It’s a common misconception that business success hinges on setting up shop in a big city. In fact, some research suggests that small U.S. cities could offer the best environments for startups. This is because the right city — be it small or large — can help a business weather economic storms like pandemics and inflation. While big cities offer vast markets and growth potential, they also come with tough competition and high costs of living and operation.
On the flip side, smaller cities often offer a more favorable cost-benefit ratio. They’re more affordable, boast strong community support, and serve up less competition. They are also more stable during times of economic uncertainty. Key takeaway? The size of a city isn’t the be-all-end-all for business success.
Case in point: A comprehensive study of over 1,300 small cities across the U.S. revealed the top ten hotspots for new businesses. Central and Southwest Florida cities featured prominently. Factors like growth rate of small businesses, access to investor funds, labor costs, local economy health, tax climate, cost of living, and education levels were considered. The conclusion? Small Florida cities are entrepreneurial gold mines.
Assessing startup prospects in small U.S. cities
Florida’s robust economy and business-friendly climate make it a prime target for startups and innovative ventures.
Fort Myers in Southwest Florida stands out as a recommended hotspot due to its high number of per capita investors nationwide. New ventures here stand a good chance of securing needed funds. Small businesses in the city grew by over 21% between 2015 and 2021. Affordable office space and a significant number of startups per capita make it an attractive base for small business growth. Lines like tax incentives and drive to create a business-conducive environment make it all the more appealing.
However, small cities aren’t without their challenges. These can include issues with establishing extensive professional networks, limited industry choices, reduced customer diversity, and problems keeping top-level talent due to smaller city populations. Limited resources could also hamper service delivery and production, impeding growth and innovation. Other potential drawbacks might include a lack of technology infrastructure, limited market base, and restricted business scalability potential.
Despite those challenges, Cedar City stands out as the best small city to start a business. Factors include high startup rates per capita, small business growth of a whopping 33% from 2015 to 2021, and the fourth shortest average commuting time (just 13 minutes). Cedar City is also in the top 100 cities for employment growth and working-age population growth. These factors, coupled with a low cost of living and access to a local university, contribute to a steady potential employee pool. A business-friendly environment, accessibility to small business loans, and high quality of life make it even more attractive. As a result, Cedar City is fast becoming the go-to destination for entrepreneurs looking to build successful businesses.
