The Best Small Cities to Start a Small Business: Report

See full list of cities here

See the top city in each state here

Launching a small business in a big city can be challenging due to high prices, traffic, excessive noise, and oftentimes fierce competition. Smaller cities, on the other hand, often lack the competition found in larger cities, showing that, with good market research, your small business idea may be just what a small city needs. 

For the fifth consecutive year, Go.Verizon conducted intensive research to again conclude that smaller cities allow plenty of room for business growth.

Considered Data Factors:

These cities won the top spots for good reason. Upon gathering data from nearly 300 cities across the country, Go.Verizon focused on certain factors that would categorize them as “small” without moving towards “town” status. These elements also indicated the financial and tax climates of each city, loans per business, commute time and an overview of its education.

Population: According to the US census, the population of a city must fall between 50,000 to 75,000 people to be considered a “small city.” Most of the spots in the top ten hit the high end of the scale, but still manage to balance out the urban stride with a more hometown vibe.

Percent of residents with at least a bachelor’s degree (15%): In order for your city to qualify for this list, you have to show us your smarts. We completed an analysis of the percentage of the population over 25 years old who have received a bachelor’s degree or higher from an accredited university or college. This information came from the 2020 American Community Survey 5-Year Estimate. (A higher percentage positively impacted the final score.)

Travel time to work/commute (15%): According to the 2019 American Community Survey 5-Year Estimate, this includes the average total travel time it takes working individuals 16 years and older (who do not work at home) to reach work from their residences every day. This takes into account the time spent carpooling, waiting for public transportation, navigating traffic, and “other activities related to getting to work.” (A higher travel time negatively impacted the final score.)

Income per capita (15%): For this particular study, mo’ money = mo’ problems. Based on data from the 2020 American Community Survey 5-Year Estimate, we used median per capita  income to measure labor costs. In the case of small businesses, the lower the per capita income, the better (the lower the score, the lower the operating costs).

Broadband Access Score (10%): High-speed internet is crucial to modern business operations. We analyzed information taken from the 2020 American Community Survey. We looked at the percentage of homes in a city with access to broadband internet as a proxy for good internet coverage.

Loans per business (20%): New businesses can rarely get off the ground without a loan. How easy is it to get a business loan in your city? To find this out, our team gathered data from the SBA Paycheck Protection Program. From there, we determined the average loan amount by state.

Tax score (25%): Typically, lower taxes provide a better environment in which to establish a new business. So to determine each city’s tax score, we pulled information from the 2022 State Business Tax Climate. The higher a city’s tax score, the better its ranking.

*A city must have available data in all metrics to be included in the list. We looked at 333 total cities.

Top 10 US Small Cities for Small Business

In its fifth consecutive year among the top 50 small cities for small businesses, Logan has earned its highest ranking yet, coming in first place. This comes at no surprise seeing that the average commute to work in Logan is 18 minutes, which is much lower than in heavily populated cities. In addition to low commute times, business is booming with easy access to broadband, generous business loans, and a tax score 22% higher than the average city on the list. This picturesque college town is no doubt an attractive location for small business owners.

This year Richland, WA joined our list as the second best small city for small business. While it is a small city, it’s packed year round with fun outdoor activities, music festivals, and cultural showcases. Roughly 25% of Richland residents hold a bachelor’s degree, and earn 4% more than the average income. Their broadband access is also 4% higher than average. Richland is a young city, with a dense suburban feel making it one of the best places to live in Washington.

Corvallis is nestled in the center of Oregon’s Willamette Valley, within 90-minutes of Portland, major ski resorts, and the breathtaking Oregon coast. Through several categories Corvallis holds its own: commute time is below average at 22 minutes, business loans are readily available, and tax scores are above average. Out of the top three small cities for small business, Corvallis is the most populated, but don’t let that fool you. Corvallis residents appreciate its small town feel.

If you don’t care for big city living, but still want to be close to all the action, Millcreek (a suburb of Salt Lake) is the perfect city for your small business. Although commute time is not the lowest on the list, this city makes up for it with their growing job market and admirable tax score. Most of its residents are families and young professionals, which only adds to the excitement of this growing city.

Categorized as one of the best cities to live in Michigan, and the Most Diverse Suburb, Kentwood is a newbie on our list. While average income is lower than most cities on the list, there is no shortage of business loans and broadband is solid across the board. In addition to its tax-friendly environment, Kentwood residents enjoy brisk commute times (average commute time is roughly 21 minutes). 

This small city big on history, culture and art isn’t just a thriving location for small businesses, it’s Washington’s capital and, some may say, the backbone of the state. Olympia is also one of the region’s top tourist attractions, which could explain why commute time is the third highest on our list. Luckily, this city’s tax score, average income, and average business loan size are great perks for those looking to set up shop in Olympia.

Business owners looking for a small city with all the amenities of a big city will love Royal Oak. Often called the “City of Trees”, Royal Oak is home to a wide variety of local businesses. Out of our top 10, this city is by far the most-educated (over 35% of its citizens hold at least a bachelor’s degree). Although Royal Oak’s population is well below average, its commute times are some of the highest on our list. Nonetheless, this city has a lot to offer all around. 

If you like the vibrant energy of Miami but want a more toned down place to relax in the sun, Palm Beach Gardens is the place for your business. Home to the Professional Golfers’ Association of America, Palm Beach Gardens hosts professional golfers year round. Residents of this golfer’s paradise do pretty well for themselves, earning $16,000 over our lists’ average income. Business owners can also enjoy generous broadband access and convenient commute times. 

Utah’s sixth oldest city is rich in pioneer and old west history. This small city packs a big punch in several categories including, income (average household income is over $100,000), broadband access, business loan size, and tax score. As one of the most well-rounded cities on our list, Lehi is a great place for small business owners to set down their roots. After all, the old west is known for expansion and reinvention. 

Missoula is nestled in the northern Rockies of Montana and is home to thousands of outdoor enthusiasts. The natural beauty of the city and its vibrant and welcoming residents make it an attractive area for business. Surprisingly, Missoula is the most populated city out of our top 10 with roughly 74,000 residents, however commute time is the second lowest at 20 minutes. This city offers the small town feel with urban touches, giving it an appealing reason to set up shop there. 

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The top 50 cities to start a small business:

The top small city for small business in each state: