Best Small Cities for Starting a Business

If you're an entrepreneur looking to start a business, you'll want to give these small cities in eight states ample consideration.

Starting a new business is an exciting and challenging endeavor that requires careful consideration of several factors, including where to establish it.

While every city offers its own unique advantages and opportunities, some cities stand out as prime destinations for budding entrepreneurs. The small cities included here provide a winning combination of a robust infrastructure, access to funding, a skilled workforce and a high quality of life.

In 2023, WalletHub deemed these 20 small cities in the following eight states to be the best locales for starting a business. The site compared over 1,300 cities in terms of business environment, resources and costs using 18 metrics, each of which is graded on a 100-point scale.

WalletHub then determined each city’s average across all criteria to calculate a total score — those that ranked the highest are listed here by state, with the states that had the most cities listed last.

Idaho

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Cities (total score): Coeur d’Alene (59.89)

Note: Stats were sourced from the 2023 WalletHub study.

Bottom Line: Idaho

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Northern Idaho’s Coeur d’Alene is a small but vibrant community that is very welcoming to new businesses. Locals actively support and patronize companies based in town, allowing entrepreneurs to benefit from a loyal customer base and word-of-mouth referrals.

The town has a relatively low cost of living and a favorable tax structure. Plus, the local government actively fosters economic development initiatives for new businesses. Coeur d’Alene is also a tourist hotspot, as it is situated on Coeur d’Alene Lake. Hospitality, retail and service businesses can easily tap into the tourism market.

North Carolina

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Cities (total score): Morrisville (60.05)

Bottom Line: North Carolina

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Morrisville is North Carolina’s shining star when it comes to new businesses. The city benefits from its location in the heart of the Research Triangle region, which encompasses renowned research universities and major tech companies. This provides new businesses access to a skilled workforce, research collaborations and networking opportunities.

The city also boasts a business-friendly environment. Here, the local government actively promotes economic development programs that offer resources, grants and incentives to encourage the growth of local businesses.

For example, Morrisville recently launched its Morrisville Means Business program, which offers $4,500 grants and free business consulting and assistance to eligible companies impacted by the pandemic.

Wyoming

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Cities (total score): Cheyenne (59.6)

Bottom Line: Wyoming

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If you’re looking for a bigger city to set up shop, choose Wyoming’s capital, Cheyenne. Wyoming has no state income tax, and its low business taxes and regulations allow small businesses to operate with reduced financial burdens and potentially higher profit margins.

The movement of goods and services is relatively easy in Cheyenne, being situated at the crossroads of major highways and rail lines. Here, new businesses can reach broader markets, particularly Denver, which is less than two hours away.

Cheyenne’s government hosts various events and initiatives throughout the year that promote local business and encourage collaboration among business owners in networking, knowledge sharing and support.

Oregon

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Cities (total score): Redmond (59.14)

Bottom Line: Oregon

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Oregon is generally known to be very friendly to entrepreneurs, but Redmond stands out as the state’s best destination for starting a business, frequently making “best of” lists.

Its city officials actively promote economic development and provide resources and assistance to business owners. They work closely with entrepreneurs in streamlining processes for permits and licenses, which makes it easier for new businesses to establish and operate.

In comparison to bigger cities in the state like Portland, the cost of living in Redmond is relatively low, allowing business owners to manage their expenses more effectively. And if your business is outdoor recreation, you’ll do well in Roseville — the region attracts a significant number of tourists and outdoor enthusiasts throughout the year.

Montana

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Cities (total score): Missoula (59.49)

Bottom Line: Montana

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Missoula, located in western Montana, offers a favorable environment for new businesses to thrive. Residents love to shop locally, and the city government fosters entrepreneurship with various programs.

This city of nearly 120,000 people is known for its economic stability and diverse business sectors that include healthcare, technology and outdoor recreation.

Over the past few years, Missoula has also experienced steady population growth, which means more customers for the new business owner.

Colorado

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Cities (total score): Windsor (59.02)

Bottom Line: Colorado

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Windsor is booming, growing at a rate of nearly 8 percent per year, which translates into an ever-expanding customer base. Situated in close proximity to Fort Collins and Greeley and being a short drive away from Denver, businesses in Windsor enjoy the advantages of being part of a larger economic region without being centered in a bustling metropolis.

Local government and residents show strong community support to small businesses. Residents prioritize shopping locally, and the city does its part by hosting various community events and initiatives throughout the year.

Florida

Beach Vacation Destination Fort Myers Beach

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Cities (total score): South Bradenton (60.7); Fort Myers (60.21); Winter Park (58.99), Altamonte Springs (58.99)

Bottom Line: Florida

Park Avenue in Downtown Winter Park Florida USA

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Recently, Florida has seen its share of economic issues, but with four cities on this list, it still ranks as one of the best places to start a business in 2023.

The Sunshine State boasts a favorable tax climate, especially because it has no personal income tax. This allows business owners to keep more of their earnings and allocate those funds back into the business if they so choose.

Bradenton is the top Florida city on the list of places to start a business. It offers new residents a high quality of life with ample recreational opportunities and a warm climate. Additionally, the area benefits from tourism, which means plenty of potential customers.

Utah

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Cities (total score): Washington (66.77); St. George (65.64); Cedar City (64.96); Logan (61.08); Lehi (60.15); Eagle Mountain (59.92); Midvale (59.46); American Fork (58.97)

Bottom Line: Utah

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Utah has a whopping eight cities on this list, and that’s because the state offers a business-friendly environment with low taxes and minimal regulations. Currently, Utah’s economy is booming.

The Beehive State consistently provides entrepreneurs with favorable conditions to start and operate their businesses, which are supported by major players in industries like technology, healthcare, tourism and aerospace. Utah boasts a skilled and educated workforce, excellent infrastructure and a high quality of life (and if your business is related to the Great Outdoors, there’s no doubt its success is imminent.)

The city of Washington is the top dog overall. Its population is about 31,000 — and this small yet thriving community offers a unique blend of natural beauty and modern amenities, while also boasting a warm and welcoming atmosphere for businesses and families alike.