating costs).

Broadband access score (5%): Nowadays, no matter the industry, businesses rely on the internet to stay afloat—and thrive. To see how well each city does in the broadband department, we analyzed information from the FCC’s 2016 Residential Fixed Internet Access Service Connections per 1,000 Households by Census Tract to measure the number of ZIP codes with a minimum of 10 Mbps download speeds and 1 Mbps upload speeds.

Loans per business (20%): Every startup needs money upfront to get them off the ground, but how easy is it to get a business loan in each city? To figure that out, we used data from the SBA Paycheck Protection Program and Small Business Profile to determine the percentage of loans per business within each city.

Tax score (25%): Usually, lower taxes are more conducive to startup success, so to determine each city’s tax score, we used information from the Tax Foundation’s 2020 State Business Tax Climate Index 2020 score. (One thing to note: this measurement is by state, not city.)

To find each city’s overall score, we compiled each score from highest to lowest, and voila: the best small cities for small businesses, ranked.

Top 10 cities

1. Cheyenne, Wyoming

Cheyenne serves as both Wyoming’s capital and the leading small city for small businesses. Its tax score is 55% higher than average and its commute time is 42% shorter than average, making it easy to open a business and get to your business. The city also boasts above-average internet access, which, in today’s world, will make or break a brand new business’s success. (Plus, Cheyenne is so beautiful, it’d make anyone want to set up shop there.)

2. Casper, Wyoming

It’s a good time to do business in Wyoming. Wyoming, North Dakota, and Montana boast two cities, respectively, on the list, but Wyoming took the top two spots overall. For starters, Casper is in one of the tax-friendliest states—it’s also not too hard to get a loan there. Beyond that, its mean income is below average, which means labor costs in Casper are relatively low.  

3. Grand Forks, North Dakota

Grand Forks plays host to the University of North Dakota, and lovely Red River scenery to boot. Beyond its absurdly beautiful landscape and some major college town pride, it’s also great for entrepreneurs looking to get ahead. For instance, the city’s loan approval rate is 83% above average, the highest on our list. Plus, its average commute time of thirteen minutes is the shortest on our list.

4. Missoula, Montana

Missoula is far more than a Zootown—it’s a small biz haven. Its mean income is 10% lower than average (which means cheaper labor for business owners), and its tax score is 25% higher than average, which throws brand-new businesses a bone. Plus, with the University of Montana as its pride and joy, people in Missoula prioritize education—and it shows. Missoula’s percentage of residents with at least a bachelor’s degree is 43% higher than average. 

5. Bismarck, North Dakota

If Grand Forks isn’t where you want to plant roots in ND, look no further than Bismarck—a few ZIP codes away. Despite the fact that agriculture is one of North Dakota’s leading industries, Bismarck has a significant amount of non-farm businesses—it beat out several other cities in the top ten in the same category.

6. Great Falls, Montana

Time and time again, Great Falls is recognized as a great place for entrepreneurs and small businesses owners. Dubbed the Electric City for its cluster of power plants and dams, Great Falls has all the right resources beyond power: it has cheap real estate, its broadband access is 3% higher than average, and its median income is below average, which helps with labor cost. 

7. Manhattan, Kansas

You don’t need to go to the concrete jungle to experience a vibrant startup scene—Manhattan has cornered the market on all things tech. Manhattan bleeds purple because of Kansas State, and thanks to the university’s Launch a Business program, nearly a dozen startups receive the resources and funds they need to flourish each year. On the topic of higher education, 51% of all residents in this small city have a bachelor’s degree or higher. For being a (relatively) tiny town, Manhattan touts huge potential when it comes to business ventures. 

8. Portland, Maine

Much of Portland’s startup scene—especially in the tech space–has flown under the radar in recent years, but now that the city’s tech scene is growing the fastest it ever has, several startups are starting to make headlines. Businesses are migrating to Portland to grow, in part because the city has all the right elements to support them. Portland’s got a broadband score 19% higher than average, and its average commute time is 41% shorter. Even better, Maine expanded tax credit programs in 2020 to help stimulate newly-minted businesses. 

9. Logan, Utah

Logan may be a quiet city that sits smack dab in northern Utah’s farmland, but its up-and-coming startup scene is anything but sleepy. The college town’s tax score is 16% higher than average, which lends way to more startups able to establish business. Beyond that, its average commute time is 41% lower than average, and its number of residents with a bachelor’s degree or higher is 8% higher than average.

10. Grand Island, Nebraska

Grand Island may not be as big of a tech hub as Silicon Valley or New York, but it has a host of startup success stories under its belt. Between a mean income 19% lower than average and a commute time of only sixteen minutes on average, Grand Island is a breeding ground for small business success. Plus, if you need help in the financial aid department, you’ll sit pretty in Grand Island: the city’s loan approval rate is 62% higher than average.



The top 50 cities to start a small business:

1. Cheyenne, Wyoming
2. Casper, Wyoming
3. Grand Forks, North Dakota
4. Missoula, Montana
5. Bismarck, North Dakota
6. Great Falls, Montana
7. Manhattan, Kansas
8. Portland, Maine
9. Logan, Utah
10. Grand Island, Nebraska
11. Bellevue, Nebraska
12. Corvallis, Oregon
13. Lenexa, Kansas
14. Doral, Florida
15. Ames, Iowa
16. La Crosse, Wisconsin
17. Eau Claire, Wisconsin
18. Coral Gables, Florida
19. Sarasota, Florida
20. Shawnee, Kansas
21. Pensacola, Florida
22. Lehi, Utah
23. Appleton, Wisconsin
24. Daytona Beach, Florida
25. St. Charles, Missouri
26. Dubuque, Iowa
27. Joplin, Missouri
28. West Des Moines, Iowa
29. Idaho Falls, Idaho
30. Weston, Florida
31. Oshkosh, Wisconsin
32. Waukesha, Wisconsin
33. St. Peters, Missouri
34. Delray Beach, Florida
35. Pocatello, Idaho
36. Port Orange, Florida
37. Grand Junction, Colorado
38. Ocala, Florida
39. Palm Beach Gardens, Florida
40. Coeur d’Alene, Idaho
41. Midwest, Oklahoma
42. Muncie, Indiana
43. Lafayette, Indiana
44. Terre Haute, Indiana
45. South Jordan, Utah
46. Blue Springs, Missouri
47. Bradenton, Florida
48. Taylorsville, Utah
49. Janesville, Wisconsin
50. Bowling Green, Kentucky

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