Expert, John B. Ochs, Ph.D., offers insight into starting a business in a small city

Size matters when choosing a city in which to launch a startup. As many veteran entrepreneurs — and failed startups — understand well, bigger is not always better. A city with a smaller population can offer a greater chance of success, depending on an entrepreneur’s type of business and personal preferences.


Every small city offers unique advantages and disadvantages to prospective ventures. Lower overhead costs, stronger relationships with customers and the potential to become a big fish in a little pond are among the benefits. But the drawbacks come plenty as well. For one, entrepreneurs seeking to cultivate a large professional network aren’t likely to fill their roster in a town with fewer residents. Other restrictions might include limited industry options, a less diverse customer base, and difficulty attracting and retaining top talent.


WalletHub’s analysts therefore compared the business-friendliness of 1,261 small-sized cities to determine the best overall for launching an enterprise. Our data set of 16 key metrics ranges from average growth in number of small businesses to investor access to labor costs. Read on for our findings, expert business insight and a full description of our methodology.


Ask the Experts

The lack of expert guidance is a common problem for entrepreneurs that could lead to failure even before a business takes off. For insight into starting a business in a small city and advice on overcoming the challenges they pose, we turned to a panel of experts for their thoughts on the following key questions:


  1. What are the pros and cons of starting a business in a small city?
  2. Would some types of small businesses (e.g., a retail store, restaurant, or tech startup) do better than others in a smaller city?
  3. What tips do you have for an entrepreneur starting a business in a small city?
  4. What impact do you think the Trump administration’s proposed policies will have on entrepreneurs?
  5. What can local authorities do to encourage entrepreneurial activity in their small city?